Blockchain Asset Review’s chief content officer Tsering Namgyal spoke to Lucy Gazmararian, founder and managing director of Token Bay Capital in all aspects of cryptocurrencies and crypto-investing.
Q. What does Token Bay Capital do? Please introduce your company to us?
A: Token Bay Capital is an early-stage venture fund based in Hong Kong that invests in digital assets and blockchain companies with a focus on Asia Pacific. The fund provides institutions, family offices and high net worth individuals with the opportunity to gain direct exposure to this new asset class right at the start of a multi decade cycle. With deep knowledge and an extensive network in both digital assets and traditional finance industries, Token Bay is providing investors with an institutional investment gateway to the digital assets universe and new token economy. The Fund is regulated by the Securities and Futures Commission of Hong Kong and operates under a Type 9 asset management licence.
Q. As we enter the Web3 world, what are some of the most exciting areas that you are working on in Metaverse, NFTs, GameFis, Daos and others?
A: The fund’s investment universe covers five key verticals; Infrastructure, Financial Services, DeFi, Metaverse & NFTs and Social Media & e-Commerce and so provides investors with ‘all-in-one’ Web3 exposure across both token and equity investments. The buildout of our new blockchain-based token economy is still in its very early stages and we are seeing enormous numbers of high potential start-ups innovate right across the board, launching new products and services that are changing business models and creating new revenue streams.
Q. Which areas are you interested in investing in? Please introduce to us, if you have, some of your investee companies?
A: I wouldn’t want to pick out any particular investee companies, as we only back outstanding founders that are building businesses with a distinct edge, but for those that are interested we do have a selection of companies that we’ve invested in listed on our website at https://tokenbaycapital.com/portfolio/
Q. What do you think of stablecoins and settlement coins? Are you looking at them? What are some of the opportunities and challenges in this area?
A: Stablecoins are an essential part of the plumbing of our new token economy as they are tokens with a stable price as they are backed by real world assets, most commonly 1:1 with USD. As the crypto ecosystem and decentralised finance grows exponentially, the demand for dollar backed tokens is also skyrocketing and existing stable coin issuers can’t mint them fast enough. Currently they account for approximately USD 180 billion in total supply which is just over 10% of crypto’s total market cap. Most businesses can’t make payments and run their business using cryptocurrencies due to their volatility, so stablecoins provide a solution as they can operate on blockchain based infrastructure and integrate into Web3 products and services, while at the same time keeping the price anchored.
As most stablecoins are backed by the USD, regulators around the world are turning their attention to this burgeoning market and looking to regulate them as they need to ensure that consumers are protected. For example, if consumers wish to cash out their stable coins for fiat money, there need to be safeguards in place to ensure that stablecoin issuers are able to facilitate these redemptions. As we enter a world of increasingly decentralised financial markets, regulators also need to monitor the money supply and protect against any systemic risks building up. For example, there are instances where certain stable coin issuers have been accused of not having sufficient reserves of USD to back the number of stable coins they have minted and which are priced 1:1 with USD. This essentially means they these stable coin issuers are taking on a type of banking type role by implementing a de facto fractional reserve banking system. As a result, we are seeing stablecoin issuers, such as Circle in the US, looking to obtain a full banking licence and regulators around the world, for example in the UK and in Hong Kong, are starting to clamp down and explore what type of regulatory framework would be most suitable for stablecoin issuers.
Q: What are some of the great use cases of blockchain?
A: We are at a turning point in our history as new digital products and services are rapidly being created for our digital economy. The applications and use cases for digital assets and blockchain are wide-ranging and can be viewed through Token Bay’s five key digital asset verticals:
1) Infrastructure
2) Financial Services
3) Decentralised Finance (DeFi)
4) Metaverse & Non-Fungible Tokens (NFTs)
5) Social Media & e-Commerce
While bitcoin brought crypto and blockchain to the world, the ecosystem has exploded since 2008 and there are many other ways for individuals, corporations and governments to engage with the digital assets ecosystem. A new token economy is being created on the internet and anything of value can now be transferred securely around the world, peer to peer. Entrepreneurs are building modern digital infrastructure which will support the issuance, trading and safekeeping of digital assets. The digital assets universe is wide-ranging and encompasses digital currencies, digital financial securities and a variety of digital goods and services. Blockchain is fast becoming the foundation upon which our economic and social lives will seamlessly operate and it is transparent, secure and efficient. The future is digital, instant, global and frictionless and we are currently transitioning from the early adoption stage into the mainstream.
