EP 338 – Will Blockchain Make Banks Obsolete? – Tianwei Liu – co-Founder and CEO of StraitsX

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:04
Okay, we are on Hi. This is Michael waitze, and welcome back to the Asia Tech Podcast. Tianwei Liu, a co-Founder and the CEO of StraitsX, is with us today. Thank you so much for coming to the show. Before we get to the main part of this conversation, let’s get a little bit of your background, or a lot of your background. Frankly, for some context,

Tianwei Liu 0:23
Hi Michael, thank you for the invite. I’m happy to be here today. Thank you. Maybe just a quick background by myself, I’m an engineer by training, a Computer Science and Electrical Engineer to be exact. I started the company about 10 years ago. Actually, we just celebrated our 10 years since the start of the initial company, but I’m always an engineer and a gig at heart. Most of my folks here that have been working with me always say is that I’m actually always doing only two things. I’m either the front line trying to sell the vision and the product, or I’m at the back end trying to think doing with some stuff that I usually mess up what others are doing, but I really enjoy that process.

Michael Waitze 1:04
Are you someone that really likes writing or at least reading code? Do you know what I mean?

Tianwei Liu 1:09
Oh yeah. So it’s arguable that I might write bad code, but I am actually involved in a very big part of the code, writing in the very early days, the first line of the code of the company was written by me, because these days at Geek hub, right? Yeah, and you can literally see the command I write. And always people was like joking around, you know, the first few lines, and the first, maybe a few, maybe hundreds, 10s of 1000s of lines, was written by me, and the deleted, you know, a lot of bullshit. People don’t really like it. And to the point I think, I think five years in, eventually, people banned me from GitHub. I actually have access. I can read it, but I can’t push code anymore because there’s, there’s a disastrous event that happened one time that you know, just before some client demo, I decided to fix something.

Michael Waitze 1:58
So what happened? Did it get? Did it get really fixed before you did the client demo or no? Did it kind of blow up?

Tianwei Liu 2:03
Absolutely. I closed the sales, but I broke everything else for the rest of the clients. The engineering team hated me after that, and they’re like, Nah, ban this guy from from the access onwards, I lost ability to change the code. But also great fun. Yeah, maybe that’s a better thing. I

Michael Waitze 2:21
don’t know, and I’m not making a value making a value judgment about it, so don’t hold it against

Tianwei Liu 2:25
me. No, absolutely, I got my CTO and attack team still love me. I think they love me more because I don’t write any more code.

Michael Waitze 2:31
Yeah, fair enough. Look, 10 years ago was 2014 which is hard to say out loud. I don’t even want to have that part of the conversation, but wow, 10 years ago 2014 Yeah? And 14. And actually, I was on a call yesterday or the day before, with somebody. We were talking about Bitcoin itself. And I was like, what is it good for? Like, what can you use it for? And he was like, you can’t think about it that way. And again, correct me, where you think I’m wrong. He’s like, if bitcoin is the gold of digital assets, you have to think about it that way, right? And then, then I was thinking for our conversation, if that’s the case, and tell me if it’s not right. How would you define stable coins and like, can you maybe then give us a bunch of different use cases? Where do they fit in here?

Tianwei Liu 3:14
Yeah, so maybe, maybe that’s actually a good time to also go back to the origin story. Please do the company right move closer. Yeah, as I was mentioning early on, that, you know, I’m just, I’m an engineer at heart. I’m actually proud of that identity. If anything that a lot of time people will talk about is we like to fix problem. We like to tinkles and try to look at what is under the hood, how to do things a bit better. So I started, as mentioned, I started company 10 years ago. I was a software engineer then before, I quit my job. So I was fortunate enough. I was born and raised in Singapore. My alma mater is National University of Singapore, NUS, and they have a program and is actively instructed by the Singapore government. We like to do a lot of that. They send students like me overseas on exchange program, and this program is called the NUS oversea college. And it’s like all Singapore, we like to do acronym for acronym. So national TV Singapore is called NUS the the program is NUS oversea college. So in short, is noc, right? So when I was explaining that to people, they were like, Oh, this is crazy. You have an acronym for acronym, and, yeah, so I did that. So I was being sent that, I think that was in 2020, 10, 2011 during the the hype of the.com bubble burst, I went to Stanford. I was in the Bay Area for for a year. I was working on a startup company working on, you know, plastic transistors. So they were, I was an electrical and computer science engineer, right? So we’re making eating displays flexible, flexible eating display. And I had a lot of fun working the labs, making eating displays itself. But eventually it was a small startup. I was employee 15. By the time I was leaving, they were like probably 90 people. I. Then when I go back to school, which was required right to graduate, iPad came out, so they didn’t do very well immediately after so, but I was fortunate enough to build the network, right? So the bosses started a new company, and they were graceful enough to hire me back, right? So eventually, after I graduated, I straight away started my career in the Bay Area. I’m just working a software engineer, right? So I was working there as a software engineer, working on Android kernel. We’re making plastics. In this case, the new generation of that was, we’re making a wearable, smartwatch. So eventually that that company got acquired by Google. So good in the better story for this one is, didn’t get killed by Google, right? It got, they got, yeah, yeah. It was that at that trial, that tablet was out. We’re making this Android smart watches based on the Android OS, and eventually, fortunately that they got acquired by Google. But acquisition by Google is tough, and all this immigration problems and on the h1 visa. So thanks to the network, I found a job before the acquisition ended, and I ended up working at Amazon. So I was at Amazon about three years in total, and that’s before I came back. So you see, the journey was really interesting, right? I was a software engineer doing that, but during my time on Amazon, is where the idea to come back and start a company was started because, like all Asians and Singaporeans, you know, Asian values about family and stuff, I have to come back every year, right? So, I have to come back every year, if not, my parents would disown me. And then during those back and forth, we found out that how different the two market like in Singapore, we were like being told as to the Silicon Valley of this part of the world, right? And then, you know, this was the most advanced tech, you know, hub of this region, and that was 10 years ago, right? And I was sitting on the pinnacle on both sides, because I was transiting back and forth. And I keep seeing that, you know, you know, where everyone was then, you know, there was a big push for fintech. Everyone was talking about developer experience, building up things that was missing in Singapore, yeah. And, and that’s where we first started the company for, right? We thought, you know, we’re naively thinking that, hey, why can’t payment? That was a story here, right? Because over one weekend, I was then working at Amazon, and Amazon Kindle Paperwhite came out, and it is a good device. Everyone love it. So my colleagues and friends and then in Singapore reach out to me and say, Hey, can you just grab us 110 This is 10 years ago, right? Amazon wasn’t in Singapore, and people wanted to buy this advice. And then I say, Sure, I got a bit of a 10% employee discount you can get. You can figure out the FedEx, right? So I was just buying Kindle and shipping it back to Singapore, and then before you knew it, it comes to payment collection, which is a big part, right? Yeah. And this joke that we always have been talking about how the whole idea of x was started, was that, which is the original company, where I found it right? Was like, hey, when I was collecting payment, then it was the post the era of like, instant messenger. We were, like, writing email, right? It was 2014 right. Messenger wasn’t out yet. There’s no WhatsApp as well. And I think there was a MSN, something along those lines. And when I was collecting payment, there’s, I was so shocked that people don’t even use, you know, the things that I was used to then in the Bay Area, was like, Venmo, PayPal. None of that exists in this part of world. I didn’t even

Michael Waitze 8:12
think a way to write. There was no Venmo, right? There was no way to do that. And

Tianwei Liu 8:16
the way they were pay was like, Hey, can I just bank transfer you? Literally they would ask you, it was hard. It was pre the era of fast, right? So I think a lot of us were used to real time payment. Then you don’t even have that, right? You literally would just be sending money, money to some random guy on the internet. And you, you do it because he’s your friend. And so my friend does that for me, right? So with gyro, they take about three days, and the pain was that I remember was about 10 Kindle, I received eight payment and one of the payment was for twice the amount. So there was, like, one payment missing, and you couldn’t figure out in health, right? And that was Christmas. I was like, joke was that was Christmas. I was doing that. And then by February, which is the Lunar New Year, I was coming back home to Singapore, which is what I do every single year, and people still couldn’t figure out whoever pay me, right? And I was like, This is frustrating. I can fix it. And then we’re talking about it. That the thesis then is that there’s no tech, there’s no API. We were like, developers, right? If that was a API, allow developer to innovate, comes in and build solution, you can do that in a weekend, right? And this thing could be solved. And that, that was the genesis of this. What we started from, right? We were just thinking that if we can build a better API, a lot more innovation can be happening, and developers or entrepreneur around this part of the world will be able to build the same tech product. And one of the area that we were thinking was early days, was block shop because we will I was fascinated when I was jumping into this problem. I still remember that like that there was a starting the bloom of early e commerce days. But no, you don’t have shopee. We don’t have Lazada. People were just starting internet website, and they’re selling

Michael Waitze 9:46
whatever they can sell on Facebook too, at least in Thailand,

Tianwei Liu 9:49
exactly, yeah. And then you have people pasting their bank account details on those comments. People to it was weird, was to pay them, yeah. And they were like, invoicing. People just like. Practice. It was, it was chaos, but this is amazing. So we thought that we can do a better job. It’s like, Hey, let me just figure out how to do that. So that was a back end for all of our the genesis of the company. We think can do payment better, but we have absolutely lighted, no idea then that how to even go about doing it. Yeah. And we were engineers, where we just looking at the problem, and the first thing that we did is, instead of talking to the banks, which we do not know how to do, we build a solution around it. We start to build crawlers around Internet Banking. We engineered a solution out of this whole thing, and we started helping SMEs and online users accept automated internet banking payment. So that’s the whole company. Yeah. So

Michael Waitze 10:41
two questions that I want to ask you, I have to ask you right away. The first is, did you ever find out the guy that didn’t pay you?

Tianwei Liu 10:49
Yes, I did. I

Michael Waitze 10:50
did. Okay, that’s clears that one up. And second of all, what was this exact thing that you built? Was it an API suite like and why did you start with SMEs? Tell me a little bit more about this. And then I want to talk about the transition into straight sex, which is probably like a souped up version of this. I don’t know. Go ahead. Yeah.

Tianwei Liu 11:06
So yeah, the joke was that that the person didn’t pay me, because in the Chinese tradition, you can’t owe people pass the Lunar New Year, so just blasting them and someone like, Oh, I forgot to transfer. So that solved the problem. I love it. It was a funny, funny, but then you’re right that the API side of this thing, how I started this, because I was so from there, I stumbled upon ladies and the blog shop, ladies. I was like, Live Journal. You guys still remember that thing that people used to blog, send a photo. And they were like, Oh, we were hiring interns to basically do this customer support. And I was like, Why do you hire the interns? Oh, their job is customer service, but actually 90% of their job is to just check my internet banking portal when somebody claimed they have paid me and tried to match one to one, that was the work that they were doing for a long period of time. And this sales can happen over a weekend, and you do hundreds of transaction. Can you imagine that manual work that’s involved, right? So I was hoping in one of this, one of this project, which was like, hey, I can solve this. I can automate and what we do is not even talking to anybody, right? I was just figuring out, okay, you have a bank statement over here that’s online. I can download the statement. I can do some way to reconcile that with the transaction that was logging on your blog shop, and that was the genesis of the API business. We were saying that I can automate an orders, and then I can link up to your bank account. I can automate the process of downloading your bank statement. And how we do it. It was really, really fascinating. I remember the early days we built a web crawler that does the work that a human does, because what they will do is they will lock into the internet portal, download this CSV file, and then try to pass it to the intern, right? So we built a web crawler that basically lock into the bank portal for them, download that bank statement on their behalf, and then process everything. How did that’s how it works. How did you handle

Michael Waitze 12:55
the security, right? So how did you get their password and their login and stuff like that, and still make sure that it was secure, so that you could actually download that CSV file? Yeah? Perfect.

Tianwei Liu 13:02
Great question. So, so I was watching the founding Teamwork was four engineer and one lawyer, right? So my co founder, still with me, is head of legal right now. And we were, we were solving this problem. We’re like, exactly like, how to even lock in and be legally be able to do that, yeah. And we read through the film and condition of all the internet banking portal. I think to ask your users to diverge that for you is a sensitive part, but if you are logging it for your own account, you’re absolutely allowed to do whatever you want, because your account and your money. So what we actually do is that we then incorporate a company. The company created an internet banking account, and we were logging in as ourselves to check all the transaction and we routed the transaction. We asked the users, instead of transferring to the individual company’s bank account, transfer to us, right? So we are the guys that’s logging into our own bank portal to read our own bank statement as not. That’s not against the term, the condition of the bank. And when, eventually, when the bank find out, they’re like, what you guys are doing, it’s crazy. But then at the same time, they were like, Okay, it’s not really violation of anything. And then, of course, we have to work out the compliance side of this thing in terms of AML control and everything,

Michael Waitze 14:09
mixing funds and stuff like that. At some point, though, if the company’s growing fast, the amount of payments that are going through just that one bank account could have been huge. Reconciling is not hard, right? Because you’re just doing it in an automated way. You’re just matching, matching, matching, matching, matching, but just the sheer size must have confused the bank a little bit. No,

Tianwei Liu 14:28
absolutely. It’s not just confusing the bank. It crashed the bank in the early days. We were, like, known to be the guy that the bank’s IT department was freaking out with, right? Like not mentioning the exact bank was, I think, will be a bit offensive, but a couple of banks that are not that great with the IT system cannot bang us, and we have to keep changing bank account because, like, we broke a couple of banks until we found a bank that is willing to work with us. They’re like, what exactly were you guys doing? Why would you logging into your bank portal every. 30 seconds and refreshing the page every minute. Yeah?

Michael Waitze 15:02
Because it looks like, oh, it looks like drug dealing or something like that. You know what? I mean? Not in a funny way. I just mean like, yeah, it’s not normal. Normal people are not It’s not normal behavior every 30 seconds, right?

Tianwei Liu 15:11
Yeah. And we were just like, randomizing it, and to the point that they couldn’t tell they thought that it was human doing that, and they were asking questions like, why were you refreshing your page every minute or so? Like I was trying to download my bank statement because somebody was transferring me fun, and they can see that it to the point that they were like, Okay, I think your model of usage is just a bit more crazy that we can afford. So we have to then work out, how can we find a bank that eventually want to work with us? And then, of course, the AML and control and the compliance side become a very big part of the business. So it took us about five years to fast forward to where eventually, straight acts happen, right? Which is we eventually the scale of the business was so large we have to make sure the bank fully understand our business model, able to work with us closely and the regulators, because the transaction volume that we are processing have reached the high I think we were the first FinTech in Singapore, and under the experts previously, to basically being granted what, in the old regime, known as a widely accepted stock value facility. So we were working very closely with the regulators, and that’s actually the DNA of the company, right in the early days, when I was talking to me as about our business, and I will gain kudos to them, and they were graceful enough to really hear from entrepreneurial there’s engineers that’s trying to make it work, right? That what exactly were you guys doing? Because the regulation then was written was very suitable for a large enterprise, yep, and a company. So the license that were first given out, which is the Wiley acceptors top value facility, was designed for, you know, likes of big organization like like NATs, like, easily, right? They weren’t very suitable for startup. So they was very surprised that a small company like us were really hitting the limits of what you can do without applying for a license, because they used to have this exemption policy that if you’re less than 30 million in terms of transaction volume, we can just operate without a full license, but we were like, constantly hitting the ceiling, and it took us five years, right? Of a slow process. First they hear about you guys, then they recognize you guys, and they want to work with you guys. They understand that, hey, there is a legitimate business here. There’s a demand here, right? We need to come out with the right regulation to allow you guys to properly operate. So which is the story of us, right?

Michael Waitze 17:21
This is one of the things that I want to ask you. When you first started, you said it was just a bunch of engineers. Obviously, your lawyer was there too, and you didn’t even go to the banks to try to figure out how to connect to them. You just did a whole bunch of work on your own and figured a whole bunch of stuff out. And five years later, then you were like, wait a second, we’re just getting too big. And now the banks are noticing. And remember, you were right. You probably broke the bank because the banking system itself wasn’t set up to do what you were doing. They didn’t anticipate you as a client or your business. But once you started communicating with the banks and they started realizing, as you said, this is not just a legit business, but it’s actually a real thing that real people need, exactly for real reasons. How did like, the way you build the business change I get the regulators and mas, you’re right. Are fabulous, right? Very forward thinking, very flexible, pro business in a way that, like a lot of the other monetary authorities globally, aren’t. So that part I understand, but I’m more interested in you and the founding team now saying, now that we have the connectivity with the banks, what do we really want to know and what should we change in our business to actually make it even better and bigger? Is that fair?

Tianwei Liu 18:29
That’s fair. So actually, in some sense, that’s how it leads to straight acts itself, right? So I’ve taught five years since the genesis of the company. So we started about, we I got into, I quit my job in 2015 and I got into Y Combinator. I did. I was like, I did. I did. And, and the funny part is a story there too. I quit my job on April 1 and join Y Combinator April 1. And I still remember the competition I had with my boss. I’m serious, right? It was like, you quit your job on April 1. Is this April? It’s a joke. Yeah, right. But now we really left the job at April 1. So then we started YC, and we came back 2016 right to really full time. Started the company. We were very fortunate. Then the ecosystm was right. We got funding from both Y Combinator and then follow up by Golden Gate ventures. A few of the VCs really supported this company in the early stage right. And then fast forward to about 2019 where the licenses was coming in, right, the regulator. Right? The regulators recognized that, you know, company like us needs to be around, and once the licenses comes in, enable a whole different phase of growth for us, right? Because at the same time the banks see more legitimacy. Our compliance was up to standard, and more clients were willing to reach out to us, to work with us. But that’s also at the same time where we see that there responsibility we have to play here, but at the same time is there’s also a market demand coming in from the web tree space with Blockchain space, right? So we, in our early days, we serve an E commerce company, crowdfunding campaign, FinTech, and assignment of the FinTech, and today, they are still pretty big segments. Asked, well, Blockchain company, and we’re talking about cryptocurrency exchanges here, right? They have needs like this too. They need to have a way to connect to the retail by receiving bank payment, and then when your exchanges, if you offload your cryptocurrency, send it back to your bank account, right? So that was the genesis, right? They constantly connect to us, and we’re using our rails, but eventually they will tell you, right? If you understand how the blockchain stuff work, they needed something that’s natively working on the blockchain itself, right, instead of having to connect back to you, because it kind of like everything is supposed to be decentralized. Everything is supposed to be on chain, right? And the value of that which you were coming to that right, is it’s supposed to be programmable, right? Like,

Michael Waitze 20:40
if they’re being true to themselves and to their message, they don’t want to have this, like back end system that’s not part of their front end system and their story that says it’s all decentralized. It should be part of the same thing, right? Fundamentally, sorry, go ahead.

Tianwei Liu 20:55
Yeah, absolutely right. If you, if you ask me, so this is where we see, as you know, the reason, what I was giving the background is, we are a payment company at heart. We are engineers at heart. We are just trying to solve real world problem. Yeah. And when we, when we first saw the whole entire blockchain innovation and the geeky part of it, would like to play around with it. And, you know, of course, we get pretty excited, but we are practical guys, right? We’re prac medical, right? We’re saying that, what exactly does it actually do? And one thing that we over the years have this two down, that why we were double, that we are betting double down on this part of the technology side, is, if you understand payments, which we are now, you know, have a little bit more understanding, if we do this for 10 years, is right? All payments traditionally are done in two floats, right? There’s a communication layer which, you know, we connect to each other via TCPIP or the jargons work and stuff, when you are making a payment, transaction have to be communicated real time, so that the merchant will be able to give you your goods and services immediately. But then there’s a second part flow, which is a settlement. A settlement usually happens offline, and it can be two to three days or even a week later, right? So I can get my payment when you buy a coffee from Starbuck, you tap your card. Is a payment communication like that. The payment is going to go through. You get your coffee, you walk on but Starbuck might only receive his payment settlement in his bank account three to five days or even a week later, right? That’s how traditionally payment work. But if you brought on the paradigm of blockchain payment, this changes because on our blockchain side, with especially with stablecoin, a payment itself is both a communication and a settlement. So for example, when you send your stablecoin from your wallet address to the merchant wallet address, he get a communication part that he can give you the goods and services, but he also immediately get finality. He knows that the assets have reached his own wallet. He can go on to basically use it to make other payments. He does not have to wait for that two and three days. So that’s that is the game changer part first that we noticed in this settlement and part of this whole story, right? What chain are you on? Oh, we are on multiple different chains, on Ethereum, hydera polygon avalanche is launching next week itself. So the chain itself, the way we see it again, it’s just different ecosystm, and it’s a back end innovation, right? And a big part of this, does the user really want to know? Especially the mom and pop is using this on the payment side, of course, on the developer front, there a lot more innovation that can be happens because of the different characteristic of different ecosystm. But the end of the day here is, what is the problem that you’re trying to solve for the end user is always at the heart of what we think, right? We think that the settlement delay that now can be instant is actually a very big value add from the existing system that we’re working on, if you think of it from a cross border perspective, which I have to share more about this problem is it becomes even more important, right? Because, especially for cross border use cases, can you imagine if you using your credit card from your home country, making a buy a coffee at another country, like, say, in Indonesia, from Singapore, the transaction delay in terms of communication and settlement expose you to FX risk, which makes the merchant needs to mark up the transaction. That’s why the FX rate is not that great, right? Because the time that you confirm the payment versus the time you somebody actually pay them, yeah, there might be fluctuation already of a, you know, 0.5% and

Michael Waitze 24:13
they’re not traders. That’s not how they’re supposed to be making their money. They’re supposed to make them on it by selling coffee or whatever it is they’re selling, yeah? So fair enough, exactly.

Tianwei Liu 24:20
So that’s the first part of why we think the blockchain side and payment and stable coin will help to change some of this whole thing. And of course, if you then add in which is another part of this, very true to our heart, the program blissing part and the decentralized nature of the blockchain itself, it introduced a lot more capability, right? That a lot of things that in the past will be difficult to be done can be now be programmed on chain, because the chain is during complete so we demonstrated that over the last few years, like you can did, you can do a digital voucher with custom, you know, in terms of exploration, they did promotion all baked into a smart contract that allows it to be passed along to different wallets. And instead of having this, all this business. Logic that only work within a single wallet. Now it can be returned to a smart contract and be shared around. And the interoperability nature of this is make it extremely powerful, which actually aligns with the things I was talking about when I first came back, right because the ability to unlock developers and innovators to be able to build things without having to talk to a centralized entity and spend months and months negotiating is the essence of how the company started. Remember, because when we started this, I didn’t talk to the banks, I didn’t talk to the regulators, I was just figuring out how to make it work, and to a lot of innovators and to a lot of engineers, that is actually is a lot easier for them personally. Of course, things have evolved over the years for me myself, but when I first started, it’s a lot easier for me to talk to the software because I know it can work. Then I was trying to justify to you the business case and explain to you why this makes more sense when I can actually show you that it’s already working. And the blockchain part really helped to solve this in a different scale. Who were

Michael Waitze 25:57
your who are your biggest customers? Then today? Yeah, did it change from, from when it was expert to straight sex? Does the customer mix change?

Tianwei Liu 26:06
Of course. So when we first started, you know, like I said, we will just, if you really understand this, in the very simple term, we are a payment gateway, right? Really helps basically, yeah, yeah, very basically, we are helping e commerce, FinTech, to ever collect payment, and eventually we became a payment infrastructure guy, because besides collecting payment will help you with disbursing of funds, managing your E Wallet. So we are like a payment infra that’s on top of the bank, right? So our client were basically other FinTech customers, e commerce, remittance company, Blockchain exchanges, crowdfunding campaign. So we do that a lot in Singapore itself, right? Of course, we expanded the business into Indonesia, which I spent quite a bit of my time since 2019, before the covid, I used to travel there every single week. And we will become a payment acquirer, right? So we help small SME mentioned earlier on to collect payments, right? So Singapore, for example, we evolved and started to collect payment for offline pay now acquiring. So this can be a mom and pop store. They’re simply accepting pay now as a form of payment for their goods and services, right? And it can also be the same thing for Indonesia, right? When we’re helping a small war, wrong, or a small shopkeeper collect offline payment via digital form, like, in this case, in Indonesia, they call it Chris. So that’s a big part of the business as we evolve over the year. But as you move on along those lines where we started straight access, we are targeting a more niche area of appliances in the web, three space, right? Because what happens is some of these folks in the blockchain side will need a lot more ability for them to interact with the blockchain, and they will like a product that’s natively issued on the blockchain itself, and that’s where stable coins comes in. Okay? Giving them ability to program that becomes a huge part of the business. But I think the next phase is, what we are seeing is that this should come together, right? Because ultimately, we really see all this blockchain and all these back end things as a back end innovation, right? We shouldn’t be thinking about trying to educate everyone about what is a stable coin, what is a blockchain? Because to most of these users, like my mom and my parents, they just want to know, how do I pay? Can I just scan and move on with your life? It’s funny

Michael Waitze 28:15
because you mentioned this earlier. You mentioned TCPIP earlier, right? And for people that aren’t Unix geeks, like they have no idea what you’re talking about. I do because I was actually a systems administrator for a floor of, like, 100 Sun workstations back in the late 90s. So I know what you’re talking about, but you’re right. If you had to sit down and tell people that like everything that goes over the internet is using TCPIP you’d be wasting your time in the same way that nobody understands how swift works, or any of these other banking protocols work. Nobody cares. And are you suggesting that, on you, on the straight sex platform, that you’ve kind of merged these two things together? So there are stable coins, but I can also just pay in Indonesian Rupiah, same thing, yeah. And nobody knows the difference. Okay? I just wanted to make sure.

Tianwei Liu 28:57
So, of course, so on the straight x side, because of the brand and the way that we have targeted the web, three native customers, right? So there’s a bit more, what we call web tree features, where you will be more familiar with for web three native users, meta mask, using Blockchain address, but at least on the group level, which is what we’re heading to. Us as a payment company, we’re trying to take that away from the end user itself, right? I like your point, right? Exactly on this whole TCP idea was mentioned around because what we are noticing is that it’s the same paradigm I’ve given previously. When I was in Bay Area in 2010 there was this.com bubble burst, right? But just a few years before that, people were all telling you that, hey, I’m going to quit my job and start an internet company, right? That’s a big thing then, but like now, you’re hearing the same hype, right? You’re telling people that I want to start a web tree company. But if you think about it, it’s going to be ridiculous today if you tell your friend that you’re quitting your job to start an internet company. Yeah, everything happened on the internet, right? And we believe it’s the same. Saying, right? The end users really don’t care. How does it work? Right? They just take out their app and make it work. So this is where we are trying to shift the narrative that web tree and straightax is going to be focusing on that to what exactly are we trying to do, which is payment right? And that is a direction that the company is going right. And bring you an example. What is happening here is we’re working this year with the likes of Anne and grab, and this is already a two years project, right? It all first started doing 20, I think 2022 during the FinTech festival that we work with mas under the umbrella of project orchid, under the concept of purpose bound money. We were doing this to help them showcase a real world use case of programmable money, right, where people was able to interact with this so called Digital blockchain money without, you know, the fear of it, right? So the first Genesis iteration of that was simply giving every participant of the FinTech festival of digital voucher instead of singles, right, that they can use this to pay for good and services at the convention hall. So about 40,000 participants of the FinTech Festival, which happens every year in November, when it came to the convention hall, when they register for their account and get the tab, they were told that they can use any wallet, web three wallet, their choice, and can create one on the fly, right? And then immediately, the so called AirDrop given this digital voucher, which they can use to pay for good and services, in this case, f&b beverages at about 20 outlets on the convention hall. So they can buy a coffee, they can buy a pizza, right? So that’s what they’ve been doing over the three day event. And we demonstrated the programmable nature of this whole thing, right? Where all these vouchers have baked in denomination. They are $5 $2 $10 all these vouchers have expiration date right beyond the seven days it will just stop working. So there’s no concern about AML raised on that itself. And they were very useful, very specific use case. You can only use it to pay for good and services at the convention form, right? So that was the start of it, right? So of course, over the years, they’ve evolved. So last year, we launched it with grab. So grab users in Singapore were able to create a web tree wallet and use it to basically purchase vouchers again, that allows them to shop at a discount at about 200 outlets across Singapore, and some of the most popular outlets were like koi bubble tea or jungle seafood, right? So these are things that the end users are very used to. Right? I buy a voucher discount. I can pay for it right at this participating outlet for good and services. But this year, you will see this evolving to the next stage itself, and it’s no longer going to be a trial. What is going to happen here is we have partnered with both graph and end group and international right, where it allows basically Alipay plus right, which is a network of wallets, e wallet player across this region, with starting from Alipay, China, Alipay, Hong Kong, touch and Gail go in Malaysia itself, the user of all these wallets, when they come to Singapore, using their native e wallet, they will be able to walk up to any grab outlets. In this case, grab pay outlets to scan and pay as though they were making normal payment to the way that they were very useful. So today, if you are Alipay users, you will see an Alipay sign, scan the Alipay QR code, enter the same dollar that you would like to pay and just press confirm, right? So that will be the exact same user experience, right? So talk to me,

Michael Waitze 33:18
then, what happens on the currency side? Right? Because if you’re coming from China, if you’re coming from Indonesia or from Indonesia, or wherever you’re coming from, what happens on the

Tianwei Liu 33:25
currency side? Exactly. So for from the app itself, they will be seeing the FX Rate Code real time in the native currency that they come from. If they are in China, you, of course, you will give them in CNY. If you are in Malaysia, you’ll give you the rates in MYR. So to them, they will know that they were just paying in their local currency at the exchange rate that they can immediately attest to and once they pre confirm payments is completed. And then on the merchant side, in this case, grab merchant, this is grab pay. They don’t understand anything about Ali blockchain. They don’t care. Their EDC will just show up that grab pay. Let’s say it’s $5 is received real time, and then it will give them the good and services via coffee or pay for food, right? So that is the experience that we are trying to bring more mainstream, like, as you can imagine, the whole flow we just talked about is a payment flow that you and I are very used to, right these days in this part of the world, right? Yeah, actually, if you look at the stats, digitization is actually happening at a tremendous pace in this part of the world compared to the rest of the world, right? Actually, with the big push of covid, about 46% of Asian Pacific populations are already online, and they have been used to paying with a digital wallet, of course, in their own native currency. Right? In Singapore, I’m very used to grab pay. In Indonesia, you might be used to go pay or Dana app, right? So this is happening already, and a lot of people are very used to scanning and paying. But what is actually happening right now? That’s just going back to the experience I was talking about. They’re now able to do this cross border, yeah, and behind the scene, this is where the stable coin and the FX settlement and the real time settlement I talked about earlier on will happen magically. Behind the scene. Okay? Good sir, which is obfuscated to the end users. What they do not know is actually on the confirmation on the ALI site, xsg, which is a stable coin that is issued by us, will be sent from the operating wallet of n to the merchant wallet real time, which will help to immediately with the settlement and also logging in the FX rate, right? Because if the FX rate is in five single dollar, the merchant expect to receive it in five access duty, which is always one to one. And settlement finality happened at that point, because they do not have to worry that what is the FX that you might pay me three days later, I just know that I get a stable coin, and my back end is subtle, but again, that the merchant don’t even know that obviously. Just know that the payment have went went through, right? Because grab site work with us to actually settle that real time.

Michael Waitze 35:46
Yeah. So the merchant, the grab merchant, doesn’t need to know whether it’s a an F and B thing, right? Like you said, the bubble tea or whatever it is. They don’t even need to know that anything’s changed. The only thing that’s changed is on the back end with grab itself integrates the straight sex system, and in a way, it disintermediates Some of their FX risk as well, right? Because if they had some, like you said, there are two layers to this. It’s communication layer saying you’re going to be getting a payment, and then the settlement layer going, here is the payment. And if there’s no gap between them, I guess the stablecoin kind of disintermediate some of that FX risk. And that’s something that grabs willing to implement without kind of anybody needing to know exactly right. Interesting. Yeah. So

Tianwei Liu 36:26
like you see the real business case here, right for a company like grab, what you just mentioned first and foremost is they take away the FX risk that they typically have to deal with, and that’s something that the wallet operators, in this case, can be the ALI or the touching go, we’ll have to settle that right? And then on their end, they just know that, you know, as long as the back end connection is being achieved on the blockchain, access cities arrive and it will be converted to single dollar of the exact same amount, they will be able to deal with their merchant in terms of settlement exactly the same. But what they get right now is faster settlement, right? Because typically, if you do it in the other network itself, it might take three to seven days for the funds to reach them. There will be t plus two as well. Like you say that that’s the industrial rate, but for cross border, that’s typically slower, but they enjoy faster settlement right now. But then think about what actually enabled them to do beyond that. Because of the interoperability and the programmable nature of the blockchain. They get additional stuff. Right now, a small developer from Bangladesh or in India will be able to say that I can build an app that is on this blockchain itself, and I can walk up to grab and scan I pay, and it just works, because I do not need to talk to grab right because I know that to the grab QR code, I will be able to get a blockchain address that says that as long as you send me access GD, payment will go through. Of course, all the email control, again, is already baked into the smart contract that will be taken care of, but it enables this InsurTech beauty that we’ve been describing at which about right, all the wallet operators will be able to come in and do this. And on top of that, the third point, they can build in the programmability part of this, all these digital vouchers, all this, you know, discount can be baked into this smart contract that allows that to happen as

Michael Waitze 38:08
well. So you said earlier that you issued your own stable coin. Did I hear that correctly? So what are the risks to you to straight x of having your own stable coin and having to maintain your own stable coin? What are the risks? There are some of the challenges there, right? Because it’s not just a gimme that it’s going to be fine, yeah.

Tianwei Liu 38:25
So this is a long journey, right? So we started this straight X project in 2019 actually. So right after we secure our licenses from the MAS as a authorized Wiley acceptor stock value facility. It’s a mouthful. Now, it is actually just, yeah, it is, if you convert it to the layman today, it’s emanate, right? So we got an email licenses, right? So at the back of the email licenses in 2019, and of course, like I said, we felt that there’s more responsibility that we do now in terms of regulatory compliance. But at the same time, the industry is moving, and there’s a lot of demand coming from all these exchanges talking about the innovation that can be enabled that I just talked about for stablecoin. So they look to us to try and give them a solution. And that, again, kudos to mAs. We again work with them very closely. We came and talked to them that, hey, if you know this is in the early days. Mind you that none of us really quite figure this out yet, we kind of work with them and convince them that the regulation around e money can be achieved, if we were just to see it, that this is just a tech involvement. Again, no need to talk about any changes in regulation. The only key part differences between the way that we do the E money in the past versus what is happening now is that the ledger, the record of all these transaction or the database, move onto the blockchain. That’s how we started. In 2019, we were convincing the regulator that there is no difference in the regulation around a typical e money versus a stable coin. That’s the place where it sits. Is different. Yeah, exactly. And the layman term, then we use this. That this is just E money on the blockchain, right? That that’s how easy it can be understand. Of course it have fast forward to these days that more regulation is coming up to make sure this is properly addressed. But actually it does not change much. I think in a recent discussion that in last year’s FinTech festival masoch will gain very forward looking. And I like the way that they diskew things down for a lot of laymans to see how what they call the web two versus a web three role. I don’t really like that word, but just the simplest way to let people explain that the traditional finance that we are already used to, there’s really three types of money, right? You see this talking about the central bank, money that is money that is being used between banks, right? That we are quite used to that. I think only the banks touches this. They have ability to get access to central bank money, to allow for settlement between banks, right? So that is central bank money, which is a traditional world. And then there is, of course, private bank money. So if you think, think about it, right, when you have a bank account with dBs, or you have a bank account or you will be actually, individually, they are creating their own money supply because they they do fractional lending, right? So actually, these are private, yeah, reserve banking, right? They are private bank money that’s belonging to the individual bank. And of course, then there’s a third tool that we’re all used to, which is E money. E money wallet, wallet operator like us, has been, already been a big part of this whole digitalization of the last 10 years. As I mentioned, 46% of the Asia Pacific users are very used to E money. And the concept is that you put the money in the bank, it’s fully guaranteed by a bank, and I give you a digital version of that, and you can use it on the E Wallet. So you really see these three pools of different money type. And in the web tree world, there is going to be a mirror of that, and that’s what me has been talking about, right? You’re going to start seeing them talking about wholesale cbdc, right, which is basically a one to one mapping of this central bank money, this basically digitizing that onto the blockchain, and it’s something that is going to be available only for banks and also for maybe countries, right? For cross border, country to country settlement, right? So you’re going to have a one to one to one mirroring of that. You’re going to have, like I mentioned earlier on, private bank money, the version of that you’re going to start hearing more than talk about regulators around the world is tokenized bank deposit, right? Basically, individual bank will be minting their own token. And you already see the first of that JP Morgan started to have JP Morgan coin, right? So there will be a mirror of that as well. And then there comes the third class, which is E money. Players like us now are going to be well regulated e money stable coin issuer, right, which is a license regime that mas has granted us. In November, we are granted, in principle, license by mas to be given a new regime and a new license for issuing of well regulated stable coin out of Singapore, right? And that, of course, bring about more responsibility. But as you can see, this is how things in the regulation have been evolving over the last few years, right? That we are seeing a mirror, actually, again, the heart of it is the same thing. This is a tech play. There’s not much changes, again, in the way that all this regime is regulating, from a money perspective, like I say, central bank money is only done by the central bank. Private Bank money have their own guard rails. They have to keep certain reserve ratio. And for E money players, everything needs to be one to one back. You can’t print money out of this. It’s just that the tech the tech medium, have changes. Instead of trying to talk about it on a centralized database, I can say, I’ll tell you, is a MySQL database or RDS is translated to it’s exactly the same thing, but it’s now being done on the blockchain, and to most Layman and end users, they will not learn about this. They will not need to understand this. It will be just an application that the developer will develop or companies will show to them that brings about, ideally, faster settlement, better user experience and lower price.

Michael Waitze 43:44
I mean, at some level, isn’t this the same equivalency, although much simpler, between like regular mail, where I write something down, put an address on it, put a stamp on it, and send it to you, and then email which is just more fully it’s a tech it’s just a tech difference. The philosophy is no different at all. And the only thing is that that email has way more functionality built into it. Because it’s programmable. I can do all these other things there that I couldn’t do before, that I really wanted to do. But it doesn’t change the fundamental idea of that I’m trying to send you a message. Is that fair? Exactly?

Tianwei Liu 44:12
If you think about it, then, at the crux of it, this is what the so called blockchain or web tree innovation, that if we distribute it down, it’s a tech improvement, right? And and for as all tech improvement over the years, the magic is when all the technology disappear, right? The end users, majority of the end users, will never need to know how it actually work. They just need to understand that the user experience must be more superior. They get their services that they want to render easier or faster, and that’s that’s it, right? And at the back end for the developers, that will be something that they’ll be more interested in. But the way the developers and all the engineers will be looking at it is, how is this allowing them to be able to innovate faster, innovate cheaper and fail cheaper, right? That’s all the way that we should be looking at. It’s just like, how internet I bring around a whole. Rise of a new way of doing things and how, like, how computing have changes that again. Do any of us actually know how cloud computing works? We don’t really need that, but we are actually using it without knowing it, and that’s how we see this thing will evolve in that direction.

Michael Waitze 45:14
Okay, I’m gonna let you go. Tianwei Liu, this was a really fascinating conversation. A co-Founder and CEO of StraitsX. You’ve got to come back. I mean, we could have gone, I think, for another hour, but this is really great. I’d love to have more updates. I cannot thank you enough for coming and doing this. I learned a lot. I had fun, and I hope you did as well.

Tianwei Liu 45:30
I did, Michael, thank you for your time here today.