Fusang Exchange, Asia's first fully licenced securities exchange focused on digital assets recently obtained its Securities Exchange approval in Labuan IBFC, Malaysia. Licensed under Part IX, Section 134 of the Labuan Financial Services and Securities Act 2010, Fusang plans to launch in the latter half of 2019, offering a platform for the primary listing of digital securities, listing of alternative assets and secondary-market trading of security tokens and cryptocurrencies.
(1) Fusang had its origins from providing family office investment services. What led Fusang to pivot into the Fintech space and how does this move change the focus on wealth/asset management?
Fusang began our journey into fintech two years ago as we began exploring the digital asset economy. We found a lack of institutional infrastructure that could support regulated firms such as ourselves. There were no institutional brokers, banks, fund administrators, etc. Eventually we decided to begin building that institutional infrastructure ourselves. As our projects have grown considerably in size and scope, and in particular the Fusang Exchange, we decided to internally restructure. Going forward, the Portcullis Group will continue to focus on serving families and institutions in the traditional asset space, while the Fusang Group will focus on building financial infrastructure for the digital asset economy.
(2) What are the challenges in developing a financial infrastructure/platform focused on digital assets?
We have 35 years' experience in servicing traditional assets, and leverage off that experience in understanding how to build infrastructure for digital assets. The main difference is the radical change in technological platforms. For example, instead of having paper share certificates, we will record digital shares on a blockchain.
Furthermore, blockchain-based digital assets function for example securing access to those assets through their associated private keys is paramount. That is why, in addition to the Fusang Exchange, we have built the Fusang Vault as a custodial and asset servicing platform to enable institutional investors to access the digital asset economy in a way that is secure, convenient, and compliant.
(3) How has Fusang addressed such challenges or is planning to address such challenges?
By combining technical expertise of Fusang and Portcullis's history in wealth management, company administration, trust administration and setting up structures for family institutions, the challenges from both ends can be met. We are fortunate to be working with some of the most experienced professionals in financial technology. Our team and partners have built and managed infrastructure for some of the largest banks and companies in the world. In many ways we think that running high-availability and mission-critical infrastructure requires a unique skillset, that we marry with our deep experience running licensed and regulated institutions.
(4) What were the main considerations in choosing Labuan IBFC as Fusang's base as a Securities Exchange?
Our group has been operating in Labuan IBFC since 1993. We have long believed that Labuan IBFC occupies a unique position as Asia Pacific's Midshore International Business and Financial Centre. Especially with the new global economic substance rules, we think that the domicile has an opportunity to ride this fintech wave and help build the future of finance. The most important thing for investors and issuers is a stable regulatory and legal framework, combined with a pro-business environment.
(5) What do you foresee will be on the landscape for digital assets and how should businesses gear up to claim their space in this area?
We believe that in the coming years, all assets will become digital assets. Everything in the world is becoming digitised, and finance will be no exception. It's strange that in today's world it can be quicker to physically fly paper contracts and securities across the world, instead of waiting T+2 days for stock settlements to take place.
(6) If you had one wish for the Asian fintech space, what would that be?
We are living in the Asian Century. The engine of world growth is shifting East. We at Fusang look forward to enabling the growing digital asset economy as we help build the future of finance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
