Crypto’s Moment of Truth Boom, Bridge or Build

Now I don't need to tell uh any of you how popular crypto uh and digital assets are. Uh and in my community everyone says look at the change of administration in the US last year. Look at what chair fam is doing in the CFTC particularly with respect to crypto exchanges and look at chair Atkins non-custodial wallet is the right of every American accelerating policy. But I have to tell you something. It all started here and it started with this man in 2015 when he was the CEO of the ADGM, FSR and the regulator here and brought in the fintech framework, REITs, APIs and of course went on to become the CEO of Binance, the world's largest central crypto exchange and the FSR has just kept going with its digital asset framework asset reference token framework.

It's it's really been outstanding. And so this is a highlight for me because we're sharing now 10 years uh of history together and of working together and having done all of these things. And when we were coming on today saying you know this started as a fintech conference in 2018 that was two days and and and and look at the island now look at the infrastructure. So, Richard, welcome. Let's start off with uh giving the audience your thoughts of exactly where we are now that we're growing up with respect to building infrastructure um and and really building ties into the institutional financial markets.

Well, so first of all, greetings everyone. Salam alaikum. It's very good to be back at ADGM. Right. So um well to me if you look at the journey so far it has always been about building.

So building through the ages I got involved in crypto right about 2017 and then I push for crypto adoption and regulations here in Abu Dhabi in 2018. Right? So we became one of the first in the world to start regulating crypto sector. What goes around comes around the for the framework that I started then now is regulating Binance on a global level. Right.

So but if you look at crypto journey right so from very early days ICOs to defy uh to stable coins yes has been we keep finding new things that solve problems solve pain points throughout the world right so and the acceleration may come later but the foundations are always laid very early on if you look at stable coins they've been around for a long time but it's only now that you see mass adoption and rapid acceleration once the regulatory clarity come true on that front, right? Same for things like crypto payments um have been around for a long time, but now you're seeing that rapid adoption on the Binance front. We started the year with 12,000 merchants around the world accepting Binance Pay. Now we are close to 21 million merchants. So you see you see that pace of rapid growth, right?

Again things like tokenization have been existing around but it takes a long time to impart that knowledge and to highlight to people that this is a far superior technology that solve many of the pain points in different parts of the world in many different organization. If you look at financial institution media and back office today right you're doing accounting reconciliation settlement most of those can be replaced if you rethink the future by AI and blockchain right so if you rethink the future of many economic sector they can be rebuilt using AI and blockchain technology so that's why it's going to be very exciting in the next phase

and you you rais a good point it's uh I think for most of our uh learned audience stable coins have been really the the killer web 3 application digital money you know the on on rail on on rails or on-ramp offramp etc for for for fiat and I know we were speaking in in my institutional space you know tokenized money market fund uh you know collateral eligibility is really big but what what are the ties that you're seeing particularly between central exchanges defy protocols and and and you know the financial institutions of the world you know Wall Street the city of London.

Well, so if you look at the centraliz decentralization tech, right, is talking about the technology and the infrastructure layer, but access can be centralized. So for example, Binance is the largest centralized exchange in the world. We announced uh that we have just crossed a key threshold of 300 million global customers. So we're very grateful to our users and community. I'm sure quite a fair bit of people here use Binance as well.

So very very grateful for your support on that front but we continue to push the agenda on that front. So what we want to do is to build the most secure, most compliant, the best-in-class platform in terms of product features for our users, but at the same time bring about the convergence between the web two space and the web three space, right? So we're working with the likes of Franken Tempton, I know Jenny is here, um likes of Black Rockck and many others, right? to bring about that because we are seeing that convergence coming through very very quickly now with regulatory clarity and regulatory support but we're also building oursel out to be the best CD5 platform bring together the best of centralized features as well as decentralized and D5 features on that front right so if you look at we route things like our web three wallet finance alpha that's extremely popular allowing our users early access to very promising tokens for the future So those are extremely popular for our users, right? So we continue to push the agenda in terms of product features to make sure that we meet the needs the fast growing needs of our users.

Yeah. And I I think those um you know those releases on your uh relationship with Franklin Templeton Black Rockck really you know raised a lot of eyes and said okay now we we are here we're at the you know stage of the ecosystem where we've got better integration with highly regulated financial institutions but you know the number of announcements you've had in the past couple of weeks have been breathtaking for me you know yehe's now taking on the co-ce CEO roles a co Binance co-founder. Uh but coming here yesterday morning now and this comes full circle uh hearing that Binance now will be globally regulated uh by the FSR here at ADGM has got to be the biggest news uh for all of us folks that spend a lot of time with policy makers and regulators. How has that relationship I think changed? I mean and everybody talks about the SEC or the CFDC in the US, but uh are regulators really now uh you know leaning into this space and and recognizing the the benefits that you digital finance and assets are offered to society.

So if you look at Abu Dhabi, it has always been at the forefront of embracing technology, right? whether it's blockchain, whether it's AI and all this new emerging technology. Abu Dhabi has a very pro- innovation approach and putting itself to work very early on even before the rest embrace it. Right? So UEI has a minister of AI which you don't see anywhere else in the world is just show how foresightful the entire country is how foresightful that Abu Dhabi is on that front.

So this is one of the first country in the world and Abu Dhabi is the first jurisdiction in the world to start regulating the crypto sector and my thesis then was very simple right so if you look at crypto it has always been embraced by retail for the longest time instit institution was saying that it's a passing fat they'll go away regulators are not spending time on it but we always believe at especially at ADGM is this will be the future of finance but It needs clarity on two fronts. First, you need regulatory clarity. With that, then the mass adoption will come through very quickly. Secondly, you need institutional adoption because when it's just merely a retail play, things can get volatile, you don't have enough bread and depth of the marketplace. But with institution coming through, different investment pattern, different duration, etc.

, then it becomes a healthier marketplace, right? So we are seeing both of that that dimension coming through uh in 2024 last year and hence you see the mass adoption coming through now right. So we are very very grateful with the support of Abu Dhabi and partnership we became first in the world to announce this very comprehensive regulatory approval from Abu Dhabi FSR people know that is a very wellrespected regulator throughout the world and we serve our global users using this platform. FSR will regulate us you know end to end including our global liquidity on that front. Um so we continue to push ahead and pull ourselves to the highest standards in terms of things like compliance, risk management, investment protection uh on that front and that will really bring together I mentioned bring about the convergence of web two web three space.

A lot of global institutions, a lot of global corporates are looking at you know very credible licensing regime and credible licensed entity like ourselves. So even before this global license we are the most regulated exchange globally. We are regulated in 21 different local jurisdiction but this represents a very significant milestone for oursel where is it on a global basis we are regulated right. So is our ambition to the world as we work towards 1 billion users

and and I I think it is it is uh you know it really is uh uh revolutionary on the regulatory front because to the larger extent you've got a conduct regulator regulating you here globally uh which gives a degree of conviction to other regulators or other jurisdictions that that you're you know going to be going to or operating in. So it it it is almost a bit like a functional equivalence isn't it? So h how will that actually work uh when it comes to uh other regulators around the world like the you know CFTC the SEC the FCA with the the FSR now regulating you globally?

No certainly. So I think many of the regulators around the world can take comfort that you know we went through quite a long process with the FSR showing them doing walkthroughs showcasing all our expertise in different areas right so from our wallet custody uh to security function to compliance how we do KYB KYC transaction monitoring market surveillance to things like our listing process right casting so it's a end toend regulation And because we hold three different licenses that covers all our different clients, right? So first investment exchange that cover all our trading business uh invest exchange business. The second is a uh clearing house that cover our settlement custody and then third is a broking house right so cover our trade arrangement facilitation on that front. So it's a end to end process.

So many and fs has many regulatory working arrangementus with global regulators around the world. So global regulators can take comfort that we are holding ourselves to that high higher standard right that other regulators are familiar with. So in a we're in a form and shape and governance structure that regulators can take comfort and that's what many of the global partners are looking out for as well. So we are very pleased with this outcome. Well, we'll look forward to that and hopefully see maybe some global passporting regimes uh develop on the back of that.

Now, know we we only have a minute left, so uh I'd like to ask you about uh where you think the future is going. And so I come back to 1010 where we had this, you know, great uh you know, volatility in in in crypto prices. Uh to to which I said to my own community, well, boy, when you've got a 24/7 asset and you know, news pops, the market needs to sell off on a Friday night. Um crypto is likely going to be the canary in the coal mine. But you know on from that and the rebuilding the next uh you know generation of of infrastructure can you just give us your your your views on what the future is looking like for crypto?

Well, so 1010 is not a crypto event. It's a market event, right? So it affects all the different asset class. If you look at US equity that day, um it lost 1.5 trillion in value, right?

So we saw about 150 billion of liquidation in US equities alone. Crypto was affected to a smaller scale about 19 billion. So I just wanted to correct that. It's not quite a crypto event. It happens across different asset class.

But it's all about building, right? So the I still feel that the momentum is very strong. The drivers are very strong within the industry. If you look at all the key use cases, they are going through mass adoption. Yesterday at Bitcoin mean a CZ belief that the we may not see the four-year typical cycle in crypto.

Next year could be a super cycle, super year for crypto. So who knows? We can't predict that. But if you look at stable coins skyrocketed through the roof in terms of transaction volume, Jeremy on circle will tell you a bit more about that front. Crypto payments again global adoption coming through in a very fast way.

Tokenization another key use of blockchain and you have many key use cases in DeFi all coming through in a very sharp fashion. Right? So next year I believe the momentum is still very going to be very strong and with greater regulatory clarity and partnerships throughout the world we believe that you know uh the momentum and drivers uh and the long-term prospects for crypto continue to be very bullish

and with the S&P forecast to go up 20% next year if Bitcoin's correlated to it uh that that's an interesting forecast right and absolutely a comment about the market uh asset class failure on on Penton. But can I say thank you very much, Richard T. What a pleasure to to speak with you here today, sir. I only wish we had a bit more time. I know we we need to get off stage now.

So, and thank you for listening.