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Investment Banks Focusing on Digital Assets

Expert Interview


 
Henry James, co-founder, Fincross International

Henry James

Former currency trader, analyst, and fund manager, Mr. James has 9 years of experience in investment management across foreign exchange and cryptocurrency markets. As a co-founder of Fincross International, Mr. James provides support to the strategic development of the firm in harmony with the evolving landscape of the digital asset markets and the core infrastructure that underpins these markets and connects them to the traditional financial system. Mr. James supports the firm’s business development and marketing strategy and is a vocal spokesperson for the firm.

Mr. James is a Founding Partner of Rolle Capital and formerly an Investment Manager at PE Capital with experience in systematic trading and quantitative long/short strategies in currency markets working across London, Monaco and Mumbai.

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Fincross International - Gold Member Fincross International - Gold Member

Fincross International is a regulated investment bank leveraging proprietary banking infrastructure to provide new investment products and financial services to a diverse group of clients.

Transcript


 

Adam Chapnick:

Hey everybody. It’s me again, Adam Chapnick with the Security Token Academy. We’re here in Los Angeles for CIS 2019 and we are joined by a friend of the show, Mr. Henry James, the deputy CEO of Fincross. Thank you so much for joining us.

Henry James:

Thanks for having me.

Adam Chapnick:

All right, so for everybody who hasn’t heard of Fincross yet, tell us what you are and how you came to be?

Henry James:

Sure, Fincross International is a digital asset focused investment bank. We’ve come about from two co-founders, myself included. My background’s in investment management and trading foreign exchange. So, really the entry for us came thanks to the crypto market, the volatility of the crypto market. We had the plan to launch a crypto hedge fund, and we were then identified by officials in Mauritius, the beautiful island of Mauritius, to launch an investment bank that could take full advantage of regulatory frameworks for digital assets from their jurisdiction. So, that’s where we are. The last two years we’ve been building the company together. We’ve onboarded senior leadership team based on bankers, people that are very experienced in the securities world as well. And, of course, now with the emergence of the security token market last year, this is really the key market for us to kind of penetrate our market and our target audience in the US and Asia.

Adam Chapnick:

So, you have an interesting niche because there’s not a lot of companies that portray themselves as digitally focused investment banks. How does that make what you do unique?

Henry James:

Sure. I mean, in the market today, we like companies like Galaxy Digital, Diginex, out of Hong Kong, SEBA is another one of our peers in Switzerland. These are investment banks that are focusing on digital assets. And, how we vary is we’re actually producing a lot of our own proprietary technology because we believe that an investment bank dealing with digital assets has to be able to rely on its own technologies to deliver on the trading and the liquidity, the production of liquidity, for product products in this market. So, really, we’re joining that group of great companies, like I said with a HQ in Mauritius, but our management team is currently spread across the US, the UK, and Dubai, and with a view also to launch a branch in Hong Kong later this year.

Adam Chapnick:

So, maybe a silly question, but will you be able to do deals everywhere, or do you have certain jurisdictions that you’re able to operate?

Henry James:

Well, basically our investment banking license in Mauritius doesn’t limit us to where we can do business. But, naturally in certain markets, let’s say like in the US, obviously for us to sell security tokens, we’ll have to either work with a broker dealer or acquire a broker dealer license ourselves. So, we’re in the process of doing that right now. We’re just right now activating our investment banking license in Mauritius, we received an approval for that license in November last year, and kind of from this period moving forwards, we’ll start onboarding clients for the first time.

Adam Chapnick:

Got it. Now, we’ve been talking about sort of your travels and you’ve got a really unique insight from your global focus to how people are responding, or the different appetites for security tokens in being involved in this space from different places around the world. What are you seeing in Asia, in particular, from maybe both sides of the deal?

Henry James:

Yeah, so I think that the security token market is being driven from an innovation standpoint here in the US. The Asian markets are kind of just a little bit a wait and see approach. Let’s watch the Americans do this, and then kind of catch on once we see some momentum coming out of the US. But, that said, they are still very sophisticated and understand the market well and the potential for this market. We all identify that the security token market’s going to dwarf the size of the crypto currency market. And, that sentiment is felt also in Asia where crypto is very popular and probably more popular than it is here in the states. But, we’ve spoken with multibillion dollar asset managers in Asia with mandates to buy security tokens now. I think they’re still exploring what kind of products they want to buy, but they do see it as a means to have greater and wider access to investment products in different parts of the world which otherwise, through traditional markets, would be harder to access.

Adam Chapnick:

Is there any type of assets that they have a predilection for? Are they most interested in real estate or something else?

Henry James:

Real estate is up there.

Adam Chapnick:

It’s real estate.

Henry James:

Real estate is up there. But, it’s not limited to that. We found there’s two kinds of trends that have emerged from the groups that we’ve spoken to around the world that are interested in security tokens. One trend is from institutional investors that are looking for more complex products, products that we can’t buy and access through traditional markets. In other words, they’re looking for a new investment product and with, let’s say, IRR of 20 percent. Just highs.

Adam Chapnick:

That is high.

Henry James:

[00:05:00] A high yield product. So, whereas on the other hand, there’s another client segment that’s emerged and that trend there is an investment mandate that is focused more on, what I like to coin, the vanilla security tokens, maybe real estate backed, or precious metals backed, or even oil backed, right? If people want to buy and access oil, trade oil, it’s quite difficult for them to do that. So, I think these kinds of products appeal more to family offices and high net worth individuals. And, they have a different investment thesis. These guys are in the game of wealth preservation and the fund managers, of course, institutional guys are here to make some good returns.

Adam Chapnick:

So, you’re talking about, there’s something interesting you had shared with me earlier about these vanilla opportunities and sort of what the strategy is behind them. Can you talk a little bit about what you learned?

Henry James:

I know what you’re asking me for here. So, yeah, when we probed a little bit deeper and we asked these groups why do you want these vanilla products, which you can buy in, by the way, much more liquid markets, through traditional markets today. Why do you want to buy them in the form of security token? And, their view is they’re taking a medium to long term view in saying once liquidity does come to this market, we will have the ability to trade asset for asset via the security token market. And, that’s huge. And, I think that’s a movement, an investment movement, that’s going to resonate also with millennial investors as the whole market grows and matures over the coming years.

Adam Chapnick:

Yeah, I think that’s very exciting because I hadn’t heard that yet. And, the idea that it’s what sounds like an innovative thing to do, but from the most conservative investors. That’s kind of mind-blowing and exciting because it means people are deeply understanding the space, and that to me is an indicator that it’s going somewhere.

Henry James:

Yeah, absolutely. And, like we said, these are kind of investment mandates with completely different needs and objectives. These guys are here to try and to reduce their exposure to cash. With their reliance on cash and sovereign currencies, they want to protect themselves in case of recessions, regional, recessions in different parts of the world that may affect themselves. And, what they see the security token market as being a market where they can actually start hedging some of their positions and diversifying their portfolio in a more efficient and cost effective way.

Adam Chapnick:

Yeah. Very exciting. Well, Henry, thanks so much for telling us about Fincross and sharing some of the things you’re learning from your travels. This is going to be the first of many. We can’t wait to have you back.

Henry James:

Thank you so much. Thank you. Cheers.