With the Asia-Pacific region now home to the fastest-growing fintech industry in the world, more and more players are jumping in to grab a slice of the action. ALB speaks to general counsel at fintech companies about how their roles are shifting in the face of increased competition and challenges, and how they are staying on top of the evolving regulatory landscape.
ALB: Can you describe the scope of your role as general counsel of a fintech company, and what are some of the biggest challenges you face in this role?
ERIC LIM, general counsel, CapBay: The “general” part of the title is certainly ﬁtting. In any good week, I might start off by stitching together the frame for structured lending, designing a product or programme the next day, followed by looking into process improvements while getting the ducks in a row for a corporate exercise, negotiating a tech contract thereafter and ﬁnally wrapping up the week with some fund-raising work (in no particular order), all sprinkled with a healthy amount of bread-and-butter legal work.
I am the ﬁrst occupant of this ofﬁce and therefore my very ﬁrst task was to refresh and re-organise the legal department (establishing new workﬂows, introducing process improvement measures, resource work management, upskilling team members, upgrading existing documentation and so on). Having to concurrently work on a few other critical projects and product development meant that I was facing an even steeper slope. So, I guess you could call dealing with all of these my biggest challenge to date although I would prefer the term “opportunity” – my team has been very comfortable working on our 1 percent improvements ever since.
ALICE CHEN, co-founder & general counsel, InvestaX: Being co-founder and general counsel of a ﬁntech means that my role spans across all departments of the business, so I wear multiple hats which keeps me busy but also provides me with a full view across the entire company from legal/compliance to sales and tech development. And for a ﬁntech start-up, having a full view is beneﬁcial and also important so we are not operating in silos.
As for challenges, being in a regulated platform operating in a nascent industry (i.e., digital securities), one of the biggest challenges is navigating the regulations in multiple jurisdictions.
DANIEL MOK, general counsel, Aspire: I lead the legal function of Aspire, which is a VC-backed ﬁntech company present across Southeast Asia. To describe it broadly, my key responsibilities are to manage the company’s legal and regulatory risks; help my colleagues in the commercial teams develop and execute solutions for our challenges; and lead and motivate my team of talented lawyers.
These responsibilities span almost every subject matter of the company’s business and operations: fundraising, licensing, employment, vendor/customer contracts drafting and negotiations, dispute resolution, intellectual property rights, insurance portfolio management, and new product development. The biggest challenge in this role is being able to consistently make legally defensible and business-friendly decisions quickly in ambiguous situations.
THITIWAT WISARATH, chief legal compliance & risk officer, Gulf Binance: My current role covers three functions; legal function is about the legal documentation and legal advisory on all relevant laws and regulations to our business, while compliance is more on policies, control, governance, and AML. Risk management will handle enterprise risk management, including risk assessment and mitigation.
Given the digital assets industry is quite new and there have been many good and bad incidents that occurred during the past few years, the key challenges in this role would be around the balancing between the applicable regulations versus the digital assets products and technologies which are evolving all the time.
More importantly, we also need to build up the proper trust in ourselves with the regulator. We must prove to them that we are here to do it right and we won’t let any wrong thing pass.
ALB: In your opinion, what are the biggest legal and regulatory challenges facing the fintech industry today, and how do you see these challenges evolving in the future?
LIM: It is unfortunate, but perhaps rightly so, that innovation is always a yard or two ahead of the law. Regulate (too early) then innovate doesn’t sound about right to me.
A trade-off here is that we will then have some legal/regulatory uncertainty to grapple with in the absence of a specific piece of law to deal with the issue at hand.
“Innovation is always a yard or two ahead of the law. Regulate (too early) then innovate just doesn’t sound about right to me. A trade-off here is that we will then have some legal/regulatory uncertainty to grapple with in the absence of a specific piece of law to deal with the issue at hand.”
— Eric Lim, CapBay
In our corner, this (happily) keeps us busy formulating inventive ways to solve problems amidst such uncertainty and allows the organisation to keep innovating. Sometimes though we are compelled to revisit ground zero when there’s just no reasonably safe way to proceed and painful as it may be to speak truth to power.
For the regulators and authorities, they are faced with a neat challenge in deciding on these issues in a manner which would take care of all stakeholder interests in a legal vacuum.
We have been fortunate enough though to be able to engage with our regulators and authorities very closely and regularly. From these engagements, we have been able to, more often than not, arrive at solutions which work for businesses and regulators alike.
I’m quite conﬁdent that we could build on these blocks, layer them with more view sharing and end up with a very smooth path for the road ahead.
CHEN: As more businesses go online and become borderless, navigating the legal and regulatory requirements become increasingly difﬁcult, and especially difﬁcult in an industry where new legal frameworks have yet to be developed for the ﬁrst time in industries like digital assets, digital securities or stable-coins. There are often no precedents, combined with the fact that the technology and the product offerings/services are evolving at an unprecedented pace, so regulation is always playing catch-up.
As certain ﬁntech players get large enough or pose enough systemic risk, as seen in the case of FTX’s collapse, the unintended consequence will be more oversight and legislation. In the digital assets industry, we are seeing more companies moving to licensed and regulated entities and an acceptance of the traditional consumer protections required in the traditional ﬁnancial markets, i.e., proper disclosures, cybersecurity and technology risk management, segregation of assets, conﬂict of interest management, etc. - all the things we would expect from any traditional ﬁnancial institution handling customers assets.
MOK: The main challenge for ﬁntech today is having to ensure that they comply with the myriad of payments regulations of each country in which they operate while being able to offer customers the same positive user experience regardless of where they are located, and still stay ahead of the intense competition in terms of product innovation and proﬁtability.
I am certain that such challenges will prevail, if not deepen, in the foreseeable future as the harmonisation of ﬁntech regulations in Asia is hardly on the horizon given their relatively early stages of development. Many regulators are only now developing their own ﬁntech sandboxes and payments regulations and in time to come ﬁntech may ﬁnd themselves having to revisit their ways of doing business.
THITIWAT: It is always the regulator’s main objective to focus on (i) proper customer protection and (ii) supporting product development and innovation. However, when the time comes, we need to accept that the ﬁrst one would get higher priority and it is the duty of all business operators to prove that their products or services always take it as part of their core values. Hence, the new regulations would move toward higher protection for customers. I would say, fairer products, higher governance, and better integrity should be the focus points for new regulations in ﬁnancial-related industries.
ALB: How do you stay current with the legal and regulatory changes that impact your company and industry, and what resources do you rely on for information and guidance?
LIM: The common repertoire here is inescapably subscribing to libraries, databases, newsletters and blogs, monitoring regulators’ websites and announcements, attending conferences as well as signing up for external training. That having been said, nothing beats going out there and having constant dialogue with friends, partners, and counterparties – nuances and unique viewpoints always emerge from lively discussions.
CHEN: In my capacity as general counsel of the company as well as the chair of the Digital Financing Subcommittee of the Singapore Fintech Association, I have to stay up to date on the latest impacting my company as well as the industry as a whole.
I also guest lecture at Singapore Management University, so I am constantly scouring the Internet, Twitter, and LinkedIn for news and updates. Of course, in these roles, I also have the privilege of dealing directly with regulators and various authorities in different jurisdictions, to provide feedback and be involved in advocacy work.
MOK: I subscribe to several newsletters and, where possible, attend webinars organised by law firms and industry associations. I know AI resources are all the rage now, and for good reason I’m sure, but for now, I still rely on doing our own research and reading and lean on the expertise of our external counsels where required.
THITIWAT: We have no choice but to keep actively monitoring the changes. Setting up a monitoring and using tracking system/tool could be especially useful, and summary alerts from external counsel would be also a good help.
One thing that we’ve been trying very hard is to show the regulator that we can be the extra eyes for them from practical and commercial perspectives with well-balanced interest for both business and customers in mind. With that, they would always want to hear your thoughts when they think about any change.
“We have no choice but to keep actively monitoring the changes. Setting up a monitoring and using tracking system/tool could be very useful, and summary alerts from external counsel would be also a good help.”
— Thitiwat Wisarath, Gulf Binance
ALB: How has the makeup of your legal team evolved over time, and what are some of the key traits and skills that you look for in new hires?
LIM: I’ve been extremely blessed to have the core members of my team staying with me. They not only ensure continuity in terms of knowledge and know-how but more importantly have been the ﬂag bearers of the 2Rs I preach - responsive and responsible. Along the way, we’ve welcomed a senior counsel (amongst others) who has helped to share some of my responsibilities and enabled me to work on expansion areas of the organisation. In time, I hope to add more specialists (whether in terms of practice areas or jurisdictions we are moving into) to the team. From these new hires, I expect no less than the 2Rs and frank sharing of fresh ideas/perspectives.
CHEN: Our legal team has grown over the years as we obtained more licenses in more jurisdictions. We currently have four full-time legal professionals which is a big headcount for a ﬁntech start-up. We spend a lot of time researching and reviewing applicable legislation, and then looking at the practical applications of the same. So, some key traits which I look for are those who are not only precise and thorough, but also analytical and can think outside of the box, because often, we are doing something for the ﬁrst time, coming up with new legal structures, or process ﬂows, and so being able to also have a business mindset is important.
MOK: A young legal team needs to have contributors with strong and diverse technical skillsets that meet the business needs – they are necessary for any company that wants to ensure it stays out of trouble. As the company scales and the business becomes more complex, which is the trajectory that we are on now, having a team of creative players with growth mindsets becomes more critical because we don’t only want to be operating in compliance with regulations, we want to stay ahead of the competition and thrive in the long haul.
“Working in a fintech is not for the faint-hearted. If I were looking to hire today, I would be keeping a keen eye for technically strong candidates who can demonstrate resilience and that they are able and willing to accept challenges even if it may make them uncomfortable.”
— Daniel Mok, Aspire
Also, working in a ﬁntech is not for the faint-hearted. If I were looking to hire today, I would be keeping a keen eye for technically strong candidates who can demonstrate resilience and that they are able and willing to accept challenges even if it may make them uncomfortable. Icing on the cake if they come with a sense of humour!
THITIWAT: In my early years, legal and compliance functions are entirely separated with different reporting lines. Compliance focuses on applicable regulations, while legal handles general laws and legal documents.
However, for today, especially in the ﬁntech industry, which is speedy and under heavy supervision, I think we must combine the two skillsets into one. Our team should be a single go-to-point to users for any matter in relation to legal and regulatory requirements. And hence, my team’s scope will not be limited only to providing legal advisory, but we also need to be able to advise about compliance pieces as well. Our goal is not just to deliver the best contract, but we need to actively help ensure that the entire company is moving forward with proper legal protection and regulatory compliance.
Therefore, I would look for a team who comes with open-minded attitude and is willing to learn as no one would know everything from day one. It won’t be only about the relevant laws and regulations, but we also need to understand strategy, products, operations, technologies, control, risk management, and every other thing that would keep our business in good shape.
ALB: What are your expectations from the law firms that you work with, and how do you evaluate the effectiveness and value of these relationships in terms of supporting your legal needs and the growth of your company?
LIM: The 2Rs are non-negotiables to me and therefore I demand them from external counsels as well. It wouldn’t be very amusing to ﬁnd external counsels turn sluggish in the midst of a transaction, ours typically being fast-paced. Being very on point with their advice wouldn’t hurt too. To these, many would add “cost-effective” but I’m a ﬁrm believer of “value add” instead - would having the external counsel on board allow me to complete a valued transaction for which we do not have in-house expertise or help us alchemise a new structure which could prove proﬁtable?
CHEN: We work with multiple outside law ﬁrms, and generally go to speciﬁc lawyers within the firm with specific expertise, whether it is regulatory for licensing purposes, or M&A or someone with securities expertise. It is usually driven by the matter at hand. Of course, we also like to work with ﬁrms and lawyers who share the same vision as we do as a company, because naturally these ﬁrms/lawyers will be more engaged.
“The kind of external counsel who appeals to us the most are not those who just tell us what the law ‘says’ because we can determine that ourselves, but those who provide suggestions and approaches to tackle the hurdles and challenges we are being faced with.”
— Alice Chen, InvestaX
Being a lawyer myself, I know the role is to advise clients and ensure that they understand where their legal boundaries are, but the kind of external counsel who appeals to us the most are not those who just tell us what the law “says” because we can determine that ourselves, but those who provide suggestions and approaches to tackle the hurdles and challenges we are being faced with.
MOK: Technical competency and responsiveness are the basic deliverables, I’m conﬁdent all law ﬁrms are aware by now. I value the lawyers who actually provide an opinion on matters even if they are, as some lawyers like to say, “commercial points”. Telling me what the implications are and what the market practice is on the topic goes a long way towards helping me make an informed decision, and I appreciate that.
Another thing I appreciate is working with lawyers who would send me updates on legal developments that they think would impact the company’s business. It demonstrates that they have given thought to our business and are keen to foster a long-term relationship.
THITIWAT: Solution. It may not have to be very perfect, nor super long legal opinion, or sometimes it may come with certain risks which we will then determine how far we can go, but that is how I would expect and value such legal support.
In conclusion, general counsel and law ﬁrm should work together like thinking partners where we can freely discuss and ﬁnd the best idea or solution which could still serve business needs (even partially) but always be in good regulatory compliance.