Interview with Justin Chow, Global Head of Business Development and Relationship Management for Cumberland


Justin Chow is the Head of Business Development and Asia for Cumberland – a DRW Company, one of the world’s largest liquidity providers in cryptoassets. The firm trades dozens of cryptocurrencies via its over-the-counter trading operation, which has been up and running since 2014. Now, recently, the firm has introduced Marea, an electronic platform designed to enhance the overall cryptoasset trading experience for our counterparties.

After joining DRW in 2015 as a global macro proprietary trader, Justin is now focused on helping the Cumberland team expand and grow its business in Asia.  Prior to DRW, Justin was a global macro trader at hedge fund Citadel, where he specialized in managing portfolios of foreign exchange and liquid futures. Justin started his career as a distressed debt and securities analyst. Justin earned a BS in economics and psychology from Columbia University.

To learn more about Cumberland, check out this indepth Bloomberg Article from 2018.

Full Transcript

Joyce Yang 

Welcome to the Global Coin Podcast, a podcast where we hear from leading global operators and investors in crypto with their thoughts on the Asia blockchain and cryptocurrencies space. Asia is a cryptocurrency hub and this podcast aims to provide context and insights into what’s happening locally. We also have a newsletter that highlights all the important crypto news and happenings coming out of Asia with many translated by our staff directly from the local media. Check it out at [globalcoinresearch.com]. I’m your host Joyce Yang, and today I am joined by Justin Chow from Cumberland. Justin Chow is the head of the Singapore Office, and global head of business development and relationship management for Cumberland. Cumberland is a DRW company, and is one of the world’s largest liquidity providers in crypto assets. Thanks for coming on the show Justin. For our audience who may not be familiar with Cumberland and DRW, can you tell us a little more about your company and its role in the crypto market?

Justin Chow

Yeah. Well, thanks again for having me Joyce. It’s really a pleasure to be on the talk show today. Cumberland effectively is a large over-the-counter trading firm in the crypto asset industry. We’re well known for providing prices in about 40 different crypto assets; over-the-counter prices, we trade on exchanges and we are a part of a large trading firm based out of Chicago that’s been around for 27 years, and that firm is called DRW. DRW was founded by a gentleman named Don R. Wilson, and over the years Don has been very active in traditional markets where he’s booked a strong name for himself. And DRW trades in asset classes all over the world 24 hours a day, and since then has expanded into multiple business lines including real estate, venture capital and now through Cumberland wholly owned subsidiary, the crypto asset industry. So Cumberland was founded in 2014, so just over 5 years old now, and we are just well-known as a large trading firm in crypto. 

Joyce Yang 

So I always wondered how people get into this sector of the cryptocurrency space. What about your role? What’s your background how did you get into doing crypto trading in Asia?

Justin Chow

Great question. So my background actually is as a hedge fund manager. I started my career just over a decade ago on the buy side which was in the hedge fund industry. And initially I started out as a fundamental analyst, analyzing the balance sheets of companies in the credit sector. So I was a credit analyst at a hedge fund, doing financial modeling etc. And then I had the opportunity to work for a guy who I consider my mentor, and he was a well-known trader in Asia, and he traded global macro, which is liquid markets stuff that trades 24 hours a day as well, primarily FX interest rates and liquid features. So I went to work for him at a large hedge fund in their Hong Kong office and spent close to about 6 years or so working for him at this firm and then at DRW. So I’m an internal transfer from DRW, the FX trading desk to Cumberland. And in FX, it’s a speculative instrument and so it’s highly active trading, it’s a lot of volume and a lot of sort of what we call swing trading. And I suppose DRW was looking to transfer talent within the firm into the Cumberland unit and they approached me to consider moving internally, which was really an honor. And as I sort of took that dive into researching into the crypto industry, I realized that it is sort of an early stage, but not only in an early stage, the industry itself sort of mimics traditional asset classes, ones I’m familiar with of course; credit and FX are both over-the-counter businesses, they’re not traded on exchanges. So my background suited it and as I sort of did some more research I realized that this was a very interesting industry with a lot of talent and capital behind it and it was just starting to grow some green shoots and I thought “Wow! That’d be phenomenal to be able to be part of the growth of this new industry and it would also be phenomenal to be able to bring my expertise from traditional markets into the industry and then hopefully contribute to its development.” 

And so that’s really how I got started. I’ve obviously been following bitcoin from sort of early 2010/2011/2012, I read about it early on, didn’t pay much attention. And then in sort of 2013, I got quite interested in it, but never took it like that seriously until I realized that DRW had a large crypto trading desk, then I had the opportunity to be part of it. So since then, it’s been a great journey, the team has grown substantially, I started off as one of the market majors, trading on the desk, and then was asked to do more business development, and then my journey… I was made the head of business development in Asia and responsible for sort of growing our brand and our presence out there, and then as you mentioned in the beginning more recently, taking that role into a global position within the firm. So that’s where we are today and I’m still very excited to be part of it. I look back at the last year-and-a-half, my time with Cumberland as probably the most exciting and rewarding time of my career even though I’ve had some pretty exciting times at my former employers. So it’s been great. 

Joyce Yang 

Yeah, that’s wonderful to hear. I think in the traditional finance space no one could ever imagine getting promoted and kind of giving that kind of opportunity to move up in such a short time period as you did which is kind of credit to your hard work and you know doing late-night calls such as this one that we’re doing now. You mentioned in our conversation offline that you see a lot of the new interesting things popping up with the markets in the last few months. Can you elaborate a little bit on that? 

Justin Chow

Yeah I mean, when I first moved into the industry, it was sort of in the heavy price action and bullish rally in the end of 2017, and there was a lot of folks were kind of wondering what was happening and you know, a lot of folks; well, I guess you could call it. People were trying to get into the space and the prices were moving, bitcoin was moving at $2000 dollars per day. People didn’t really have time to think about developing their projects or what this ecosystem could do for the world or how it’s going to develop, they were more interested in speculating. Since then, the prices obviously declined quite a bit and the market has become more calm, less volatile. And that has given people time to reflect and it’s also given the people who are purely in the industry for speculative versus time to reflect and maybe consider that this is not necessary for them. 

And so what we have now is the remaining players in the industry are those who believe in the underlying technology or feel that they have skills that can contribute to the development of the ecosystem. And then you have a subset of new entrants coming into the space who recognize that the technology or the use cases for crypto assets could be applied to their businesses. And so I want to I want to focus a little bit on that category right there, because that’s the part of the future of this industry that we get to see as it’s kind of the largest and most reputable player in this space. And so a lot of folks will come to us and they’ll say “Hey, we know DRW has been around a long time, you guys have got a great reputation in traditional markets and you’re a big market maker. Can you share with us what’s happening? Can you talk to us a little bit about how this space could be applied or how our businesses can enter this industry?” And so these are the kind of like large you know FinTech or technology companies, some of whom you and I have their apps on our phone. And they’re starting to explore and it’s really something that happened I would say early in 2018. And so every now and then, we’d have a conversation pop-up, and I personally have gotten to speak to the CEOs of some of these folks, of some of these companies. It’s very exciting and we take a stand to try to educate them, to share a little bit about our journeys, why we’ve gone down the road of entering this space and talking a bit about the service providers that are available today and how that’s going to change, how it’s going to evolve and develop such that it looks somewhat similar to what they’re comfortable with in the traditional market. So at a very very basic level, let’s just use an example of a payment processor. I go to a bank, I sign up for a credit card, I go to Starbucks and I swipe my credit card and I pay for a coffee and then there’s all these transactions and money moving around the back and eventually at the end of the month, give it a bill and I have to pay that bill. So there are also use cases where crypto can be used in a similar fashion to solve payment and be a settlement layer to solve the delay in settlement for payment. And so for folks that have rewards programs or who have their own sort of credit system in their ecosystem, this is one of the use cases of crypto. So they’ll come to us and talk a little bit about it and say “Hey, what can I do with my company with crypto?” And then we would kind of share the examples and then share some of the names of the providers in the industry and say “these are some guys you should also talk to.” And then of course let them know that it’s going to continue to change over time. So that’s the area, the subset I think for me in the last 9 months, it’s been very exciting, we’ve had some tremendous conversations over time and you may have read about some of them in the news, but pretty early on, we were engaged with them and trying to share about how they could become more involved in the industry. And so that’s an area I think is really exciting for me. 

Joyce Yang 

Yeah, definitely. I think because we’re so early in this space, everyone is able to kind of collaborate together and never compete like the way you see still in traditional finance you know, for that single last penny. I hear similarly from kind of some of the banks that we’ve spoken to here, and they’re like we never imagined to be in the same room with another big bank talking about technology, but now we’re sharing stuff, and we’re trying to explore it together you know, thinking about what blockchain could do for our businesses. That’s wonderful, and I think with the market slightly recovering since the beginning of the year, the sentiment has been improving. Can you just tell us a little bit about the crypto trading and landscape in Asia right now? There aren’t that many global players like Cumberland I assume, so who’s there?

Justin Chow

Yeah. So when I look at sort of the crypto landscape, some of the largest exchanges in the world are based in Asia. There’s a large large retail presence out here that trade on the exchanges. And then there are some of the biggest service providers in the crypto industry based in Asia that we do business with. So we’re first and foremost, we’re more of an institutional player for our minimum trade size is 100,000 US dollars per transaction. So we will deal more with sort of companies or entities or high net worth individuals or you know crypto OG’s that might be involved for a while. So I would say the nature of the counterparties we deal with in Asia is actually quite different than in North America. For example, in North America, BnB, the largest sort of capital market in the world, the largest sort of you know density of wealth, you have most of the fund managers in the world based out of the U.S, that’s like traditional fund managers, fund owners of stock bonds. So in the U.S, we actually have quite a few crypto funds that do business with us, and these are fellows that will come in, will trade quite actively, some of them are a little bit more long-term fundamental, and some of them are more VC in nature, taking positions and less liquid coin than really holding them for long term view. In Asia, it’s a little bit different. I’d say there’s a lot of miners in Asia that we definitely do business with. They’re scattered all throughout and not even just in one country. There are other sort of smaller crypto funds out here as well as other sort of brokers in the space who are trying to facilitate transactions that will kind of use us as liquidity providers. So in that example, there might be another desk for example who has their counterparty base that they do business with and those will facilitate trades and then come to us for liquidity rather than hold onto the risk. And so we’re always happy to take risk under our own books, but that’s the backbone of DRW and guys like myself as professional traders, we were happy to sort of shore risk prices and take those positions directly out of our books. The other type of entities that we might view with are other large service providers who earn fees in crypto, and then they need to sort of trade out of those fees and they trade from one treasury coin into another. So we might have a basket or a Treasury of different crypto assets, and then they’re trading crypto to crypto with us to sort of rebalance their treasuries. So there’s quite a few large players out here that we do business with. So if you look at our volumes for example, the percentage breakdown, I can’t remember what the most recent number was, but I remember Bobby Joe, one of my colleagues mentioning that, it was about 25-30 percent of our volume comes during the Asia time zone, but we had significantly fewer counterparties in that part of the world. So it’s very kind of dense within a number of larger players.

Joyce Yang 

Interesting! Yeah, I actually had a joint call with the information, and that was an information called with BitMex’s Arthur Hays and he said that majority of their volume is coming from North Asia. And he said you know, him being in Hong Kong, that Asia is like the crypto hub. And I wonder if I could give….

Justin Chow

I have to give a call after this and verify that.

Joyce Yang 

Yeah, yeah. I think that was really interesting, it was a great call I think, just to kind of uncover what he was thinking because Arthur, I feel like is not very public, but I found that super interesting and I really wanted to get your thoughts. But they’re more of retail driven and you guys are an institutional focused. 

Justin Chow

Yeah I mean, it’s different. For the exchange model, there’s no minimum size that people can trade on there. And so you get a lot of be the retail players in the world you know, I’m sure you’re very familiar than in Korea there were a lot of folks in the end of 2017 that were going on, exchanges and trading crypto. So yeah, it’s a bit of a different type of counterparty base. I would say more of the institutional players and the well-known names and brands still, they’re the ones that really tend to be cheapest.

Joyce Yang 

Got it. And while we’re on this topic, do these funds and minors and treasuries all act very differently from each other? Do the volumes vary by a lot? I mean it’s generally how you interface with them, do business with them. Is there a difference between kind of Asia counterparts or the kind of North America counterparts?

Justin Chow

That’s a very good question. I would say that in general the counterparties we deal with are extremely diverse. Their knowledge and understanding of capital markets, of trading can vary as well. We have former hedge fund managers who come in and you know, for a guy like myself, it’s plug and play, they know exactly how to deal with us. And then sometimes we have folks that come in and they’ve never traded professionally before I mean, we give them a little tutorial, we kind of get them on a phone and walk them through how you would ask for a price and how we could show you a price and it’s live for x amount of seconds. So it’s actually quite fun because again we’re at the very sort of like earliest stage of the development of this asset class where there will be people that you deal with that are not really familiar with capital markets. Right, because again if they’re just buying and selling cryptos, it’s a capital market. 

In Asia, I would say also the people we do with are very different, it’s fun because there are cultural differences, there’s language barriers, it makes it always interesting for our team out there who’ve done a great job of being able to facilitate, slow for our counterparties. But also the way they trade, you are absolutely correct, it’s very different. Some of them take a long-term view on the industry and they love holding these assets, they’ve held them for a long time, and so they don’t part with them very easily, but when they do, they come in very large sizes and over a large period of time. And then there’s a couple of folks out there who are quite large and you know, we’re talking significant amounts of crypto or beyond, and no trade and twing trade. So they may not come in and trade every single day long or short, but they may build positions that are getting very very large over a certain period of time and that’s very exciting for us too because it’s fun to see real capital sort of moving around in this space. And so I like to think of those kind of bigger players moving around, it’s like the mother ships of crypto. And when they start to act, it’s always pretty fun to interact with them. So hanging out in the industry, I do some traveling speaking at conferences etc. I’ve got to meet a lot of the folks out there who have obviously met a lot of the counterparties that we do the most business with. And even interacting with them face of faces is very different as well. Again in Asia, credit is just so sort of spread out, there are so many different cultures and that makes it really enjoyable for myself and our team especially the BD team, to go out there and meet them and learn a little bit about doing business in their culture, but also just communicating with them, letting them know that we take privacy and confidentiality extremely seriously. People trust us to just sort of keep their trading activity 100% confidential, they trust us with sending wires and settling trades on time. We’ve hired some really amazing folks internally from huge hedge funds, 10-20 years of experience, that really understand how to build for world-class operations teams or relationship management teams or strategy teams. So I think the investment that DRW has made, and the investment Cumberland continues to make in its personnel to be able to keep the highest quality standard for our counterparties is something that we’ve consistently got feedback from them as one of the defining factors of our business. So it’s one of those things that makes me sleep well at night, and I feel proud of what we’ve done and you know, we continue to sort of look to the future and try to see ahead of the curve, make sure that we’re staying you know in the game. 

Joyce Yang 

For sure, for sure. And you guys are, especially your role where you have insights on Asia and now you’ve brought back into the States, it’s quite invaluable for the business. To actually see that global perspective coming from your end, because I think that’s a new type of talent that people are lacking in the U.S. you know. As a research firm, having written extensively about how projects now are looking to go to Asia to look for adoption you know or even companies are looking for partners in Asia, with exchanges there because those folks move so much faster. So someone with like your experience and insights, now I think definitely its super cool and great for the firm. I wanted to quickly ask about this uptake in the market that we saw in an early April. Of course without disclosing anything about your clients, my suspicion is that this market was driven up well you know, Bitcoin price is being driven up above $5,000 was coming from Asia. And you mentioned a lot there are a lot of you know obviously Wales. Is that what you’re seeing as well?

Justin Chow 

Funny mentioned, I remember that I was in the office one day and I said to the folks you know, the technicals on the chart are showing that we could get a big move in either direction, but most likely up in the next in a couple of days and then I went to bed and I woke up and Bitcoin was up a thousand dollars or something. So it’s a running joke on the floor that people think that I have a crystal ball. Yeah I mean, that moved, that kind of moved Bitcoin above the 4500 and 5000 level did happen during the Asian hours. I think what has sort of happened in the last 6 months or so into the lows of the market was the negative sentiment got exacerbated to the point where people were getting very emotional. And I remember reading on Twitter and I kind of flipped through that every day just to see what’s going on, and there are folks talking about feats below $10 and Bitcoin you know, at 2,000, and it was getting very extreme negativity. And whenever that happens you know, the trader in my mind always thinks to myself “Hmm, people are sort of getting very emotional here. Maybe they’re starting to see things that are not really there and their mind is kind of playing tricks with them.” So the positioning ends up reflecting that, and we definitely saw that in our business as well, that we had sort of extreme panic selling so to say towards the end of the year, when folks come in and kind of make emotional decisions rather than making rational decisions. So we have our top counterparties, we’ll talk to them every single day and they’ll ask us “What do you guys think about the market? What are you guys seeing? What news is relevant?” We kind of just have a dialogue, quite casual, nothing too in-depth or confidential, but towards the end of the year, you didn’t really have a lot of that, it was just a lot of extreme negativity every day and then of course the trading behavior representing that. So first and foremost, I think going into the end of the year, the positioning was definitely very one-sided. Meaning that those who want to be long were probably flat and some speculators were probably short. And you saw the first sort of movement in that unwinding in December over the holidays in fact. I remember that I was on holidays, I looked at my phone and crypto was screaming. And so that sort of behavior in December already was a warning sign for our team. So for [Inaudible21:35] to move so much like that from below, you’ve got to be a little bit careful because it didn’t really want to be down there. It’s being the crypto industry; the price is right. And then of course in January, we started to see some buyers come out, I don’t know if it was the new year and new subscriptions in funds etc., but there was some definite activity. And then in general over the last quarter or so, there’s been more development on the infrastructure level within the industry. People from traditional markets moving into crypto and starting to build solutions. So like as I mentioned earlier, folks that may have serviced people in the traditional market. Then there’s platforms, other service providers starting to reach out to us and say “Hey, we’ve been working on our crypto offering for the last X amount of time, we’d love to work with you guys and have you guys provide liquidities to our clients etc. And so those conversations started happening, and then more recently in the last couple of months, I’d say some of the larger guys out there who were selling into the end of the year, they came in sort of like sniffing around starting to buy a little bit. And so you definitely see that reversal behavior and it’s I guess one of the cool things of our business, we get to see that. But that behavior definitely seems to have played out in the prices of the assets in the last sort of like 6 months or so. 

Joyce Yang 

Yeah, that’s interesting.

Justin Chow

Now, going back to your question about whether or not we saw that in Asia or you know globally etc. I would say that what I mentioned was pretty universal. So the extreme selling we saw in all the regions of our business and then sort of the buyers coming in, it was both in the US and in Asia as well, so I think that’s that was quite interesting. And now that you mentioned; I never thought about it. I pay very close attention of course, but now that you mentioned it, that’s initially data point in my mind now. 

Joyce Yang 

Yeah. I’m not a trader by training, but I always wondered how should I be observing the markets you know, should I be separating these two different types of trading audiences? Because Asia tends to be more retail driven, very risk risk-loving versus the US tends to be more conservative. So if we’re seeing selling, I always guess that it’s going to come from the US first, and then Asia probably second. But I always assume that their appetite will be a lot higher. And you know, their actions and behaviors tend to also be a lot faster in and out and volatile. Just even, I remember in January when Grin came out and the miners got excited very quickly in China you know, and then they really had that huge inflation in prices of Grin when it was launching, and then immediately it fell back down. And I think that was primarily coming from Asia because the US was just kind of sitting on the sidelines for that one. So I want to quickly change here, I’d love to hear your thoughts on what’s going on in kind of the OTC landscape. Binance said that they made most of their profits from Q1 from OTC trading. Are you seeing that across the board as well?

Justin Chow

Definitely there’s been a pickup this year, I might say January was very slow. And then since then, we have sort of like grown more interest in the OTC space, it’s quite competitive I mean. One thing that we talked about a year ago when we were going on the conference circuit was how as markets develop, the volatility comes down over time as there are more market participants entering the space. And then of course in addition to that, the spreads will tighten as well. And so that’s definitely one thing we’ve seen consistently since my time starting with the team, is that the spreads have come in almost on a monthly basis consistently. Now, obviously in the last sort of 3 weeks or so things have been a little volatile, so the spreads have probably widened out slightly, but I’d say they’re pretty much near the tightest they’ve ever been, therefore making it you know more competitive, and servicing the industry in a way that participants can reduce their transaction cost and trade more frequently. I think that in the OTC space in general, that we’ve seen a lot of competition enter in the last sort of 12 months. There’s different varieties of players, there are some that come from traditional backgrounds, there are some that are as you’ve mentioned earlier, exchanges starting their own desks. In general, these are all positive developments in my mind, even though one could argue its competition for us. We actually welcome it because what it means is the industry is growing, and as liquidity increases, it makes it easier for new market participants to enter because the costs of participating in this market go down. So an example would be if you are buying a house and let’s say you’re buying a house in the country where there’s a very high tax. You’re probably going to buy that one house and then you can’t sell it or you’re not going to trade up. So you have to be a little more careful because the cost of moving in and out of that house is so expensive; the transaction cost. In crypto, as the transaction cost comes down, it makes it easier for people to participate. So it’ll give rise to more participants entering and just allow the industry to grow. And so that’s a natural development. If you look at tradition markets whether it’s bonds or stocks or FX, the largest market makers are the global investment banks, and they all do business with each other anyways. So yeah, I just look at it and say “Well, this this is probably what is supposed to happen and it’s a natural evolution.” Now like I mentioned, there are different kinds of desks. So obviously we come in from an institutional background as a big trading firm, guys like myself come from trading backgrounds at Cumberland. So we’re probably a little bit different than other folks, we do take principal risks, we sit on positions, we’ll take a view on the market and then we’ll trade different types of strategies to generate profits. Some of the OTT desks out there and probably a large majority of them are what they call Agency Desk. An Agency Desk is effectively a broker; they don’t want to sit on the risk, and so when they have someone inquire about an order, let’s say you know, Bob comes to them the Bob said “Hi, where can I sell 100 bitcoins?” The agency desk will immediately go to another desk and ask them where can they sell, in the hopes that they could just take a markup or what they call a spread. And so there’s definitely been some of these desks popping up as of late, and they do exist as well in traditional markets. But as the spreads come down, it makes it very competitive and I would imagine more difficult for the agency desks to generate profit. But yeah, that’s kind of how the breakdown of the OTC landscape is at the moment. 

Joyce Yang 

It’s kind of increasing [Inaudible28:06].

Justin Chow

Yeah, it’s just going to continue getting more competitive. And you know, the bigger desks are just going to have to evolve and provide great service, another value added service is to make sure that they can service their counterparties properly. And so yeah I mean, I think in general I’m not surprised at all because this is exactly what happens in any traditional market. 

Joyce Yang 

And I’m curious, do you see a lot of activities with the IEOs? Given that you’re based out of Singapore majority of the time, that’s been kind of the hot thing in Asia. I didn’t realize how hot it was until one contact told me how some exchanges are making hundreds of millions of dollars just issuing their own IEOs of their own platforms.

Justin Chow

Yeah, the IEO market is pretty interesting. It’s almost like ICOs 2.0 and rebirths. And so I think the folks that sort of started out in this new venture are very creative. It just shows again, this sort of the creativity of the industry and the desire for it to develop new ways for people to participate and enjoy sort of the volatility and the excitement of a new capital market. So definitely in Asia, the talk is IEOs and STOs actually. STOs I think are something that is a very interesting topic, we are not actively involved in that space in the moment, sort of watching the sidelines and see how it develops. Obviously the bar for us to be involved in a new area of the industry is a little bit higher because we’re a bigger company and possibly not as nimble. But I think the IEO space is definitely something in Asia that has garnered a lot of attention. And I think what it has done is its sort of made, its provided the retail participants something to be excited about, something to look at every day and focus on. I don’t know too much about it and it’s not our primary strategy, of participating in IEOs, but definitely it’s kind of funny because it’s just like ICO moved on into the next form which are IEOs. So sometimes when I read about them, when I see what’s going on and all the commentary online, I kind of just chuckle to myself. Yeah, I just think again you know, what it shows is the market, the industry is trying to find its final form, and they’re all these know intermediary steps between where people are creative and they find new ways of replicating a model, and then of course you know, I’m sure IEO’s may die down at some time and then something else will come up again. So it just makes it fun because this industry especially on days like today, there’s just nothing to be bored about. 

Joyce Yang 

All right, for sure. So do you think that’s going to drive a kind of essentially the next mini or potentially a long and sustainable one? And kind of following up with that, I think people in a U.S. especially, we’ve been focusing a lot on Binance. In every pricing blog that people are writing and speculating on Binance and the success of their Binance chain and their ERC 20 cover of their Binance token. Would you think that’s also going to help improve the market conditions in Asia and the rest of the markets?

Justin Chow

Yeah I mean, I think the industry needs someone to be sort of an industry leader, to sort of show what hard work, determination and the right attitude can be. Having the team over there has really done a great job of growing that business which is not even 2 years old really.

Joyce Yang 

Binance right?

Justin Chow

Yeah. And [Name missed 00:31:39] himself is a very driven hardworking guy. He’s very methodical about his approach, he handles people well, he’s got good EQ. And it kind of shows that in order to grow a company, it’s more than just a vision, it’s also leadership. And I think that’s probably one of the differentiating factors from that company versus other players in the industry right now, that they look to the leader of the firm waiting for the vision but he also inspires the employees to work hard which I think is sort of what we try to create as well. And they’ve done it in a more visible fashion where the world can actually sort of see them, they’re active on Twitter, they’re active online and on social media, and they’re continually rolling out new products and moving so fast and you know. Together, it’s the combination of good leadership combined with quality employees that work hard. So it’s good to see something like that in the industry. And obviously there are other good players as well that are doing great things, and I think as time goes on, you’re going to get more firms that focus on sort of the longer-term view of how to develop their business in this ecosystem, and you’re going to get a reduction in the number of players who are just looking to make quick money from being involved in the space. So that’s something that I certainly look forward to as well. So it’s more fun to view with people that are really committed to the industry’s development. 

Joyce Yang 

For sure. It felt like after Q1, at least in China, I’m sensing a little bit of more risk on mode coming from the markets and the regulators. I wonder if you think also that could be a potential driver for the markets, and sort of crypto markets specifically, and kind your thoughts on the macro outlook in the next few months?

Justin Chow

Yeah, that’s a good question. So I actually look at Asian and break it down in different regions. In Singapore where we are, the government has spoken up quite a bit about the industry, trying to show support for the crypto assets industry, coming out with pending regulations. The MAS which is the central bank has made comments multiple times about the industry and showing that they’re willing to spend the time to understand it. They meet with players as well which is writing quite exciting. And then you go to places like Japan which is one of the only regions, I think pretty much one of the only real regions in the world that has regulations in the crypto space. The have a virtual currency exchange license, there are a number of exchanges, somewhere between 16-20 now, that actually have a license to be in the industry and they’re formally regulated by the JFSA. Then over in Korea where the regulators are taking a step back because of what happened in the end of 2017, but are still actively engaged and trying to learn quickly and support in the industry there, and you see some large corporates kind of coming out of Korea and moving into the crypto space as well. And then to China, it’s a little bit more opaque to me at the moment. That’s an area that we try to understand but it is difficult, they hold their cards close to their chest. But I think that the crypto industry and blockchain let’s say, does make a lot of sense for the Chinese economy as well. So I wouldn’t be surprised if they are also very actively engaged with some of the biggest players in their local industry and learning about it and sort of planning and understanding better how they can be supportive. And so I think that’s general overall feeble what I see that a year and a half ago, end of 2017 and the first quarter of 2018, there was a slew of sort of negative views from regulators clamping down on the industry. And then now you’re getting the opposite; you’re getting a slew of news about regulators trying to partner I guess you could say with the industry and to better understand what is going on. And I suppose the next stage from then would be sometime down the road, a slew of news where regulators are putting out regulations and there’s more positive news about them trying to help the industry grow. And so again, that’s sort of the natural progression of how everything evolves, is that something gets queued out of line, the regulators have to come in and protect its citizens which they’ve done, and then they spend the time to understand and figure out how they can help us be legitimate and safe, and then they execute that. And so I think we’re somewhere between the understanding phase and the executing the strategy phase right now, which is why we still remain quite positive in the outlook of the industry over the long term. 

Joyce Yang 

Got it. And when you mentioned that the regulars are partnering with the industry, is that something that you’re seeing recently? I would love to learn more about that. 

Justin Chow

Yeah, I say in the last sort of like 5 months in the end of 2018, you started seeing that certain regulators were open to speaking with people from within the crypto industry and learning about what they’re doing.

Joyce Yang 

I see.

Justin Chow

So that was the understanding phase, they kind of a started understanding phase in the last summer into the end of the year and still continuing now. And so at this point after about call it 6 months, 9 months, they probably have a decent understanding of what’s going on and they are developing their plans to figure out how they can help the industries thrive within their local economies. That’s why I kind of believe we’re somewhere in that middle ground now, and in the next sort of like 3-12 months could be quite exciting.

Joyce Yang 

Yeah, definitely. If you had to rank the regulators attitude towards crypto from the most friendly to the least friendly in Asia, how would kind of line up with the countries?

Justin Chow

That’s a good question. Yeah, I’d say probably Japan has been making moves, making the most progress in terms of sort of helping the industry grow as I put them at Number 1. Again, they have the actual license and regulations in place already. I think Singapore feels to me like it’s at a Number 2 stage where it’s powering along as well, trying to understand what’s happening. 

Joyce Yang 

And that’s kind of where Binance in kind of being their sandbox. 

Justin Chow

Right. Yeah, that is a good point. They receive funding from an investment arm of the Singaporean government as well, so that was exciting. And then I think I’d say Korea is somewhere the middle ground where they’ve turned the corner, but they’re not really so far ahead that something, some news is coming in a near-term, but they’ve definitely shown signs to want to better understand and work with the industry. Then the one I don’t really have a strong handle on right now is China. So they could be somewhere in that mix, but it’s not entirely clear.

Joyce Yang 

What about Hong Kong?

Justin Chow

Sorry, yeah you mentioned. I forgot about Hong Kong. Yeah, Hong Kong I think it’s somewhere close around Singapore. They’re making open comments. Yeah, the SSE made open comments and they’re trying to create a sandbox for participants to be able to operate, they’re making sort of headway, they’re making some progress in helping fund managers be license to be you know, sort of I guess you could say “license as a manager of crypto.” So yeah, they’re definitely making some moves as well although Singapore is approaching it from a bit of a different angle. 

Joyce Yang  

So it sounds like everyone’s kind of ahead of the US. 

Justin Chow 

Well, U.S. is starting to pick up too and that’s one of the things that I’ve learned from my trip here. That the type of team is that you know, the regulators are also paying a decent amount of attention on what’s going on. Again, it’s also very positive in the long term because any time someone’s paying attention, even if there’s negative news initially, it’s generally positive in the long term. So it’s good stuff. 

Joyce Yang 

Oh, that’s great. Yeah, I was looking a little bit facetious there because I’m basically U.S, but every time I go to Asia it’s like if you just step out of Singapore and go next door to Thailand, you go to Indonesia, even there are so many interesting things happening. So it always feels like there’s a lot of stuff when you combine all that together, and all that activities happening, you won some landmass over the region. So was there anything else you think that our audience should know about? Anything that Cumberland is working on, that our folks could learn more about and…? 

Justin Chow

Yeah I mean, I think one of the things that people talk about when they talk about crypto is they’ll focus on what has happened in the past or where we might be right now. The interesting part about crypto for me is always about what is coming in the future. And so the biggest most exciting part of crypto’s future in the near term that I’m looking forward to is really sort of seeing the established companies enter the space and effectively create their own tokens. And before you know it, you will actually have exposure to crypto via the app on your phone; that company’s app. And that’s very very different than what we saw last year in 2017 as well where it was the ICO craze, new ideas, new projects, white papers, fundraising. That’s a very very different kind of use case and evolution in crypto’s lifecycle than what is coming next. I think what we’re going to see next again are these large companies with established user bases you know, some with 10, 20, 50 hundred million active users entering the space. And before we know it, a lot of people around the world will suddenly be exposed to crypto without there even going out there and you know signing up for an account in exchange etc. So how crypto evolves and how we get exposure to it is going to change, and I think for those out there who are keen on understanding what the next development is, this is one area they can pay attention to. So look forward to seeing those developments and then having some of my friends who think I’m crazy for moving into crypto, let me realize that they’re involved now too.

Joyce Yang 

And you’re referring to Asia as well as kind of North America.

Justin Chow

Well, I actually think yeah most of its coming out of Asia right now at this moment.

Joyce Yang 

Oh wow! Can you name some interesting projects or companies that our folks could be looking into?

Justin Chow

Yeah, well I mean look the more recently some of them have been in the news anyway. So I’m happy to comment on what’s public, but you’ve seen some sort of news headlines from companies like Rakuten recently who’s announced that they’re moving into the space, they’ve got a ton of active users. Some of these Asian specific apps as well have been in the news lately talking about their entrance space. So I think those are the kind of names I’ve been referring to.

Joyce Yang 

Oh great. That’s really really helpful. And yeah, for consensus coming out in 2 weeks, I am interviewing the head of Kakao’s blockchain group [Inaudible 00:42:31] and it sounds like they’re also doing some interesting stuff there. So we will be….

Justin Chow

That’s just another name exactly.

Joyce Yang 

Yeah, definitely. Those folks are kind of chugging along, I’m looking forward to what they’ll be kind of sharing with our audience or probably not as exposed to that side of the region. 

Justin Chow

My last comment is you know, when we think about these large players coming in, it’s not just about the idea that it’s exciting that a big player is involved, but it’s also the industry responding to the needs of these large players. So these are not crypto related companies, they are companies that are going to be using blockchain and crypto within their existing business. And what they look for is they have specific demand they need that the industry will have to meet, and that may require the industry to also evolve and bring in more talent and people that understand how to cater for these needs and build solutions within the crypto industry for these types of companies. That that may be anything from reduced reputational risk where these companies say they want to deal with you know guys they are familiar with or they might say that we need specific technological needs, so we need you to build API’s with this type of background etc. So what it does is it challenges the industry and it forces its evolution to accelerate, and that’s why it’s so important when these big players come in. It’s not just about the adoption of crypto now, it’s about speeding up the evolution of the industry to become more mature more quickly, and so that’s the part that really excites me.

Joyce Yang 

Yeah, that’s wonderful. Thank you so much for your insights Justin. We really appreciate it and I think our audience really appreciate your thoughts on the crypto markets globally as well. 

Justin Chow

Right. Well, thank you very much for having me Joyce. It is a pleasure. 

Joyce Yang 

Thank you. Where can our audience find you if they were to, or want to learn more about you and hear more about what you have to say about the markets. 

Justin Chow

Yeah. Well, they can certainly head over to our website at [www.cumberland.io]. They can shoot us an email there, it goes to my team and someone will pick it up, they can request to talk to me as well and I’ll try my best to get back to them. I’m pretty responsive on other values, through social media. So yeah, I’m happy to sort of talk to folks or anybody that wants to learn about what we’re doing or how they can get involved in this space. And so I would say as much as we are looking for new business partners, we’re also looking for folks to educate and sort of bring up the speed on how this space is going to be important in our future.

Joyce Yang 

Thanks so much Justin.

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