Gunnar Jaerv on Integrating Solutions for Custody, Escrow, Issuance and Payments for Crypto Companies with First Digital Trust (Episode 117)
Today Gunnar Jaerv with First Digital Trust is creating integrated custody, escrow, issuing, and paying agent solutions for the crypto and blockchain world.
Gunnar is the COO of First Digital Trust (FDT), Hong Kong’s leading technology-driven financial institution powering the digital asset industry and servicing financial technology innovators including blockchain clients, payment companies, and virtual banks.
FDT is the pioneers of digital asset custody in Asia, launching Asia’s first instant settlement network for institutional investors to trade assets seamlessly across the region. Gunnar’s team also provides an end-to-end service of asset tokenization, believing the acceleration of this industry will revolutionize access to wealth across the world.
FDT is the digital spinoff of Legacy Trust, where Gunnar is the Head of Digital Assets. Legacy Trust is Asia’s leading licensed and Public Registered Trust Company. Prior to joining Legacy Trust, Gunnar founded several tech startups including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.
*Disclaimer. None of this information is financial advice.
The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:00:00:29 – 00:00:10:10
Richard Carthon: Hello everyone. Welcome to another episode of Crypto Current, your host here, Richard Carthon and today I’ve got a very special guest. We’ve got Gunnar out of Hong Kong with First Digital. How are you doing today?
00:00:12:03 – 00:00:18:22
Gunnar Jarv: Hi Richard. Thanks for having me. Yeah, I’m doing great and really good to be on your show.
00:00:18:24 – 00:00:27:07
Richard Carthon: Amazing. Well I know it’s bright and early over there, so I do appreciate you being flexible with your schedule, but before we dive into today’s conversation, how about you give us a little bit of background about yourself?
00:00:29:03 – 00:01:33:24
Gunnar Jarv: Sure, sure thing. So my name is Gunnar, I’m the COO of First Digital Trust and First Digital Trust is essentially a spin off from Legacy Trust Company. Legacy Trust is a Hong Kong based trust company, it’s been around since 1992 and it really got into the digital and Crypto space about three years ago. As for myself, you know, as you mentioned, I’m based out of Hong Kong. I moved there end of 2008 or so, I set up a company there working mostly on you know, mobile apps, web apps back then and you know, it was really a time when everybody was trying to build apps and you know, was trying to get rich building their game or app and getting listed on the App Store for a few dollars and you know, selling it to maybe hundreds of millions of people. And funnily enough, it’s quite similar to what was happening in the Crypto space a few years ago and the whole scene was very similar.
00:01:33:26 – 00:02:10:08
Gunnar Jarv: There was a lot of startups and you know, all of that going on, but back then, for my company, one of our clients was Legacy Trust, so we ended up building a lot of things for Legacy Trust, in terms of back office systems and you know, a lot of automating, a lot of the processes and you know, procedures for Legacy. And what happened is eventually the CEO of Legacy asked me to bring over my team to join the company full time and you know, just work on these dedicated projects.
00:02:10:11 – 00:02:10:26
Richard Carthon: Gotcha. Well.
00:02:10:28 – 00:02:11:21
Gunnar Jarv: I ended up really.
00:02:11:23 – 00:02:30:16
Richard Carthon: So I was going to say so on that subject so you kind of come over you said about three years ago, so that is roughly 2017. Was this your first introduction into the Cryptocurrency, Blockchain space or did you learn about it previously, like what was your first intro to the space?
00:02:31:29 – 00:03:23:00
Gunnar Jarv: I was really skeptical actually because I knew about crypto a while back, probably from like 2015 or so, but I thought this was sort of one of these you know, novelty things to you know, just being talked about on an online discussion boards and you know, just bunch of tech people trying to build something and you know, doing that. When I really started learning about Crypto was about yeah, the end of 2017, 2018. And that was during the ICO boom when everybody was also trying to build something on top of Blockchain and trying to do things. And that’s where I, you know, I started doing research about it. For me, it’s like I always do deep dives into different areas and I read as much as I could and then I really started thinking maybe there is actually something to it. It’s you know, maybe it’s not only a novelty thing.
00:03:24:13 – 00:04:01:25
Gunnar Jarv: And essentially what happened, how I actually dragged Legacy Trust into the whole business was after I had done my research, I literally walked into our CEO’s office and said, “Hey” you know, “I need some time, I need like six months, I want to focus on this digital assets space,” you know, “This is a very sort of new and novel kind of area, but I think there’s” you know, “Issues that we can solve in terms of” you know, “Providing services to these companies in the space” and yeah our CEO is quite open minded, he said, “Yeah go ahead.” And then that sort of began my journey into the whole Crypto area.
00:04:01:27 – 00:04:30:29
Gunnar Jarv: I started going to the you know, conferences and you know, continued my learning and tried to bring back you know, some of the like, or learn about pain points and then tried to develop products around it. And really I think in the early days, we were really shown as you know, dinosaurs you know, because we came from a traditional background from a you know, as a trust company, a financial institution. We were like very foreign elements in the Crypto community.
00:04:31:05 – 00:04:31:20
Richard Carthon: Right.
00:04:31:22 – 00:04:43:27
Gunnar Jarv: But you know, we started building our solutions, we really focused on custody in the first place. I think we were one of the first companies to start talking about proper custody and you know, that’s how it all sort of got started.
00:04:45:23 – 00:05:05:27
Richard Carthon: So, so and thank you for explaining that, but you said something that stuck out to me and I want to kind of go back into it. You said initially you were skeptical, but then you basically became all in. What was it about the space or what was the turning point for you where you decided because of this I now want to go tell our CEO and we’re going to go dive into this space?
00:05:06:00 – 00:05:58:01
Gunnar Jarv: I think it was because it seemed the industry seemed very young and I saw a lot of problems. I saw a lot of problem in a way that companies were trying to build their products because everybody was really focusing on technology, but what they were essentially doing is they were doubling in the you know, financial services space or essentially building financial products in many cases and you know, that’s an area where I thought, “Okay, hey maybe this is how we can help.” And after having some discussions with actual you know, real people in the real world you know, outside of online discussion boards and forums and you know, Reddit and places like that, there were actual real people out there trying, really passionate and trying to build real products. And you know, I saw that we could actually bring value to this community.
00:05:59:23 – 00:06:40:28
Richard Carthon: Definitely. And I think it was really good on your side to see the opportunity and then look at the basically the old kind like you said, you were dinosaurs, right? You were in the traditional sense of the financial industry and you’re like, “Here’s this new opportunity, let’s find ways to adapt and try to be at the front of this.” And you say you started with you know, some custodian work and some other things, but tell us a little bit about Digital First. And basically I know you were explaining a little bit before the interview about how it’s kind of in collaboration with Legacy Trust, but it’s more focused in the digital currency, Cryptocurrency, Blockchain space. So tell us a little bit more information about that.
00:06:41:00 – 00:07:29:08
Gunnar Jarv: Sure. So First Digital Trust is essentially what used to be the digital asset department under Legacy Trust. So anything that was related to Cryptocurrencies or Fintech and all of that you know, we were just used to doing that under the Legacy Trust brand. And in the early days it was sort of a strategic decision for us to keep it under the Legacy brand because although we had, you know, great faith in this industry, in terms of business and you know, building a business, we felt that it was safer to have it under Legacy brand. And then fast forward three years to, you know, 2019, we actually saw that you know, this department has legs, it could survive as a business on its own.
00:07:29:23 – 00:08:27:12
Gunnar Jarv: And you know, the board was Legacy’s board, and was really also realizing that the business models were very different. On the Legacy Trust side, we’ve you know, we’ve been around since 92 and our business on Legacy side is very traditional you know, we deal with you know, pensions, retirement, very long term kind of structures. You know, our clients tend to be more like, you know, private wealth individual clients, while as this whole digital asset department, it was sort of ring fenced from day one, but it had to move really fast, like a Crypto space. You don’t have like settlement dates you know, or like for assets that are one month long. You have people that let’s say want their assets to be settled in you know, in a matter of minutes or in matter of hours. And when it comes to custody the technology powering the custody was very, very different.
00:08:27:14 – 00:08:59:08
Gunnar Jarv: So it’s just a very different focus and that’s why the management saw that you know, First Digital Trust itself grew faster by spinning off it into a separate legal entity. And you know, it allows us to also not only move past, but also experiment a little bit more without sort of offending our clients on a traditional side. So it was a very sort of yeah, like I said a strategic decision to do that. And that was the primary motivation underneath it.
00:08:59:22 – 00:09:09:24
Richard Carthon: Gotcha, okay. And so for everyone that wants to learn more about First Digital Trust, like who is your ideal customer, like who would come and utilize this opportunity?
00:09:12:09 – 00:10:02:06
Gunnar Jarv: So with First Digital Trust, we’re really focusing on everybody that’s in the digital space or Fintech space, I would say. We see Crypto as part of Fintech and we’re huge believers that Crypto will be, you know, a huge part going forward powering a lot of these systems. And Blockchain specifically you know, will be a huge part of this sort of a new wave of technologies that will come out. I think in terms of like our clients on the Crypto side is that funky you know, exchanges or see desks, but more on the you know, newer side issuers. Personally, I believe you know, asset tokenization is on the verge of really taking off, but you know, we’re also open to work with traditional companies that don’t use Blockchain at all.
00:10:02:28 – 00:10:35:08
Gunnar Jarv: I think you know, for example, one of the things that we’re trying to do right now is to build out our APIs so that anybody that’s building some sort of financial services out, whether it’s a wallet or whether it’s some sort of a money transfer mechanism, or anything like that, where they can tap into our APIs, our core infrastructure and build on top of that. And you know, they can have their idea, they can have their branding and everything and just use us behind the scenes, as sort of the infrastructure provider.
00:10:36:11 – 00:11:04:03
Richard Carthon: Yeah. And I mean that sounds like a really cool feature where people can just be building on top of your platform, which is always very powerful and giving people the flexibility to realize the visions that they have to bring various financial tools to their end user, their end customer. And so I know that you’ve been working on this for a while, but how has the overall experience been for everyone that comes and uses First Digital Trust so far?
00:11:07:05 – 00:12:10:04
Gunnar Jarv: I think overall the experience is good. Like we like that there’s a lot of projects, the ideas are really great, but what we find is that the projects tend to be run by, you know, people that are really good in technology. But you know, the financial services space is heavily regulated, there’s a lot of compliance requirements and there is a lot of sort of income and structure in place. And even when you’re trying to build something on the Fintech side, you do need support from this traditional side. That’s where we really, you know, try to help out and try to bring in our sort of knowledge of the traditional space. And you know, so far, it’s been working all great. You know, as long as the companies realize that it’s you know, just building an app, you know, it doesn’t make you successful right away, you need all of that infrastructure behind the scenes to power it.
00:12:10:10 – 00:12:25:28
Gunnar Jarv: And you know, we have this you know, sort of a running joke that you know, a lot of Crypto companies, especially in the early days, there were saying, “We want to build a bank and we want to do that.” So like if we had you know, a dollar for every time somebody said we want to build a bank, we would be millionaires already.
00:12:26:01 – 00:12:26:16
Richard Carthon: Yeah.
00:12:26:18 – 00:13:07:09
Gunnar Jarv: But in reality, you know, building a bank, it’s one of the most regulated, most scrutinized industries in you know, globally in any country you know, whichever country you are. So you need to sort of plug into these traditional infrastructures and that’s where we come in and we you know, we’re really open minded working with Fintech companies and that’s one of the first things that we actually explain, we say “Okay, you’re really good at technology, you have really great idea, you know, let us help you with this.” And then hopefully together, that will sort of bring about the sort of really good experience, a really good product ultimately.
00:13:07:11 – 00:13:34:21
Richard Carthon: For sure. And I think a good way to wrap that and kind of just put it in clear context is you led technology companies come build superior products and y’all help with all of the other parts of the business, whether it’s the financials, whether it’s figuring out you know, how to have the infrastructure for them to go and build this technology, you’re just the all in one encompassing way to be able to bring some really cool financial Fintech technology to the greater world.
00:13:36:08 – 00:14:05:24
Gunnar Jarv: Yeah. And I mean that’s a really good summary and I think you know, when we’re talking about Blockchain, Blockchain is there to solve very specific problems. One doesn’t need to use Blockchain for everything to be successful, but there is you know, there’s a you know, very good use for it, whether it’s for accounting or record keeping and all of that. And whichever product you’re building you know, there’s still those traditional components there and you know, that’s where we try to help.
00:14:06:16 – 00:14:22:13
Richard Carthon: Definitely. And one of the things that you brought up is that you work with quite a few different companies in the space and the customers that have come through. What are some various either Crypto or Blockchain companies that are kind of working in the space or working on particular projects that have your attention?
00:14:22:15 – 00:15:07:21
Gunnar Jarv: So maybe in terms of some of our existing clients, so we work with the Trust Token and they were one of our earliest stablecoin clients, where we handle some of their underlying reserves. This is a good example to show that you know, where they’re completely in charge of their project and program and on the technology side, we power the rails and on ramps and all tramps behind the scenes. And you know, many people actually don’t know about that and they’re not aware of that. In terms of upcoming projects, we are very bullish on asset tokenization, so there are a couple of projects in the works that I can’t really name drop there.
00:15:08:27 – 00:15:09:12
Richard Carthon: No problem.
00:15:09:14 – 00:15:48:24
Gunnar Jarv: But I’m really a huge believer of tokenization of more traditional assets like precious metals, gold. In the gold space, there are actually a few existing projects out there you know, all of these projects are doing really, really good job. But I think there is sort of more room in that space and more room to innovate. And then we are also really bullish on when it comes to tokenization, tokenization of real estate and other sort of fixed assets where a fractional ownership would play or could bring some benefits essentially.
00:15:50:08 – 00:16:09:06
Richard Carthon: For sure and thank you for sharing that insight. Another question I have for you is you know, 2020 has been a very interesting year to say the least and has definitely brought cryptocurrency about change to the forefront of a lot of people’s minds. What are some things on the horizon this year and in the future that you think others should be looking out for?
00:16:12:25 – 00:17:19:29
Gunnar Jarv: I think again the asset tokenization, I think it’s on the verge of going mainstream or maybe not mainstream, but definitely mainstream within our sort of community and within a certain space because all the components are out there already. The regulations are maturing in you know, in most countries. In Hong Kong, we had recently put out some regulations last year and this year to tax. Points are getting more clear as well globally. In terms of the structuring and the underlying structures to wrap the real world assets and that allow tokenization, those are already existent out there as well and that’s something that’s very close to home for us. I mean you know, trust structures and using a trust is a perfect example where you separate the legal and beneficial ownership and it offers very interesting solutions in terms of asset tokenization. So I would definitely say it’s something to watch out for.
00:17:20:01 – 00:17:59:19
Gunnar Jarv: One of the components that we’re still missing is maybe on the liquidity side, the marketplaces are not there, but my guess would be that those marketplaces are around the corner and they will probably you know, pop up in places like Seoul where you have you know, four hundred million people and you have U.S., which is a huge you know, single market, 300 million people. And then Asia and the smaller countries will be probably the later ones to follow suit, but I think it’s happening and I think it’s happening sooner than we can sort of expect.
00:18:01:03 – 00:18:54:01
Richard Carthon: Cool and I think that’s great things to be looking out for and something actually I hadn’t even thought about was on the trust side, especially when we think about digital assets and how that can all be set up. I mean just in the Crypto world, when you think about digitizing all these assets, when you think about the Crypto world and how could setup everything, there needs to be a more secure, more a way in place that you can make sure that these assets that you are getting can be transferred to your family or to whomever, your loved ones, whoever you want them to be done in a way that you don’t have to worry about it, right? And so I do think that is gonna be very important and something that people should be looking into as they look at having Cryptocurrency and Blockchain as part of their portfolio and building for the future.
00:18:55:05 – 00:20:07:00
Gunnar Jarv: Well there is one asset, which is the Crypto itself, like you mentioned. You know, how do you pass it along you know, if you want to transfer it and there is you know, there’s a lot of solutions out there for that. What really has been hindering tokenization before is let’s say you own a property, let’s say you’re a property developer and you want to, you know, tokenize a condominium tower. So if you were to tokenize that and if you hold the title yourself, your investors probably wouldn’t have trust because what’s stopping you from running away or transferring that title or doing something with that? So the perfect way is to separate that legal and beneficial ownership on the underlying asset level, put the property into a trust, then tokenize either the units or you know, tokenize on the trust level and then the trustees or for example, you know, personnel can provide that additional level of assurance that the person that’s or the entity that’s tokenizing the asset, they can’t run away with that. You know, there’s rules in place, there’s proper auditing in place and the token holders then can be also sure that the underlying assets really are there that are supposed to be backing these tokens that are being issued to the investors.
00:20:07:23 – 00:20:42:18
Richard Carthon: Gotcha. And thank you for that example, I think that clarified a lot. So I really do appreciate you bringing that on our thoughts and to keep that on our minds as things are developing, but you know, as we wrap up this conversation in our interview, I always ask you know, what is a final thought that you want to leave with all of our listeners? So I want to ask you you know, what is one thing that if anybody who’s listening today you want them to have like it as like a major takeaway or something to think about with everything happening in this space right now?
00:20:45:01 – 00:21:22:07
Gunnar Jarv: I think you know, for all the Crypto entrepreneurs, just you know, keep building great stuff. It’s pretty much like with any other startups, there are a lot of great ideas that fail, but there’s also a lot of great ideas that work out. And you know, I think the overall commitment to this space you know, if you have an idea try it out and you know, if it doesn’t work out, try again. And you know, just Blockchain is here to stay and you know, that Fintech solutions are going to be powering our lives into the future. So just you know, for companies to keep at it and you know, keep building great products.
00:21:22:09 – 00:21:39:12
Richard Carthon: Excellent, I think that’s a great final thought. Keep being great builders and keep building the products. Gunnar, really appreciate your time. What are some ways that people can connect with you and can also learn more about First Digital Trust?
00:21:40:00 – 00:22:12:14
Gunnar Jarv: So we have our website, I think that’s probably the main one, so FirstDigital.com. And also you know, once the whole COVID situation is over and the world’s back to normal, we do attend a lot of conferences in Asia and the U.S. So you know, when you hear our name or when you see us you know, always feel free to reach out to us, there are you know, quite open people, quite excited to share ideas and you know, just to discuss.
00:22:12:16 – 00:22:20:21
Richard Carthon: Awesome. Well everyone, make sure you go reach out and hopefully you might even get to see them at a conference sometime in the near future. And everyone listening, Stay Crypto Current.
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