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A former Singapore regulator reflects on the world of virtual assets

Ep #55 with Angela Ang (TRM Labs)

Angela Ang is TRM Labs’ senior policy advisor in Singapore. TRM Labs is a world renowned blockchain intelligence company. She is also a former regulator, having spent over a decade at the Monetary Authority of Singapore (MAS) where she was most recently its deputy director in charge of licensing for payments and crypto service providers. Angela has also been recognized as a LinkedIn Top Voice for Finance in Asia for her thought leadership on digital asset developments in the region.

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In this episode of Regulatory Ramblings, she talks to host Ajay Shamdasani about growing up in Singapore, spending time in the US, her education at INSEAD and ultimately, her early days of her career in a business development capacity at the Monetary Authority of Singapore (MAS) where she promoted the Lion City as an international financial center.

Recalling her experiences as a regulator with fondness, she notes that as an MAS officer, she was privileged to see policymaking at high level up close – emphasizing that few jobs enable one to work with ministers and policymakers so early in their career. Notwithstanding the high intellectual rigor of working for a body as mission-driven as the MAS, she stresses that regulators are people, too.

The discussion then moves on to what TRM Labs does in the realm of blockchain intelligence and analytics. As Angela describes it: “Blockchain analytics is like Google maps for blockchain. We help clients make sense of public blockchain data and use to fight fraud and financial crime.”  She points out that while the immutable ledger functionality of a blockchain is invaluable, it is often not easily understood by clients, likening it to “looking at a satellite image without context.” TRM, she says, helps make sense of blockchain ledgers by layering information of entities and their risk levels to give clients a better picture.

In that regard, she sees parallels between her time at the MAS as TRM Labs also has a compliance-centric business model and is mission driven. “A lot of our staff have joined [TRM Labs] from the public sector,” Angela says, lauding the firm’s spirit of nimbleness and entrepreneurialism.

 

She also recounts her first exposure to cryptocurrencies and blockchain in 2015 when, as part of the MAS capital markets team, her boss asked to undertake a research project on the subject. Her impressions then and now are that while there is much to be said for the “promise of blockchain,” they need to be weighed against the “technology and risks of investing in crypto”; Angela recalls former MAS head Ravi Menon’s speech, paraphrasing his central policy point of Singapore saying yes to digital asset innovation, but no to cryptocurrency speculation. She said such an approach was prudent for the Lion City to adopt as “crypto will be around for the foreseeable future.”

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Discussion guide / Chapter Topics:

 

1:43  Life as a Regulator: Balancing Innovation and Rules in Singapore

6:26  A Mission-Driven Approach to Fighting Fraud and Financial Crime

13:19  Crypto’s Journey in a Traditional Financial Sector

18:14  How Singapore and Hong Kong are Leading Regulatory Clarity

21:56  Tackling Enforcement Challenges in Crypto Regulation

27:00  Bridging the Talent Gap in Crypto Compliance

30:04  Making SupTech Accessible for Non-Experts

34:44  Asia's Role in Global Crypto Crime

36:26  Evolving Responses of VASPs to Crypto Crime

42:47  Travel Rule Compliance: High Numbers, Real-World Challenges

47:00  Using Crypto to work-around sanctions: Lessons from North Korean and other Actors

53:08  Leveraging Blockchain Transparency for Asset Recovery

58:04  The Allure of Digital Currencies: Liquidity, Anonymity, and Crime

1:01:20  Building a Safer Crypto Future: Advice for Aspiring Professionals

She then shared her views on the state of regulation in Asia, stating that the region is leading the pack in terms of regulatory clarity. “There has been more movement in crypto regulation across the region, especially in financial hubs like Singapore and Hong Kong,” she says.

For example, Japan (2017) and Singapore (2020) were amongst the first countries to pioneer bespoke crypto regulation, fully realizing the failures of crypto for the investing public over the past decade, she says. “We need to regulate and think about it [crypto] differently.”

 

There has been massive movement, for example, Singapore’s rules on custody of crypto assets and expansion of licensing requirements, as well as Hong Kong’s regulation of over-the-counter crypto trading, as well as its virtual asset service provider (VASP) licensing regime this year.

 

Yet, with Asian jurisdictions at different levels of development, Angela acknowledges that even with digital assets, every Asian regulator will have their own philosophy on how to view crypto. Having said that, she is broadly optimistic about the direction of things citing the region’s general move towards greater regulatory clarity.

Citing a deep dive regional survey by TRM’s policy team, the trend across the world was overwhelmingly (80%) towards tightening regulation and more consumer protection measures. “Regulation is about control and the requirements needed to prevent illicit activity. Sufficient enforcement is there to make sure there are consequences,” Angela said, noting more levers for action against recalcitrant entities were needed. She added that responsibility also lay with the authorities who needed a deep understanding of implementation of the technology and controls regulated entities must comply with, to ensure they are meeting the requirements of the regulatory outcomes they have in mind. Which also requires having enough skilled people to conduct rigorous supervision, as needed. The conversation then turned to the perceived talent shortage in the crypto compliance space. While explaining that digital finance was different from traditional finance, she said that older principles of compliance and risk management were still appliable “but the devil is in the details,” adding: “You need good governance and disclosures; it is the same with traditional finance as with digital finance. There is overlap, but the technology of blockchain and crypto creates differences. For example, verifying ownership of a bank account is different from verifying ownership of a blockchain wallet.” The changed landscape that technology brings also gives rise to the related topics of SupTech and RegTech – a key part of what TRM does. As Angela explains, crypto compliance professionals use TRM’s tools for ongoing due diligence and transaction monitoring. Yet, regulators also use TRM’s offerings RegTech purposes – to obtain real-time information about entities’ activities on the blockchain. “As regulators build their knowledge of blockchain and crypto, we will see greater opportunities for SupTech applications offering real-time monitoring, without adding to the [compliance] burden of regulated entities. The goal of SupTech should be to make tools user friendly for non-experts such as non-cryptographers and non-asset tracers,” she said. TRM Labs’ data shows that when it comes to the percentage of crypto crimes emanating from Asia, the total amount involved US34.8 billion, but that is still just 0.63% of the global total. Angela notes that figure is comparable to traditional finance, while acknowledging that crypto is borderless and that organizations and syndicates operate across borders across and from Asia. To that end, she says VASPs have evolved to have better responses to crypto crime, citing the loss of trust in recent years. “They are winning it [trust] back. As the industry matures, with more governance and compliance, they realize their role in fighting crime,” she said, emphasizing TRM’s role in working with both the public and private sector. Angela stresses that VASPs have lower rates of crypto crimes with proper licensing and mandated risk controls than in less regulated jurisdictions. While noting that there are different degrees of risk controls, “few exchanges in the world now exist with no risk controls,” she says. “Those are high risk exchanges and conduits for bad actors moving outside regulated parameters. Most exchanges have degrees of risk control and there has been a levelling up of crypto regulation across world.” Looking ahead, she pointed to the issue of market misconduct as an evolving area in digital finance. The FinTech task force of the Madrid-based International Organization of Securities Commissions (IOSCO) Fintech Taskforce has singled it out as a priority item for crypto regulators, she says.

Regulatory Ramblings podcasts is brought to you by The University of Hong Kong - Reg/Tech Lab, HKU-SCF Fintech Academy, Asia Global Institute, and HKU-edX Professional Certificate in Fintech, with support from the HKU Faculty of Law.

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Welcome to Regulatory Ramblings, a new podcast from a team at The University of Hong Kong on the intersection of all things pertaining to finance, technology, law and regulation. Hosted by the HKU Reg/Tech Lab, HKU-Standard Chartered FinTech Academy and the HKU-edX Professional Certificate in FinTech, join us as we hear from luminaries across multiple fields and professions as they share their candid thoughts in a stress-free environment - rather than the soundbites one typically hears from the mainstream press.

Regulatory Ramblings is a forum for those that appreciate long-form conversation. While it is something that may be regarded as lost art of an older time, it is nonetheless sorely needed in an age when glibness and flippancy pass for analysis in conventional journalism.

Having said that, we are grateful to be able to avail ourselves of modern technological resources to bring you chats with people you are probably not going to hear from elsewhere.

 

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Ajay Shamdasani is a veteran writer, editor and researcher based in Hong Kong. He holds an AB in history and government from Ripon College, JD and MIPCT degrees from the University of New Hampshire Franklin Pierce Law School, and an LLM in financial regulation from the Illinois Institute of Technology’s Chicago-Kent College of Law.

His 15-year long career as a financial and legal journalist began as deputy editor of A Plus magazine – the journal of the Hong Kong Institute of Certified Public Accountants. From there, he assumed the helm of Macau Business magazine as its editor-in-chief, and later, joined Asialaw magazine as its deputy editor.   More recently, he spent close to seven years as a senior correspondent with Thomson Reuters’ subscription-based trade-wire service Regulatory Intelligence/Compliance Complete (previously called Complinet) in Hong Kong. While there, he covered regulatory developments in that city, as well as Singapore, India and South Korea.

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