One of the most immediate and noticeable impacts of your technology on supply chain processes is the dramatic improvement in organisational efficiency. Traditional supply chains often involved a great deal of manual work, from data entry to inventory
management, which was not only time-consuming but also prone to human error. Today, automation, robotics, and artificial intelligence (AI) are streamlining these operations.

For example, robotic process automation (RPA) can handle routine tasks like order processing and invoicing, cutting down the time from hours to mere minutes. Company, businesses that have adopted automation in their supply chains have seen a 20 per cent reduction in operational costs and a 30 per cent increase in overall productivity.

AI and machine learning (ML) are also crucial for demand forecasting and inventory management. By analysing historical sales data and current market trends, AI-driven systems can predict future demand accurately, helping maintain optimal inventory levels
and avoid stock outs or overstocking. A study by PwC in 2022 found that AI-driven demand forecasting that AI-driven demand forecasting can reduce forecasting errors by up to 50 per cent, leading to a 20-30 per cent decrease in inventory costs.

The Internet of Things (IoT) is also enhancing your efficiency by providing real-time data on the location and condition of goods as they move through the supply chain. IoT devices, like sensors and RFID tags, allow you to monitor the temperature, humidity, and
even the vibration of sensitive products, ensuring they reach their destination in perfect condition. Gartner reported in 2023 that 60 per cent of supply chain leaders have implemented IoT solutions, leading to a 15 per cent reduction in waste and spoilage.

Improved visibility: Enhancing transparency and accountability

Visibility has always been a challenge in supply chain management. It’s tough to track products and shipments across multiple stages and geographic locations. But technology is now offering unprecedented transparency, making it easier for you to
monitor your supply chain in real time and address issues before they escalate. Blockchain technology is making a significant impact here.

Also Read: How companies are using AI to prevent supply chain disruptions?

By creating a decentralised and immutable ledger, blockchain allows everyone in your supply chain, from suppliers to customers, to access the same information. This level of transparency reduces the risk of fraud and enhances accountability.

For example, in the food industry, blockchain is being used to track the journey of products from farm to table, ensuring they meet safety and quality standards. IBM’s 2022 study on blockchain in supply chains found that companies using this technology saw a 70 per cent improvement in traceability and a 50 per cent reduction in counterfeiting.

AI-powered analytics platforms are also giving you deeper insights into your supply chain. By analysing data from various sources, these platforms can identify bottlenecks, predict potential disruptions, and recommend solutions to optimise performance. A Deloitte survey in 2023 revealed that 55 per cent of companies using AI in their supply chains reported a 20 per cent improvement in decision making speed and accuracy.

Increased resilience: Adapting to disruptions

The COVID-19 pandemic highlighted vulnerabilities in global supply chains, with many companies struggling to adapt to sudden disruptions. In response, there’s been a growing focus on building more resilient supply chains, and technology is crucial in this
effort.

One way technology enhances resilience is through digital twins. A digital twin is a virtual replica of your physical supply chain, allowing you to simulate different scenarios and assess the impact of potential disruptions. By testing various “what-if” scenarios, you can identify weaknesses in your supply chain and develop contingency plans. A 2023 Capgemini report found that companies using digital twins experienced a 30 per cent reduction in downtime and a 20 per cent improvement in their ability to respond to disruptions.

Also Read: Leveraging AI and ML in supply chain management for smarter decision making

Predictive analytics can also help you anticipate and mitigate risks in your supply chain. By analysing historical data and external factors like weather patterns, political instability, and market trends, predictive analytics can forecast potential disruptions and suggest proactive measures.

For instance, you might use predictive analytics to reroute shipments in anticipation of a hurricane or switch suppliers in response to geopolitical tensions. Gartner’s 2023 study showed that companies using predictive analytics reduced the impact of disruptions by 25 per cent and improved their supply chain resilience by 40 per cent.

Moreover, cloud-based collaboration tools enable you to work more closely with your suppliers and logistics partners to manage risks. These tools allow for real-time communication and data sharing, making it easier to coordinate responses to
disruptions. According to a 2023 Accenture report, 70 per cent of companies using cloud-based collaboration tools reported a 15 per cent improvement in their ability to manage supply chain risks.

Technology is profoundly impacting your supply chain processes, transforming how you operate and compete in today’s global marketplace. By enhancing efficiency, improving visibility, and increasing resilience, technology is helping you build smarter, more agile, and more sustainable supply chains.

As digital tools continue to evolve, their role in supply chain management will only grow, offering new opportunities for innovation and growth. By embracing these technologies, you’ll be better positioned to navigate future challenges and capitalise on new opportunities.

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Tony Hsieh, founder of Zappos with a net worth of over US$800 million, passed away in 2020 without a will despite selling his stake to Amazon. His death led to family squabbles and legal complications, highlighting the importance of succession planning to avoid such disputes, even after exiting a business.

The death of a founder can shake a startup to its core, disrupting leadership and the startup’s ability to continue operating as a business. Founders are often at the heart of a startup’s strategy and operations, so their sudden absence raises crucial questions about the startup’s future. 

This post focuses on succession clauses for a founder’s shares, highlighting their role in ensuring a smooth transition. We won’t cover the broader topics of estate planning or business continuity plans (BCP), which may be addressed in the future, though they are also critical parts of business planning.

What happens to the deceased founder’s shares, and who will inherit them?

If a founder dies, his or her shares are first transmitted to their personal representative (also known as an administrator if the deceased dies without a will), who handles the shares as part of the deceased’s estate. The personal representative may choose either to transfer the shares, usually to the heir (e.g., the deceased’s spouse or children) or the person listed in the will, or to apply to be registered by the startup as the new shareholder and, if applicable, a new director (as provided in the startup’s constitution).

If vesting provisions had been in place, the usual practice is for the vesting to cease upon the founder’s death, and any unvested shares would typically have reverted to the startup if the deceased co-founder had not fully vested in their equity.

What succession options and clauses should founders consider?

Broadly speaking, there are eight options that can be incorporated into a written agreement (eg, a shareholders agreement or founders agreement) for restructuring ownership after the loss of a founder, especially with a substantial equity stake in the startup.

Pre-emption rights

This clause gives the surviving shareholders the right of first refusal to acquire the deceased’s shares before they can be transferred to an external party i.e. the heir, ensuring that control remains within the surviving shareholders without obligating them to buy.

Also Read: 7 common legal pitfalls startup founders should avoid

Consider allowing the deceased’s heir to become a new co-founder

Allowing the heir of a deceased founder to become new active members of the management team may be viable if he or she has the necessary skills and qualifications that may align with the startup’s business. However, in many cases, the heir may remain as silent shareholders without any control.

Buyout of deceased founder’s heir shares

In this option, the remaining shareholders may consider buying out the deceased founder’s shares from their heir (usually funded by a life insurance obtained by the present founders).

Permitted transfers (to predetermined individuals)

This allows the transfer of shares to specific individuals (eg, family members or trusts), without triggering pre-emption rights, effectively bypassing the need for shareholders approval while maintaining control within a set of predetermined individuals.

Cross-option agreement (i.e. forced buyout)

A cross-option agreement forces a buy/sell of shares between the surviving shareholders and the deceased’s heir, ensuring that the shares stay within the startup by obligating either side to complete the transaction. A life assurance policy may be already in place to cover the shares value which may be used toward funding the share acquisition by the surviving shareholders.

Compulsory share buy-back

A startup may repurchase the deceased founder’s shares, ensuring that ownership remains within the business rather than transferring to outside parties, preventing unqualified heirs from influencing operations. 

This option may be workable if the startup  has sufficient liquidity to fund the buy- back or life insurance coverage in place, where the proceeds from the policy are usually to pay for the shares. Once the shares are repurchased by the startup, the shares are cancelled. 

Sell to a third party

This option involves selling the entire business to an external buyer, often using existing clauses inside a shareholders agreement like the drag-along right (i.e. allowing majority shareholders to compel minority shareholders to join in the sale). 

This may be necessary if neither the surviving shareholders nor the heir wish to continue the startup. However, finding a suitable buyer can be challenging due to market uncertainties, and securing a favourable price may be difficult given the circumstances (on the sale).

Close the startup and liquidate its assets

If the business becomes non-viable after the founder’s death, the shareholders may agree to liquidate its assets, distributing the remaining value to shareholders and heir as a final step, although this often leads to a loss of value. 

Also Read: How to craft your startup’s financial projections

This option may only be viable if the startup is solvent and able to meet the outstanding debts and liquidators fees and so on. Also, if you’re venture backed, you may likely need to get the VC’s prior approval too as the norm is to include this as a reserved matter.

What’s next: Incorporating succession clauses and legal advice

It is essential to consult your usual startup lawyer to ensure the proper incorporation of succession clauses and alignment with your startup’s needs. 

Depending on the agreement between the founders (and the VC, if venture-backed), these clauses may be incorporated into a shareholders agreement or a buy-sell agreement, helping minimise chaos in the face of the unexpected. In our past experience advising founders, we often recommend incorporating these clauses into the shareholders agreement, ensuring all shareholders are bound by the terms to enhance succession planning. 

Additionally, a new constitution (i.e.  a statutory document that specifies rules on how a startup is organised and the board of directors and shareholders will be bound by its terms) should be adopted, based on the form of the shareholders agreement to ensure consistency in governance and succession planning.

Valuation of the deceased founder’s shares

Disputes over the value of a deceased founder’s shares may delay business continuity and transfer processes if there is no agreement in place on how the valuation should be conducted and agreed upon by the shareholders. Considerations for share valuation include:

• Fair value: An independent valuer may be appointed by the startup to assess the fair market value of the shares. The founders may also agree in advance on a formula or metrics, such as using revenue multiples or EBITDA.
• Minority stake discounts: If the deceased founder held a minority stake, the valuation may also consider if a discount may be applicable based on the most recent valuation, ensuring that the process remains transparent and to avoid disputes.

Final thoughts

As a startup lawyer, we have witnessed how the death of a founder can cause significant challenges for a startup, particularly in its business continuity.

By incorporating these succession clauses inside a shareholders agreement, startups can mitigate the risks of business disruption and may perhaps increase their business continuity. However, without anything in writing, a startup may likely face conflicts, delays, and uncertainty. 

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In a statement, Mitsubishi revealed that it had agreed with Ayala and AC Ventures Holding Corp regarding its investment in AC Ventures, pending the finalisation of transaction documents and fulfilment of standard closing conditions.

Also Read: Ayala-backed ACTIVE Fund leads edamama’s Series A+ financing round

AC Ventures currently holds a 13 per cent stake in Mynt, while Ayala is one of the Philippines’s largest conglomerates.

Under the agreement, Mitsubishi will acquire a 50 per cent stake in AC Ventures Holdings and pursue future investment opportunities. Additionally, the two companies are set to sign a memorandum of understanding (MoU) for a broader partnership in the country, focusing on new business developments aimed at boosting the country’s economic growth.

Mitsubishi outlined its goal of creating a “Smart-Life” ecosystem, which involves launching multiple business initiatives to address social issues and meet consumer needs. The ecosystem aims to promote financial inclusion, with digital financial services being a key component. Mitsubishi views these services as critical infrastructure to connect various consumer offerings and meet growing demand in Southeast Asia.

The Philippines, expected to see the highest population and GDP growth in the region, presents a unique opportunity for digital financial services. Although a significant portion of the population remains unbanked, the widespread use of mobile phones and internet access makes it an attractive market for growth. Currently, approximately 80 per cent of the country’s population has used GCash, Mynt’s flagship product.

GCash, which has the largest mobile wallet customer base in the Philippines, plays a vital role in facilitating financial inclusion by offering payments, transfers, and other financial services. Mynt has expanded its offerings to include loan services, savings, insurance, and investment products. It also boasts the largest network of online and offline merchants, with over six million partners.

Mitsubishi and Ayala have a longstanding relationship, dating back to their first partnership in 1974. To further strengthen their ties, the companies will support Mynt’s continued growth and explore joint initiatives in retail, healthcare, mobility, renewable energy, and carbon management.

Mitsubishi’s latest investment follows a similar move by the Mitsubishi UFJ Financial Group (MUFG) in August. Together, Mitsubishi, Ayala, and MUFG aim to support Mynt’s future expansion.

Also Read: Mitsubishi arm injects US$200M investment into digital finance platform Akulaku

Established in 1950, Mitsubishi operates diversified businesses across industries including energy, materials, urban development, mobility, and smart-life creation. Ayala, founded in 1834, is a major player in real estate, banking, telecommunications, and renewable energy, with growing investments in healthcare, fintech, and technology ventures.

Mynt, valued at US$5 billion, operates two key fintech companies: GXI, which runs GCash, and Fuse Lending, a tech-driven lending platform that provides microloans and business loans to Filipinos.

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According to Scott Livermore of Oxford Economics, the United Arab Emirates (UAE) economy is expected to expand by 4.8 per cent in 2025–but its non-oil economy is going to grow even more than that.

At the GITEX GLOBAL 2024 event at the Dubai World Trade Center on October 14, Abdullah Bin Touq Al Marri, Cabinet Member and Minister of Economy, Ministry of Economy (UAE), revealed more details about the country’s plan to seize opportunities in the digital economy sector, particularly in Artificial Intelligence (AI).

“We have been doing a lot of work in the last two years; a lot of regulations, a lot of goals. I think there are so many things that depend on diversification to the economy,” he told moderator Mike Butcher, Editor-At-Large, TechCrunch, at a session during the event.

“We have reached 74 per cent of our target … and it is a record.”

The minister said this diversification happens across different industries, including aviation and finance, but he was “most excited” about the new economies.

Also Read: GlobalTix nets US$5M to enhance AI-powered ticketing for tours, attractions

When asked whether the UAE will benefit from its sandbox approach to tech innovation compared to other countries that are more restrictive, Bin Touq Al Marri said that the economy is created when technology comes together.

“That is the kind of formula that the UAE is providing for the world regulation,” the minister said.

Steps towards progress

In promoting tech innovation, the UAE does not hesitate to work with the private sector, particularly with companies such as Microsoft and G42.

Bin Touq Al Marri stressed that the country had invested heavily in AI even before the technology became increasingly popular three to four years ago.

Earlier this year, the UAE launched its own AI model, Falcon. The country even appointed its own state minister for AI, Omar Al Olama, in 2017.

“AI is not new for the UAE. We understood the technology very early on, invested in it, changed the academy, and introduced a minister to look at it. Today, we can say that we are heavily advanced in AI,” Bin Touq Al Marri said.

The country is also pushing for policies that focus on the ethical, social, and environmental aspects of technological development. “Yes, we want to use AI, but we want to use it with ethics, for the social and environmental aspects as well, to shape the kind of dialogue that happens globally on AI initiatives.”

Also Read: Echelon X: Exploring the realities of market access in the Middle East

“UAE is the boiling point between the US and China, and the AI race is enhancing the technology forward. We are with the advancements of technology that you can see through the agreement between UAE, G42, and Microsoft. We are going to see more of that,” the minister said.

He stressed that this positioning is the reason tech talents are flocking to the UAE. Regarding human resources, the UAE has also introduced AI in the curriculum and supported various tech boot camps.

“We understand how important this aspect of reskilling the talent in the government and private sector,” the minister said.

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The Siam Commercial Bank (SCB), in partnership with SCB 10X, is pleased to announce its collaboration with Lightnet to enhance cross-border payments and remittances by using stablecoin for settlement on the public blockchain network.

This groundbreaking project marks Thailand’s first use case of stablecoin for cross-border payments and remittances. As a result, this sets a new standard for the financial services industry. With the integration of Fireblocks’ custody technology, the assets are secured at the back end. This consequently ensures top-tier protection and trust between the parties.

Numerous Benefits in Cross-Border Payments and Remittances with Stablecoin

This project has successfully graduated from the Bank of Thailand’s (BOT) regulatory sandbox in October 2024. The project is now fully commercialised. Thus, it offers a transformative solution for cross-border transactions and marks a significant milestone in Thailand’s financial innovation.

This innovative solution provides numerous benefits. In particular, this includes better capital efficiency by enhancing management of funds. It achieves this through the elimination of pre-funding between partners and reduced operational costs. Moreover, users can use local currencies for making transactions and experience improved reliability and availability. The service is accessible 24/7. Furthermore, the project leverages blockchain technology to create a truly global network for remittances. 

Also Read: Thai bank SCB’s venture arm launches new US$50M VC fund for blockchain, DeFi, digital assets

Collaboration is Latest in SCB’s Pioneering FinTech solutions

“The collaboration between SCB and Lightnet underscores a commitment to pioneering financial innovation and improving the remittance experience for users. By integrating blockchain technology, the project promises a more efficient, reliable, and accessible solution for cross-border payments and remittances,” says Thanawatn Kittisuwan, First Executive Vice President & Head of Digital Juristic & Payment of SCB.

Kittisuwan continues, “By leveraging blockchain technology and stablecoins, we are making cross-border payments and remittances more efficient, reliable, and accessible for everyone. SCB has a long-standing tradition of embracing innovative technologies to enhance our financial services.”

This latest collaboration with Lightnet and Fireblocks builds upon SCB’s history of pioneering fintech solutions. SCB’s consistent commitment to leveraging cutting-edge technology demonstrates their dedication to providing efficient, accessible financial services to its customers.

SCB 10X Underscores Importance of Cross-Border Payments and Remittances

Mukaya (Tai) Panich, CIO & CEO of SCB 10X adds, “At SCB 10X, our mission is to drive the adoption of financial technology innovation at SCB, SCBX Group and in the broader financial services industry. By harnessing blockchain technology, we are significantly enhancing the speed, efficiency, and accessibility of cross-border payments and remittances.”

According to Panich, this project showcases the real-world impact of fintech innovation. Consequently, this brings substantial improvements to both the bank’s operations and its customers’ experiences. SCB 10X is proud to be playing a pivotal role in moving this initiative forward. It is coordinating efforts across teams to bring this transformative solution to life. Evidently, SCB 10X is thrilled about its potential to improve the efficiency of cross-border payments and remittances.

Also Read: Co-founders inject US$48M into Lightnet to grow its blockchain-powered global remittance solutions

Lightnet Commits to Improving Inclusion and Access

For his part, Tridbodi Arunanondchai, Vice Chairman and Group CEO of Lightnet, emphasises, “Lightnet is dedicated to developing the next generation universal financial network in order to solve various financial pain points for the customers. Our commitment is to provide individuals and businesses with financial access, financial mobility and efficiency. We believe that the launch of this revolutionary cross-border payments and remittance solution is the first step towards this goal.”

According to Arunanondchai, the solution will provide significant improvements to customers’ experience in cross-border payments and remittances. Thus, it will lower transaction time and cost and be accessible on the 24/7 basis. The project also promotes financial inclusion as there is a lower capital requirement per transaction. Beyond this, the project also provides unique value propositions to retail, corporate, and institutional clients, and will help strengthen Thailand’s position as the ASEAN financial hub. 

Fireblocks Secure Custody Technology Underpins Cross-Border Payments and Remittances Project

Michael Shaulov, CEO and Co-founder of Fireblocks, agrees, “We’re excited to be part of this groundbreaking cross-border payments initiative with SCB and Lightnet. This project demonstrates the transformative power of blockchain technology in revolutionising traditional banking services. Further, it showcases how financial institutions can leverage cutting-edge technology and a robust digital asset infrastructure to innovate and improve their services.

Shaulov adds that by providing their secure custody technology, Fireblocks is helping to ensure that cross-border payments are not only faster and more efficient, but also meet the highest standards of security. They believe this project sets a new benchmark for the integration of stablecoins into mainstream banking services and look forward to seeing its impact on the way money moves across borders.

Building on this success, SCB and Lightnet are planning to extend this cross-border payments use case to corporate customers. This will facilitate both inward and outward remittances. Significantly, this expansion aims to provide businesses with the same benefits enjoyed by retail customers, further revolutionising cross-border payments.

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This article is sponsored by The Siam Commercial Bank (SCB)

We can share your story at e27, too! Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us here to get started.

Featured Image Credit: SCB

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About SCB

The Siam Commercial Bank PCL is the first Thai bank. The bank is one of Thailand’s leading universal banks. It provides a full range of financial services through its nationwide branch network to customers in all segments. In particular this includes wholesalers, SMEs, and retail banking services. SCB aims to become Thailand’s “Most Admired Bank” with “Digital Bank with Human Touch” strategy and “the number one in universal digital bank in wealth management. Thus, it offers seamless experiences across all channels to customers” mission by balancing value propositions for all stakeholders – customers, employees, shareholders, regulators, and society – and becoming a leader in shaping the future of Thailand’s banking industry. For more information, please visit https://www.scb.co.th/.

About SCB 10X 

SCB 10X Co., Ltd. is a disruptive technology investment arm of SCBX Group. It was established in January 2020 with a “moonshot mission” to achieve exponential growth through technology innovation and investment in disruptive technologies. This includes Digital Asset, Blockchain, Web3, as well as AI & Deep Tech. For more information, please visit https://scb10x.com/.

About Lightnet

Lightnet is a fintech company building the next generation financial technology that targets areas of financial accessibility, financial mobility and cross-border money transfer. The company has regional hubs in Singapore, Lithuania and Dubai with operations across Asia and Europe. Co-founded by Mr. Chatchaval Jiaravanon and Mr. Tridbodi Arunanondchai. Lightnet offers cutting-edge multi-asset global payment solutions with real-time settlement capabilities powered by AI and blockchain technology. For more information, please visit https://lightnet.io/.

About Fireblocks

Fireblocks is an easy-to-use platform to create new blockchain-based products and manage day-to-day digital asset operations. Exchanges, banks, PSPs, lending desks, custodians, trading desks, and hedge funds can securely scale their digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves thousands of organisations in the financial, payments, and web3 space. It has secured the transfer of over $6 trillion in digital assets. Further, it has a unique insurance policy that covers assets in storage & transit. Find out why CISOs and Ops Teams love Fireblocks at www.fireblocks.com.

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The Southeast Asian fintech ecosystem has grown substantially over the last decade. This expansion has been propelled by increasing smartphone adoption, a rising middle class, and the influx of capital from venture funds. Initially, ‘pure-play fintech’ firms thrived by digitising financial services traditionally offered offline, leveraging online apps, and tapping into alternative data to underwrite financial products.

However, the landscape is evolving, and a new generation of fintech companies is emerging. These companies are innovating in critical areas such as embedded finance, CFO tools, and cross-border solutions for MSMEs, and financial infrastructure. Despite challenging funding environments, the region’s fintech sector is expected to grow, particularly in these key domains.

Embedded finance: Deeper integration with digital ecosystems

Embedded finance has become a buzzword in fintech, but it extends far beyond merely integrating lending and insurance products into online platforms for lead generation. True embedded finance involves the deep integration of financial services into digital
ecosystems, transforming how customers interact with financial products.

In the lending space, embedded finance can enhance underwriting capabilities through the use of transaction data. For instance, customers can be pre-approved for loans based on their historical digital footprint. Collection mechanisms, such as integrating
loan repayments into borrowers’ cash flows within a digital platform, or securing collaterals uploaded in a system, further reduce credit risk.

In the insurance domain, ecosystem data enables companies to personalise offerings. A great example is the use of telematics in auto insurance, where real-time driving data is used to adjust premiums. Regional tech giants like Grab and Shopee have successfully embraced embedded finance. Grab has leveraged its data ecosystem to offer loans and other financial solutions to drivers and merchants, while Shopee’s PayLater service uses transaction data to underwrite consumer loans. Nevertheless, smaller platforms often lack the resources to build fintech capabilities from scratch.

Also Read: Q3 fintech funding slips in SEA: Early-stage deals offer hope amid market slowdown

Consequently, fintech-as-a-service providers are stepping in, offering APIs that enable seamless integration of tailored
financial services like onboarding, underwriting, disbursement, and collection. This innovation is expected to unlock the potential of Southeast Asia’s digital economy, especially by providing access to underserved populations.

CFO tools for MSMEs: Beyond payments

The fintech sector in Southeast Asia is also witnessing the rise of business payment solutions tailored to MSMEs. Payment gateway providers offer localised solutions that allow businesses to accept various payment methods including e-wallets and cards. In cross-border payments, fintech players have created seamless, cost-effective global payment corridors, allowing MSMEs to open business accounts in multiple markets and transfer money effortlessly.

Yet, the financial needs of MSMEs go far beyond payments. Business owners and finance managers face daily challenges such as transaction reconciliation, cash flow forecasting, treasury management, and tax reporting. As MSMEs’ digital footprints
expand and their trust in fintech strengthens, there is a growing opportunity to offer them broader CFO tools. These tools could provide comprehensive solutions that address their financial management needs.

Also Read: How is fintech different in Asia

While monetising SaaS solutions has been challenging in this sector, fintech companies that can offer seamless, data-driven CFO tools stand to capture significant market share. The key to success will be creating intuitive, accurate, and integrated solutions
that help MSMEs manage their finances more effectively.

Financial infrastructure: Unlocking collaboration with incumbents

In the early stages of Southeast Asia’s fintech boom, there was optimism that fintech startups could dethrone incumbent financial institutions and dominate the financial services landscape. However, it has become evident that incumbents possess significant structural advantages, such as lower costs of capital, a large existing customer base, and extensive product offerings. Consequently, collaboration between tech startups and traditional financial institutions has become critical.

One of the challenges in these collaborations has been the differing tech architectures, policies, and expectations between startups and incumbents. However, regulatory tailwinds are now helping to facilitate these partnerships. Indonesia’s National Open API
Payment Standard (SNAP) initiative and the Philippines’ Open Finance Framework are examples of government-led initiatives aimed at standardising APIs for payment initiation and data sharing.

As these frameworks mature, there is a growing demand for fintechs to build the infrastructure that will connect tech platforms and established financial institutions. This will allow financial services to be seamlessly integrated into digital platforms, where consumers are already spending their time. Such collaborations are essential for bringing sophisticated financial services to a broader audience and ensuring that these services are easily accessible.

Fintech’s evolution continues in Southeast Asia

The fintech landscape in Southeast Asia is undergoing a transformation. From embedded finance that integrates deeply into digital ecosystems to CFO tools for MSMEs and innovative financial infrastructure, the sector is brimming with opportunities.

While the challenges of macroeconomic uncertainty and stiff competition from incumbents persist, fintech companies that focus on collaboration, innovation, and accessibility are well-positioned to drive the future of financial services in the region.

As Southeast Asia digital economy grows, fintech firms that successfully navigate these trends will not only scale but also bring financial inclusion to millions of underserved consumers and businesses.

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In the past decade, cryptocurrencies have evolved from niche digital assets to mainstream financial instruments. This rapid growth has piqued the interest of institutional investors, who are now exploring the potential of crypto assets to diversify portfolios, hedge against inflation, and capitalise on the promise of decentralised finance.

However, institutional adoption of cryptocurrency is still in its nascent stages, and a combination of regulatory, technical, and security hurdles continues to slow the pace of integration into traditional finance.

This article delves into the critical factors that institutional players should consider when entering the cryptocurrency market, along with an outlook on what the future holds for large-scale institutional participation.

The importance of institutional infrastructure

For institutional players, the cryptocurrency market’s volatility and nascent infrastructure present significant challenges. Traditional financial institutions are accustomed to operating on stable and scalable platforms that adhere to regulatory standards. To encourage institutional investors to allocate capital, the cryptocurrency industry must provide institutional-grade infrastructure, including advanced custody solutions, regulated exchanges, and liquidity management tools.

Many cryptocurrency exchanges today are retail-focused, lacking the robust backend infrastructure necessary to handle large-scale transactions that institutions require. The introduction of regulated exchanges, sophisticated trading platforms, and seamless interoperability with traditional financial systems will create more attractive opportunities for institutional players.

Regulatory challenges and the path forward

A significant barrier to institutional cryptocurrency adoption lies in the ambiguity of regulations. Cryptocurrency markets operate across multiple jurisdictions, each with its own set of rules. Inconsistent regulatory frameworks make it challenging for institutions to invest confidently, particularly in regions with unclear taxation, anti-money laundering (AML), and know-your-customer (KYC) laws.

Also Read: The Asian crypto tigers: Roaring into the future of digital currency in Eastern Asia

Institutions need clear regulatory guidance to develop compliant strategies for investing in digital assets. In this context, countries that have taken steps to clarify cryptocurrency regulations, such as the U.S. and Singapore, are better positioned to attract institutional capital. Future regulatory developments that address security, investor protection, and taxation will likely determine the pace at which institutional investors can enter the market.

Custody solutions and security concerns

The issue of secure storage is a top concern for institutional investors in the cryptocurrency space. Unlike traditional assets, cryptocurrencies require specialised custodial services that account for the risks associated with managing private keys. A single security breach can result in irreversible losses, making robust custodial solutions indispensable for institutions looking to invest.

Custodial solutions need to evolve to meet institutional standards of safety and compliance. Currently, many cryptocurrency exchanges provide basic wallet services, but institutional-grade services offer multi-signature wallets, hardware security modules (HSMs), and insured custodial accounts. These services need to offer both security and ease of use for institutions to gain confidence in managing large amounts of digital assets.

Risk management: Navigating market volatility

One of the core reasons for institutional interest in cryptocurrency is the potential for high returns, but the extreme volatility of the crypto market necessitates sophisticated risk management strategies. Institutional investors need access to financial products that allow them to hedge risks, including futures contracts, options, and other derivative instruments.

Some exchanges and platforms have begun offering these tools, but the market for cryptocurrency derivatives is still in its infancy. As more products become available, institutional investors will have greater flexibility to manage the risks associated with cryptocurrency investments, aligning digital assets with more traditional portfolio management strategies.

Stablecoins: The bridge between traditional finance and cryptocurrency

Stablecoins, which are pegged to fiat currencies, have emerged as a critical tool in the cryptocurrency space, offering institutions a less volatile gateway into the market. By using stablecoins, institutions can trade, settle, and invest in the crypto ecosystem without being fully exposed to the volatility of cryptocurrencies like Bitcoin or Ethereum.

Also Read: Banking meets digital assets: Coinbase’s take on Southeast Asia’s thriving crypto landscape

Stablecoins also facilitate smoother cross-border payments and liquidity management, providing institutions with a reliable means of transferring funds in and out of the cryptocurrency ecosystem. As stablecoins gain broader acceptance in the financial industry, they are likely to become the preferred entry point for institutions looking to access the benefits of cryptocurrency without bearing excessive risk.

Future outlook for institutional investors

The future of institutional investment in cryptocurrency looks promising, particularly as regulatory frameworks become more defined and infrastructure continues to mature. Several key developments will drive future institutional participation:

• Exchange-traded funds (ETFs): Cryptocurrency ETFs have the potential to make digital assets more accessible to institutional investors by offering a regulated and liquid investment vehicle. While regulators have been cautious about approving cryptocurrency ETFs, recent developments suggest that they may soon become a reality.
• Decentralised finance (DeFi): DeFi protocols are revolutionising the financial landscape by providing decentralised alternatives to traditional banking services. As these platforms become more secure and reliable, institutions may start to explore DeFi as a way to enhance their investment portfolios and participate in the next wave of financial innovation.
• Technological innovations: Advancements in blockchain technology, security, and decentralised storage will continue to address the challenges of institutional adoption. Companies providing institutional-grade services, such as trusted custodianship, audited smart contracts, and insurance for digital assets, are paving the way for a safer, more reliable market.

The road ahead

For institutions, the potential rewards of cryptocurrency investment are immense, but so are the risks. As the regulatory landscape evolves and market infrastructure improves, more institutional players will likely enter the market. For now, institutions must navigate complex regulatory environments, implement robust security protocols, and adopt sophisticated risk management tools to make the most of their cryptocurrency investments. The future of cryptocurrency is bright, but only for those who are prepared to meet the challenges head-on

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Climate change has become a mainstream topic, moving away from the spectre of NGOs and to an agenda among governments and in the corporate boardroom as well. The race to combat global warming has everyone interested, and the scaling of voluntary carbon markets is one of the key areas of interest in this regard.

Where the pledge was to keep global temperatures from rising beyond 2.5°C on average compared to pre-industrial levels, in reality, we need to find ways to prevent the earth’s temperatures from soaring by as much as 3–3.5°C within the 21^st century alone. According to a report by the World Bank, the crisis could drive over 200 million people into forced migration within their respective nations by as soon as 2050.

Currently, less than one per cent of global greenhouse gas emissions are tracked and tackled through the use of carbon credits. There is an urgent need to increase this level significantly, but there are several barriers holding back scaling in this sector.

The problem at hand: Not unknown but little done till date

The issue of reducing carbon emissions is something nearly everyone agrees upon, but in terms of action, little has been done so far. Although there is consensus that there is an urgent need to reduce global emissions significantly, in reality, emissions continue to rise higher at an alarming rate to date.

It’s not just the scientists anymore, but even lawmakers, industries and consumers who know that the mean temperatures across the world are set to rise significantly, causing ice caps to melt faster and send sea levels higher. This, in turn, is set to wash away prominent coastlines globally by as soon as the end of the present century.

There is a pressing need for businesses to transform themselves into becoming climate-positive, but the real challenge is how to achieve this. Not only should organisations reduce carbon emissions and become more responsible about reporting them but also ensure that this trickles down their supply chain for effective change.

The challenge with present-day carbon markets’ infrastructure

Carbon markets are typically decentralised but too distributed to scale up commercially at present. Meanwhile,  most projects related to carbon credits (including ones that use a Blockchain) are also too centralised in their design and lack the resources and flexibility to truly expand on a global scale.

Most of the traditional platforms for carbon markets and even the newer blockchain-based solutions work independent of each other, and there is a lack of standardisation that prevents interconnected operations.

There hasn’t been much focus on innovation and investment in developing decentralised carbon markets till date, despite rising awareness of what a pressing problem this is. The lack of interest in developing such solutions and supplying markets with robust and reliable technology for tracking and reporting carbon credits is one of the biggest hindrances that could prevent it from becoming a bigger concern.

Another major issue is a lack of understanding of how carbon markets function and how businesses can get started with carbon credits’ tracking. The market is highly opaque and very little is known beyond key sectors, although the concern is highly inclusive and all-encompassing.

Also Read: How blockchain is contributing for Scope 3 carbon emission tracking

To achieve true scalability, there must be a way to connect all existing solutions in the carbon market space together or create a whole new solution. The new solution should not function at scale without compromising on the key elements of trust, transparency and verifiability.

While centralised solutions may not be the answer, blockchain and Web3 technology can certainly render such a way out. A blockchain-based carbon markets platform can maintain decentralisation without being fragmented, complex and illiquid.

DeFi for carbon finance

One possible approach that can solve this challenge lies in the already existing worlds of DeFi and Web3. These technologies are designed with decentralisation from the ground up,  while retaining security and transparency.

Decentralised finance has already taken the world by storm and caught the attention of the mainstream financial services industry in 2022. Democratising access to financial services to users, DeFi enables smarter, cost effective and faster peer-to-peer transactions without the need for expensive, opaque and sluggish intermediaries.

A DeFi based infrastructure for carbon markets powered by blockchain technology can significantly speed up efforts by industries across sectors to achieve net zero emissions in a responsible, inclusive and transparent manner. Here’s how such a system could work:

Base layer

The settlement layer would be based on a blockchain network, carrying with it all the benefits the technology has to offer, including decentralisation, immutability and encryption. This layer would have smart contract functionality and run DeFi protocols tailormade to handle carbon markets.

Multi-protocol interface

A multi-protocol interface would help aggregate on-Chain voluntary Carbon credits (bridged via various existing projects) and structure these into novel investable financial products while also providing a set of smart services (identity, liquidity, compliance, and more); all delivered via a host of DeFi protocols

The platform

With a decentralised exchange at its centre, the platform would host marketplace with automated market making for Carbon-based structured financial products. API based integration with enterprise apps, decentralised oracles for access to accurate, tamper-proof real-world data and other external systems via asset wrapper services, relayer networks, liquidity pools and custodial services can create a wholesome and vibrant decentralised ecosystem for Carbon Finance.

An optional DAO could further provide a decentralised reserve currency backed by on-chain Carbon credits to facilitate transactions on the platform and within the ecosystem.

In addition to being accessible to enterprise applications, this layer can also be tapped by other stakeholders, including auditors, investors, aggregators or brokers and corporates or institutions. Both auditors and enterprise apps can leverage data from the system for reporting carbon markets data to regulators with complete transparency and no chance of tampering it.

DeFi protocols for carbon markets

DeFi protocols integrated with verified third-party networks or services can be used to create secure, liquid and scalable decentralised carbon markets infrastructure. They can allow corporate firms and institutions as well as individuals perform transactions with tokenised carbon credits.

Be it trading, investing, yield farming, insurance, and more, all these can be supported by decentralised exchanges that can tap liquidity pools and farms made up of carbon tokens or stablecoins. External services can integrate additional features for security, including identity management, multi sig wallets and even their own liquidity pools and relayer networks into the system.

Also Read: Why the Carbon tax is just a step forward and not a solution

The governance of such a system can also be completely decentralised by forming a DAO. The DAO can be responsible for minting or burning of carbon credit-based tokens, support staking, and even offer tokenised bonds and credits to investors and stakers.

Carbon registries can tokenise their offerings and input their contributions to power such a decentralised system.

Powering accessibility

Ensuring that such a system employs a simple user interface can encourage more stakeholders to partake in such decentralised carbon market applications. Open standards-based APIs to develop the system can make it more scalable and accessible as well.

The benefits

Such a system has several key advantages that make it attractive and enticing for use by stakeholders, including:

On-chain credits

Carbon credits can be stored and managed in a tamperproof, time-stamped and secure manner on the distributed ledger

Carbon trading

A DeFi-based carbon trading platform has its own efficiencies, including speed, transparency and energy efficiencies (as long as it is built on top of a ‘green’ blockchain). Powered by smart contracts, trading and settlement can be automated for improved efficiencies in operations which cannot be implemented in a conventional, centralised model.

Institutional tools

Organisations can innovate on the system further, developing and offering structured products based on tokenising environmental projects that counter climate change. These products can offer higher levels of accountability and end-to-end visibility thanks to blockchain technology, something that traditional systems cannot offer.

Liquidity pools

Carbon markets can be infused with higher levels of liquidity as protocols incentivise providing liquidity to the system. This can not only boost participation but power capabilities for greater scalability.

Making carbon markets more inclusive and efficient

Together these can help overcome the various challenges faced by the current centralised systems and help create a more efficient, inclusive, and vibrant decentralised carbon market. Scalable solutions designed and deployed on the blockchain have the potential to make carbon finance more accessible and attractive for individuals and institutional investors.

Climate change needs scalable and easily deployable solutions

Climate change is a global coordination problem, and blockchain technology can play a pivotal role in boosting climate action by solving many of the underlying challenges of the voluntary carbon market – including democratising participation, increasing transparency and liquidity, and reducing costs while preventing risks of double-counting, hacking and frauds.

With the emergence of Web3 and decentralised finance, we have the opportunity to take this one step further, create truly next-gen smart carbon finance solutions, and effectively accelerate efforts towards addressing the most existential threat of our time.

The time is now!

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This article was first published on September 6, 2022

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Despite turbulence in the crypto space, interest in blockchain technology and the belief that CBDCs are set to be the foundation of the future global monetary system are at an all-time high.

From China to the European Union (EU), governments worldwide are investing increased amounts of resources into launching their own CBDCs in the near future. In fact, there has been resounding agreement from leading financial institutions which anticipate that CBDCs are set to revolutionise money.

The future of global economy

Over 90 per cent of central banks are exploring ways to incorporate CBDCs into their monetary systems. A recent report by the Bank for International Settlements (BIS) even highlighted the structural flaws in cryptocurrencies that make CBDCs a more ideal and viable option.

According to the BIS, CBDCs can “meld new technological capabilities”, which simultaneously removes the associated risks related to unregulated intermediaries used in cryptocurrencies. At the same time, CBDCs can still perform all the features of cryptocurrencies like programmability and tokenisation. 

Beyond safer, faster and cheaper payments, CBDCs have the potential to bring new innovations to the fore and empower transformational change at the industry level, benefitting both institutions and retail consumers.

In a joint report led by the BIS, International Monetary Fund (IMF), and World Bank for the upcoming G20, CBDCs represent a fundamental shift for global cross-border payments as it enables instant cross-border settlements across time zones and drives payment diversity. This will go a long way to create a more vibrant, resilient and efficient payments ecosystem and disrupt the existing landscape where incumbents dominate the field. 

Global associations such as the BIS, IMF and World Bank are not the only ones doing research and experimentation in CBDCs. The CBDC global race is heating up at a regional and national level too, as central banks initiate their own experiments.

Also Read: Could China’s CBDC threaten decentralised cryptocurrencies?

In Asia, we are seeing Singapore leading the region as its Monetary Authority of Singapore (MAS) embarked on milestone collaborative initiatives, from Project Ubin to Project Dunbar, a follow-up to its earlier project, which is now exploring the viability of multi-CBDCs in global cross-border payments jointly with BIS, Bank Negara Malaysia (BNM), Responsible Business Alliance (RBA) and South African Reserve Bank (SARB).

CBDCs and its many benefits

The benefits of CBDCs do not simply stop at cross-border payments. Domestic wholesale payments stand to benefit from CBDCs through the introduction of Delivery vs Payment (DvP) and atomic settlements of digital assets.

On a global scale, securities settlement processes worldwide have evolved at different speeds due to various reasons resulting in market inefficiencies. This has led to the acceptance and reliance on a delay of 2 days (T+2) to conclude DvP processes.

However, with the convergence of interest in achieving shorter post-trade settlements and the need to source liquidity and align financial records, market participants have been actively working towards a move to T+1 post-trade settlements. 

Already at the forefront of finance and technology, R3 recently expanded on its partnership portfolio with their latest involvement in Project Ion, a significant platform led by the Depository Trust & Clearing Corporation (DTCC) to realise .

T+0 settlement cycle as well as instant finality in securities settlement. DTCC’s Project Ion will leverage R3’s flagship DLT product, Corda, to enable resilient, secure and scalable settlement service to clients worldwide. 

The materialisation of the T+0 concept is already within sight with initiatives such as these, but CBDCs play a significant role in accelerating this movement as CBDCs will ultimately allow financial institutions to enjoy improved efficiency for cross-border payments, 24/7 access to payment systems and the potential for a reduction in settlement and counterparty risks. 

Beyond securities settlements, CBDCs can potentially create social impact as it promotes greater financial and digital inclusion through a universal interoperable legal tender payment instrument.  Innovations like offline CBDCs can even work similarly to debit and credit cards which creates an innovative way to reframe the notion of money for the average retail user.

One functional option for CBDCs, which is still being explored, is its programmability for retail use. This means that CBDCs can be designed and programmed for specific uses, which differentiate them from fiat or commercial money.

Also Read: How Web3 will revolutionise borderless banking in Southeast Asia

The potential is tremendous as it will likely open up a whole range of financial services for retail users. As IMF Managing Director, Kristialina Georgieva proclaimed, “the history of money is entering a new chapter” indeed.

Leading countries at the forefront of introducing CBDCs

It is no surprise then that many countries in Asia are actively researching, experimenting and implementing CBDCs to enhance payment systems. Most recently, the Asian Development Bank (ADB) introduced its two-phased project that will serve as a platform to bring central banks and central securities depositories (CSDs) from across the Association of Southeast Asian Nations (ASEAN) and the Republic of China, Japan, and the Republic of Korea together to facilitate associated discussions in the Cross-Border Settlement Infrastructure Forum (CSIF). 

This is in addition to the ongoing Project Dunbar, a collaboration between the MAS, BIS, Reserve Bank of Australia (RBA), South African Reserve Bank (SARB) and Bank Negara Malaysia (BNM), which is exploring the use of multi-CBDCs in the clearing and settlement of payments and securities as well as  Project Inthanon-LionRock, an initiative between the Bank of Thailand and Hong Kong which has since expanded to include the UAE and China to become a multi-CBDC project in 2021.

One thing is clear from all these initiatives: central banks all around the world are recognising the viability of CBDCs in the payments ecosystem, and they are ready to put in the necessary legwork to make CBDCs the future of money.

Of the advancements made so far, it is significant to see so many emerging economies already looking to launch their own CBDCs. These include Cambodia’s launch of Project Bakong, co-developed by a Japanese fintech company in 2020; Nigeria’s eNaira is issued by the Central Bank of Nigeria (CBN), although this is currently encountering low demand challenges from merchants due to a scarcity of users and a lack of user knowledge in rural areas. 

The race is on, and as countries such as China launch the e-CNY and markets such as Thailand and Hong Kong double down on their research efforts in the digital currency space, the question isn’t who will be the first to implement CBDCs nationally but rather: who will get it right?

From The U.S Treasury to the European Central Bank, governments and central banks worldwide have launched working groups and collaborated on projects to identify best practices and make recommendations for the most efficient path forward. It is also becoming imperative that industry experts are involved to ensure that the path for implementation is smooth and sustainable. 

Many industry players are well-positioned to contribute their expertise and combine the principles of traditional finance with blockchain technology to produce groundbreaking and innovative solutions to support ongoing regional and government-led initiatives. With the knowledge of the frameworks and rules that guide the world of traditional finance, these players have been at the forefront of setting industry best practices and building new frameworks to advance CBDCs in the region.

As a leader in distributed software and enterprise technology for regulated industries, R3 plays an active role in providing advisory services to central banks across APAC, which includes the Bank of Thailand, which has been in partnership with R3 since 2020, the Hong Kong Monetary Authority (HKMA), the MAS and RBA.

This is in tandem with its ongoing work with regional institutions such as the ADB.  R3 has also been building a resource base on CBDC development which spans white papers, toolkits such as its  Digital Currency Accelerator that is powered by Corda, and a digital currencies hub to cover the latest in the industry. 

Final thoughts

The global CBDC race is only in its infancy. Though many have already launched their CBDCs, there is still some way to go before we see worldwide implementation. The onus now falls on both private and public entities to work in partnership with each other to shape the future of money and the global economy.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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This article was first September 5, 2022

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In today’s rapidly evolving business landscape, leaders are tasked with spearheading innovation and navigating the complexities of AI adoption. As we strive to stay at the forefront of technological advancements, we must take a moment to reflect on our own mental well-being—and that of our teams.

The past few decades have witnessed wave after wave of technological evolution, with AI being the latest trend that we’ve relentlessly pursued. But amidst this chase, we often forget to ask ourselves the most fundamental question: Why are we adopting AI, and is it truly benefiting us? Don’t get me wrong, I love AI and am actively adopting it myself. However, it’s crucial for us as leaders to be clear on the “why.” Is it merely because AI is the latest buzzword, a trending topic, or a directive from the top? Or do we know exactly how AI can help us achieve our strategic goals and optimise our operations?

Our unwavering focus on strategic goals and operational demands can unintentionally obscure our view of the emotional landscape within our organisations. The constant pursuit of the latest technologies can leave our teams feeling stressed and fatigued, with little time to process and adapt to change. This constant pressure can also leave leaders in a perpetual “stress mode,” like trying to drive a car in seventh gear while the gearbox is stuck in fourth—a stressful and unsustainable situation for everyone involved.

Also Read: 3 ways AI technology can help startups save money

To build thriving teams, we must create a supportive environment where individuals feel heard, valued, and empowered. After all, a strong organisational culture is built on a foundation of well-being. By fostering a culture that prioritises mental health and well-being alongside innovation and productivity, we can create a more balanced and sustainable future for ourselves and our teams.

Technology, when harnessed effectively, can be a powerful asset to our organisations—but it’s up to us to ensure that it serves our needs and complements our human potential. Let’s not allow the allure of technology to overshadow the very people who form the backbone of our organisations.

Embracing AI and other technological advancements doesn’t have to come at the expense of our well-being and sanity. It’s possible to innovate and adopt new technologies while simultaneously prioritising the mental health and well-being of our teams.

If you find yourself grappling with the challenges of leading amidst AI adoption, don’t hesitate to reach out. Remember that you’re not alone, and we can all benefit from sharing our experiences and insights as we navigate this complex and ever-evolving landscape together.

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