BlockEx , Joseph Tsou

From Utopian Ideas to Multi-million Investments

Blockchain came into the world in time of the “perfect storm”. The crisis of 2007-2008 have shown just how inefficient current procedures and processes are and as a consequence, how vulnerable are all the participants of the capital markets, from institutions to end users. The post crisis years were doomed to be game-changing, both in the technical and moral levels. Like every great invention and innovation in human history, Blockchain came out of the desperate need to change, to update and to rethink the way things currently work. However, as with all things new, it took some time for one and only use case of Blockchain at that time, Bitcoin, to pick up and make it to the wide audience, yet again not without some negative events. The point is simple, the more one uses something, a technology in our case, the more attraction, experience and excellence it gets.

In Europe, Blockchain picked up via cyber and crypto communities, who were interested in exploring the technology and other potential use cases of the framework behind Bitcoin – a cryptocurrency everyone was into at that time. Slowly, people with technical knowledge began to crack the potential, and ones with more adventurist sense and entrepreneurial skills started to question businesses “what if we use it elsewhere?” Consequently, by combining their technical knowledge and experience with business, same people began to take ideas to the reality, by developing products of other use cases of Blockchain. Now most of them are C-level officers in various Blockchain startups, working on bringing to reality utopian ideas of early Blockchain hype and harvesting multi-mullion investments with fintech, insurtech and regtech products.

Beyond POC or Turning Hype into Regulated Products

Fast pace development of Blockchain in Europe was inevitable, hence there is a large community of people with various backgrounds and skill sets, all contributing towards one goal – make the most use of the technology, doubted by some a next industrial revolution. Notably active Blockchain scene have been seen in Berlin, Barcelona, Poland and Scandinavian Countries. However, by far the largest European contributor in this sphere is the UK. Perhaps the largest amount of Blockchain focused events are happening in the UK. Quite a few high profile entrepreneurs and politicians in the UK are showing their public support towards the technology and further steps into adopting it into wider use. Mark Carney, Governor of the Bank of England is known for many positive quotes on Blockchain and its use in Central Banks, once said: “The great promise of distributed ledgers for central banks is their potential to enhance resilience. Distributing the ledger means multiple copies of the system. It can continue to operate if parts get knocked out. That removes the single point of failure risk inherent in a centralised system." So it comes with no surprise, that with the world’s largest financial services sector and a booming tech sector, London, been a capital of the UK is in the centre of all the Blockchain news. In fact it is undoubtedly the capital for many of fintech startups in Europe, combining the key ingredients for success: capital, talent, regulatory and government support and demographic diversity.

YoY investment in fintech startups, part of which are working on Blockchain technology, shown a constant rise. Investment in fintech companies around the world have rocketed by 106%, reaching 13.8 billion USD over 653 deals（Pulse of Fintech report, KPMG and CB Insights）. Meanwhile London alone accounted for 743.7 million USD through 50 deals. This is a solid indicator in support of above mentioned statement of London been the capital of startups. So what is so great about UK and London in particular, that attracts so much attention of young and talented entrepreneurs and mature investors?

Historically London is known for been a financial centre of Europe and over centuries became a symbol of trust, high regulation and innovation in financial sphere. Not only one have an access to the wide range of capital opportunities, from various seed camps and accelerator programs, to a high-class investment banks, London also is a very versatile in terms of population. Being the largest city in Europe, London benefits from a huge talent base with a very diverse international community of many university campuses.

The regulatory and government support needs to be mentioned in detail, as this is one of the key factors for the new and yet developing technology to be used more widely, securing the wellbeing of end users. It is also a huge benefit in front of investors. The strength of London’s policy environment is coming from the supportiveness and accessibility of Financial Conduct Authority（FCA）. Recent initiatives have allowed businesses to test out financial products and services in a proposed environment that is exempt from standard regulations. Notably, the FCA launched the regulatory sandbox, which is designed to foster fintech innovation while remaining under the supervision of the UK’s financial regulator.

Currently FCA launched the tender for the second batch of companies to be included in sandbox. The first batch was unveiled in November 2015 and consisted of 18 fintech companies. Among them were: Billon, Otonomos, Nivaura, Epiphyte, Govcoin, SETL and BitX all applying Blockchain technology to various areas in financial services.

FCA Sandbox Participants

Billon is an e-money platform based on Blockchain technology that facilitates the secure transfer and holding of funds using a mobile app. BitX and Epiphyte provide cross-border money transfer services powered by Blockchain technology. Govcoin, a technology provider that has partnered with the Department of Work and Pensions, is exploring the feasibility of making mobile emergency payments using Blockchain technology. Otonomos offers a platform that represents private companies’ shares electronically on the Blockchain, enabling them to manage shareholdings, conduct book building online and facilitate transfers. And Nivaura uses automation and Blockchain for issuance and lifecycle management of private placement securities. SETL provides a smart-card enabled retail payment system based on its OpenCSD distributed ledger technology. The company has recently raised 39.5 million USD from angel investors, according to Bloomberg. SETL is perhaps the furthest company in terms of “field manoeuvres” having, not long ago, successfully tested a new contactless payment card that enables retail payments to be processed and settled almost instantly by using Blockchain technology. This was done in conglomerate with Deloitte and Metro Bank. The card is expected to go into commercial product by the end of 2017. “London is a financial centre for fintech, and regulators get enormous credit for that,” Peter Randall, CEO at SETL, told Bloomberg.

What is Next for Europe and UK?

This month saw a long-awaited milestone in European Blockchain scene and it just might become another kick start factor for the further development. The European Securities and Markets Authority（ESMA）released a report on Distributed Ledger Technology Applied to Securities Markets building on the discussion paper released last year in June, and it says that distributed technology could bring huge cost efficiency savings “notably, more efficient post-trade services, enhanced reporting and data management capabilities”. ESMA, who provides supervision over Europe capital and financial markets and infrastructure foresees DLT in other words Blockchain technology having profound effect on CCPs and CSDs. The main highlights of the report where with regards to:

- Ownership records of securities, smart contracts and automation i.e who is entitled to the coupon payments, corporate actions and any call or put options.
- Single step reconciliation meaning, clearing and settlement can be almost instantaneous.
- ESMA also brought to light that the consolidation of data across multiple asset classes, would allow for better transaction reporting and risk management strategies. This would tie into better KYC procedures and AML procedures as you can store information on one ‘golden’ entry of information on your customer.

With all of that said, it is clear that the further development of use cases of Blockchain is absolutely inevitable. Amount of startups in sphere will grow, adding more competition, meaning more aggressive business development and faster delivery timeframes. By far the most uses of Blockchain are found in capital markets, however it’s quite obvious that next year will see much more ways of adopting technology in other spheres, like identity verification（KYC）, insurance and re-insurance, mortgages, public records（copyrights of music and art, registry and licence entries）and others. And who knows, perhaps there are still many use cases which are yet to be discovered – after all Blockchain technology is not at the level Internet was in 1995. So keep your interest and faith in technology and watch it evolve in something perfect!

Bio.

With both Citi & KPMG Advisory experiences, Joseph has immense knowledge within the Financial Services as well as FinTech industry, which drives him to promote and facilitate collaboration between FIs and FinTech startups. Holds a BSc and MSc from Imperial College London.

從烏托邦理想技術乃至數百萬美元之投資

區塊鏈這個技術在「完美風暴」的時間點進入了資本市場的世界。 2007～2008年的金融危機再再證明了目前資本市場的程序和流程效率不佳，舉凡各類機構乃至於終端用戶都在此次的金融危機中親自體驗到資本市場的脆弱。通常危機過後註定有改變現有遊戲規則的技術和道德層面之重大改革，像人類歷史上的每一個偉大的發明和創新一樣，區塊鏈恰恰提供了資本市場所需要之改革，包括大幅更新和重新思考目前資本市場的流程。然而，和所有新的東西一樣，它需要一些時間，包括大家最耳熟能詳的區塊鏈使用案例「比特幣」，也是花了將近4年的時間才進入主流市場，其中也不乏一些負面事件。重點其實很簡單，越多人使用東西或是技術（區塊鏈），就越能造就市場吸引力、經驗和技術的持續進化。

在歐洲，由於比特幣漸漸被主流市場所注意，眾多網路安全和加密貨幣社群裡的參與者，開始發掘出比特幣背後的技術和其他還沒被發現的潛在用例，我們也可以說，區塊鏈是靠這些社群參與者所發揚光大的。慢慢地，具有技術背景的使用者們逐漸發現區塊鏈的無盡潛力，也導致某些深具冒險精神的創業家開始質疑「要是我們能在其他地方使用區塊鏈呢？」因此，通過技術和市場經驗的結合，這些創業家們開始實際開發使用區塊鏈的其餘應用，包括實際產品化的區塊鏈商品。現在大多數位於區塊鏈新創公司的管理人，正致力於實現早期區塊鏈透過市場炒作所獲取的多項金融投資的諾言，將「區塊鏈」這個烏托邦理想技術慢慢引領為與現實金融科技、保險科技和監管科技的結合。

如何將概念性產品(POC)與市場期待轉變成受監管的產品

由於比特幣的成功，區塊鏈在歐洲快速發展起來，並在該地蓬勃的新創生態圈召集了來自於各方且包含不同背景和專業技能的產業先驅，都為了一個偉大的目標而奉獻—最大限度的利用區塊鏈技術。雖然在柏林、巴塞隆納、波蘭和東歐等地都能看到活躍發展的區塊鏈產業，然而，到目前為止這個領域在歐洲最大的貢獻者無疑是英國倫敦，其中大部分跟區塊鏈有關的重大事件都發生在當地。英國也不乏知名的企業家和政客在公開場合中展示他們對區塊鏈這項技術的支持，並協助建立起法規與確保資金的流通，以順利廣泛應用區塊鏈。英國央行行長馬克•卡尼（Mark Carney）就對區塊鏈下了許多正面評價且極力推行區塊鏈在英國中央銀行內使用，他曾經說過：「中央銀行使用分散式帳本的最大優勢是區塊鏈所額外提供的安全性，分散式帳本的特性為將系統內容分散於不同的節點中，而非傳統只存於單點，如果一個節點被攻擊，它還可以保有持續運作的能力。」因此，區塊鏈產業毫無懸念的在世界上最大的金融服務和科技新創中心之一的倫敦蓬勃發展，倫敦幾乎是區塊鏈新聞的重心。事實上，倫敦的巨大成功無疑已經成為歐洲地區其他金融科技新創公司的樣本，歸納起來倫敦之所以能成功的主要關鍵因素為：資本、人才、監管和政府支持以及人口多樣性。

金融科技新創的投資金額這幾年呈現一路增長的趨勢，其中也不乏許多區塊鏈的新創。去年整年全球金融科技新創的投資增長了106％，達到138億美元，超過653筆交易 （Pulse of FinTech, KPMG & CB Insight）。其中，倫敦就包含了50筆交易與達到7,437萬美元的募資金額，這是一個相當強健的指標，表示倫敦是歐洲金融科技新創公司的重鎮。那麼，究竟英國和倫敦是如何吸引這麼多年輕和有才華的創業家以及成熟投資者的目光？

倫敦一直以來被譽為歐洲的金融中心，幾個世紀以來漸漸成為被信任、受監管和金融創新的象徵。在這裡，任何新創有許多機會獲取資金，從各類種子和加速器計畫，到傳統的投資銀行與私募基金，倫敦也擁有為數眾多的人才，作為歐洲最大的城市，倫敦最大的優勢為擁有世界知名的大學與多元化且包容的國際化社群，讓新創公司可以更順利的招募人才。

英國政府對區塊鏈的監管和支持是此領域可以順利發展的另一項重要因素，任何嶄新／未被大量開發的技術要被廣泛地使用前，最需要政府的監管以確保終端用戶的安全。政府的態度也在投資者間形成一個巨大的優勢。倫敦金融法規／政策的制定來自於金融行為監管局（FCA），當該機構付出了相當多的心力在扶植與提供簡便的提問管道給新創公司時，就成為該領域成長最主要的助力而非阻力。近期最值得注意的是，FCA推出了監管沙盒，旨在促進金融科技發展創新的技術並同時能夠確保所有金融相關領域維持在監管機構的監督之下。

目前FCA正在審理即將納入監管沙盒的第二批公司名單，第一批名單已於2015年11月公布，由18家金融科技公司組成。其中包括：Billon、Otonomos、Nivaura、Epiphyte、Govcoin、SETL和BitX，都將區塊鏈技術應用於金融服務領域。

FCA監管沙盒成員介紹

Billon是一個使用區塊鏈技術的虛擬貨幣平台，利用手機APP來達成資金的安全轉移和持有。BitX和Epiphyte提供由區塊鏈技術為架構的跨境匯款服務。Govcoin是一家和英國政府退休金部門合作的技術提供商，正在探索使用區塊鏈技術於APP上提供緊急資金的可行性。Otonomos提供了一個在區塊鏈上以數位方式發行私人公司股票的平台，使用者可以更方便的管理股權，並直接在線上分配股權與發放現金股利……等。Nivaura則利用區塊鏈來自動化管理私募有價證劵的產品生命週期。SETL基於其OpenCSD分散式帳本技術提供了可以讀取Smart IC卡的零售支付系統。據彭博社報導，該公司最近從天使投資者那裡募集了3,950萬美元。SETL也可能是離「區塊鏈商品化」最近的公司。不久之前，它才成功的測試了一種新的感應式銀行卡，通過使用區塊鏈技術，即時處理和結算各種於零售商端使用該卡的支付，該卡預計於2017年年底前上市。SETL首席執行官Peter Randall也於彭博社訪問時如此形容英國的金融科技圈：「倫敦能夠成為金融科技創新的中心之一，當地監管機構功不可沒。 」

歐洲與英國的下一步？

這個月歐洲的區塊鏈生態圈又達成了一個期待已久的里程碑，該事件很可能成為區塊鏈進一步發展的重要因素之一。歐洲證券和市場管理局（ESMA）在去年6月發布的討論文件上發布了一份關於應用於證券市場的分散式帳本技術的報告，並指出分散式帳本技術可以「將資本市場中交易後處理與結算服務帶來巨大的成本節省效率，並進一步加強報表和數據管理能力」。負責監管歐洲資本和金融市場以及基礎設施的EMSA機構如此大膽的預測分散式帳本（也就是區塊鏈技術）對CCP和CSD產生深遠影響。該報告的主要亮點是：

—自動化任何證券、智能合約之所有權記錄；即決定誰有權獲得現金股利發放，企業的任何募資行動與看漲或看跌期權交易。
—極簡化的對帳流程，呈現幾乎即時的清算與結算流程。

ESMA還指出，如果將不同資產類別的數據允以合併將可以提供更好的交易明細管理報表和風險管理。因為您將會有一個不可被竄改的數據資料庫，其中並包含所有客戶的歷史交易資料與付款細節，這些資料並能讓不同的金融機構共用以提供更完善的KYC和AML程序。

透過上述的一切可以很明顯的發現，區塊鏈這個技術的進一步發展是絕對不可避免的。此領域的新創公司數量將增加，雖然會有更多的競爭，但也意味著這個市場將有更快速的業務發展和更短的產品週期。到目前為止，區塊鏈大多數的用途都跟資本市場脫離不了關係，不過可以預見的是，今年將會有更多的區塊鏈應用案例出現在其他領域中，包括身份驗證（KYC）、保險和再保險、抵押貸款、公共記錄（包括音樂和藝術的版權、土地所有權和使用權）…等。又或許還有更多應用案例還沒有被發現—畢竟區塊鏈好比30年前的網路，所以保持你對這個領域的興趣和信念，區塊鏈的發展將漸趨完美！