Transforming China’s Fintech Innovation Ecosystem

Chi-Won Yoon, SB ’82, SM ’86, has never stopped learning.

After 22 years at UBS—where he served as executive vice chairman of UBS Wealth Management, and president and CEO of UBS Asia Pacific—Yoon retired and returned to MIT Sloan. The electrical engineer turned financier gave guest lectures, attended classes on the latest trends, and spoke with faculty members about their research and the future of fintech.

“I gave myself an assignment when I came back to MIT Sloan: identify different technologies capable of driving transformation and disruption in the financial services industry,” Yoon recently told students in China Lab, an Action Learning course. “After a few months, I walked away convinced that blockchain, machine learning, and artificial intelligence were going to transform finance in the future.”

Inspired by his alma mater, Yoon met with fintech investors and firms in Hong Kong, where he joined the digital assets and blockchain-focused fintech company Diginex as its new chair.

“So here I am in an entirely new field,” he said, “still learning and having a great time.”

Action Learning students learn not only by doing, but also by engaging with leaders from relevant disciplines, industries, and regions. To that end, Yoon joined John Grant, SM ’79 (Senior Lecturer, Global Economics and Management), Yasheng Huang (Epoch Foundation Professor of International Management; Faculty Director of Action Learning), and their China Lab class in early May for a fireside chat on the fintech innovation ecosystem in China.

The conversation covered everything from entrepreneur Jack Ma’s Ant Group and the scrutiny it faces from regulators to the ongoing attempts to restrict cryptocurrency mining and trading by Chinese officials. Yoon, who recalled meeting Ma at a charity event years earlier, had plenty to say about the case study of his company. However, the students were eager to learn about his recent experiences in the world of blockchain and cryptocurrency.

A few months after Yoon joined Diginex in April 2020, the firm launched a cryptocurrency exchange in Singapore and subsequently became the first such company to achieve a NASDAQ listing. While the official policies toward cryptocurrencies in China are not particularly accommodating these days, Yoon believes that the future of digital assets in China and elsewhere remains very bright.

“Regulators are not trying to stifle innovation or hurt the fintech industry in China. They’re more concerned about systemic risks and potential conflicts of interest,” he said. “I suspect China’s fintech ecosystem will continue to be scrutinized for these types of risks, but once that happens, it will thrive again.”

By way of example, Yoon pointed to rising interest in central bank digital currencies (CBDC), which the People’s Bank of China is currently experimenting with. In theory, central banks would use these digital tokens to virtually represent a particular country’s fiat currency. CBDCs rely on the same blockchain technology behind decentralized and unregulated cryptocurrencies like Bitcoin but emphasize centralization and regulation instead.

Yoon said their adoption will most likely have a positive effect on cryptocurrencies and pinpointed two recent items that give him hope. The first was the appointment and confirmation of former MIT Sloan faculty member Gary Gensler as chair of the Securities and Exchange Commission.

“With Gensler’s appointment, we have a very progressive regulator who understands this space,” said Yoon, who attended the 15.S12 Blockchain and Money course when he came back to MIT Sloan. “Hopefully, he will be able to foster a regulatory environment where the industry can grow in a thoughtful way.”

As for the second, Yoon recalled asking former Federal Reserve Chair Ben Bernanke, PhD ’79, (MIT Golub Center Distinguished Senior Fellow) about the progress of developing a U.S. CBDC during a forum. In response, Bernanke explained that since the dollar is already the world’s reserve currency, the Fed has the most to lose if they make a mistake while experimenting with CBDCs. “They aren’t in a hurry,” said Yoon. “They can afford to take some time and watch how CBDCs develop in other markets before rolling out their own version.”

As for China, Yoon surmised recent regulatory strides may be designed to make room for CBDCs to play a more significant role in advancing the country’s fintech space even further.

“The way in which China’s fintech ecosystem has developed is absolutely stunning, and CBDCs may soon play a more central role,” said Yoon. “I suspect they will be implemented faster than people expect.”

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