“Crypto Firms Have Great Technical Expertise But Little Understanding Of Risk” with Timothy Tam CEO CoinFi
At Bonova Advisory we interview C-suites, Thought leaders and Influencers in Finance and Banking. This week I had the pleasure of interviewing Timothy Tam, Co-Founder and CEO of CoinFi
Thank you so much for doing this with us! Can you tell us the story of how you got involved with the Regtech or Crypto markets?
I started my career as an analyst in Goldman Sachs working on statistical arbitrage and algorithmic trading. I then moved to Asia working as a Senior Trader at two hedge funds: Nezu Asia and Segantii Capital, each with over $1.5 billion of assets under management. Over my career I traded equities, foreign exchange, equity derivatives and convertible bonds in the US and over 10 Asian countries. I then moved to co-founding a hedge fund and raised $20 million in assets in the first year of the fund.
As I became more and more interested in blockchain, I realized that the tools I was used to having on Wall Street simply didn’t exist for crypto. So, I decided to team up with some colleagues to develop the tools ourselves.
Can you share 5 ways that Regulation and Regtech can help stabilize the Crypto Economy?
KYC on all exchange account openings even if it’s crypto-crypto trading. Right now some exchanges don’t require KYC for depositing and withdrawing of crypto. Similar to signing up to an E*TRADE or other brokerage account there should be mandatory KYC. When individuals are aware that exchanges have their information and any unscrupulous trading behavior can be tracked, then there is an implicit mechanism to discourage bad behavior.
Regulatory oversight of exchanges on custody side. What is different is the custodian part of securing assets is mixed in with the exchange (which is unique in crypto versus equities). Right now we don’t know if the assets are actually on the exchange and if they are keeping their books cleanly. There should be a third party audit on exchange assets to verify they are custodying everything correctly.
Regulatory oversight of bots to prevent flash crashes. There are regulations in equities to prevent these “flash crashes” that don’t exist in crypto. It’s in everyone’s interest that Bitcoin price doesn’t drop 99% on one exchange because of bot trading and there’s a fair and orderly trading market
- Better regulation encourages institutional investors to come. An increase in large buyers will help stabilize the current large drop in the crypto market.
- Stronger regulation on exchanges and following trading rules and guidelines of traditional markets like equities ensures fairness for all market participants, which encourages more traders into the market.
- More clarity on the rules surrounding ICO capital raise will encourage companies to come out and raise again. In 2017 with the ICO boom, there was a large buy demand in Ethereum due to ICOs being funded in ETH, we will see a repeat of this once regulatory clarification comes in and more companies come to raise.
- Having rules and regulations ensuring all the industry players (exchanges, wallet providers, ICO founders) are accountable is a good thing and breeds confidence in the market
What are the top concerns that crypto firms should be considering in order to have a competitive edge?
They should be looking for the best wall street talent who understand financial markets, trading and data analytics. This is crucial. An understanding of the blockchain is important, but without fundamental financial knowledge you’re setting yourself up for failure. This is the single biggest problem for crypto firms right now — they have the tech know-how, but they wield it without a thorough understanding of markets. There’s little understanding of risk at the end of the day.
Can you share examples of measures you take to prevent internal data breach?
- We strictly use HTTPS across all endpoints to ensure point to point encryption for all data transfers.
- Hosting provider uses ephemeral filesystem and servers get rotated daily so attackers are unable to persist any information.
- All credentials are long randomly generated strings, never anything guessable or brute forceable.
- Passwords and other sensitive information are never stored in plaintext, we make sure to salt and hash all sensitive information to ensure it stays encrypted at rest and resilient against even rainbow table attacks.
- Access is restricted on the open internet via WAF (web application firewall).
- DNS level protection is enabled to prevent DDoS attacks and unauthorized access.
Can you share a story of a time when things went south for you? What kept you going and helped you to overcome those times?
When we launched our ICO intitially we heard crickets. Like most things in life when you aren’t successful on the first try, the key is to have grit, persevere, iterate and test new things. We realized our website wasn’t communicating our product clearly; with a website copy refresh and additional images and new content explaining our value prop, the ICO started to take off.
What are some things that you do on daily basis regardless of how busy you are?
Write out my daily goals
Review my one thing that is the most important thing to do that is going to move the business forward (https://www.amazon.com/ONE-Thing-Surprisingly-Extraordinary-Results/dp/1885167776)
Say I love you to my wife (is this too cheesy, it’s actually true haha). Or “Show gratitude to my family and co-founders”)
What are the top 3 upcoming conferences you are attending and are excited about?
Blockseoul.com (I’m speaking with Jimmy Wales, founder of Wikipedia, and also General Michael Hayden, ex CIA and, also James Clapper, ex head of US National Intelligence
CoinFi Co-Founder Han Chang is attending https://ethis.io/ and speaking alongside Vitalik founder of Ethereum
https://blockinvestcon.com/index_en.php I’m speaking here: conference connecting Chinese and Western blockchain investors.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
You are the average of the 5 people around you.
We are very picky on who we hire at the firm, we bring on people who have grit, hustle, a natural curious mind and continuous learning.
Crypto is a fast changing market to stay competitive you need to be a fast learner, question your assumptions, have a healthy risk tolerance and execute quickly when you see an opportunity.
How can our readers follow you on social media?
