The Intersection of Crypto and TradFi - TOKEN2049 London 2021

hello everyone and uh welcome to this panel i think it's going to be a very interesting uh discussion today on the intersection of tradify and crypto we've got a great uh great line of panelists here uh to talk with us about that and um over the course of the session um we're gonna we're gonna think about a few different things and i was given this sort of this sort of title for the talk and when i was given this title i started to think about what do we mean by intersection here and and how actually do these uh these two worlds interact um and you know i kind of came across the idea that sometimes they interact in a very complementary way so for instance crypto as an asset class another string in the bow for asset managers uh sometimes they interact in um a sort of way where it allows you to enable more products to be given but in other cases it's more of a disruptive kind of interaction and intersection either where crypto is just building alternatives that will eventually replace traditional finance or crypto is building direct competitors to some of the things that are used today so um throughout the next uh just under 45 minutes we are going to explore some of those themes and start thinking about what we're seeing happening now what's going to happen in the future where the challenges lie and some of the exciting sort of future opportunities for those things before we get into that i thought it would be good for me to just give you a little bit of an intro to myself and a little bit of a discussion about some of the things uh that we're doing uh just to give you my perspective um i'm one of the founders of vega protocol which is a effectively a new layer one which operates as a kind of scaling layer or an infrastructure layer for trading particularly around derivatives but actually derivatives are the most complex products so once you solve derivatives you can kind of enable pretty much all of the trading and vega was designed um it's sort of as an intersection of crypto and tradify itself actually so you know i worked in traditional finance for most of my career up to before starting vega i'd built and designed matching engines for stock exchanges i'd worked in and with derivatives trading desks with risk risk desks and so i had a big exposure to the traditional system but i also was a computer scientist who was into privacy and crypto and cypherpunk stuff and whatever else and so i was super excited by bitcoin i was mining some bitcoin i was getting involved in some of the early ethereum stuff um and i thought it was going to be really interesting to see if if bitcoin is the future of money or if bitcoin and tokens and everything else are the future of money what's the future of the financial system and the other question you can ask yourself is that is there any point decentralizing money if you don't decentralize trading and derivatives and everything else and the answer i came to is no it doesn't really it doesn't really help you don't get very far if it's the only thing you do is decentralize the money because most of the financial system and we're all forced to participate in that system it's not a system we can opt out of most of it is not just the money it's the things around it so i actually got involved as that kind of intersection myself with the intention of building something that was not let's look at one year at a time two years time let's try and just make money out of crypto degens whatever it was actually the intention of building something that could one day replace the traditional finance systems i'd previously worked on and you know the goal was to be able to go back to the traders that i was working with in desks in the city and in new york and say hey this product is serious and this product is something you could use and the goal is to eventually be able to get there and not be laughed out of the room by those traders for what we've built so um you know vega really really started on that same intersection um we are about to launch the first restricted main net which is a kind of governance network being launched by a decentralized set of validators and hopefully you know by the end of the year or roughly thereabouts that will migrate into a network which allows the first trading of instruments and and stuff on that network in a completely decentralized way so super exciting time for us and a super sort of uh appropriate topic uh given the current timing both for us but also i think for the for the industry as well um there are a huge amount of opportunities finance is this system as i said that we're all forced to participate in and i think uh creating a system that um if we're forced to participate in creating a system that treats us all equally and gives everyone the opportunity to help it innovate and grow and is not maintained by gatekeepers is going to be a wonderful thing to do so this is a this is a great introduction here and i think the things i'd love to see us talk about and get out of this are some of those discussions about those different intersections how they work what the challenges are um and where we think all of this is going and so with that um i'm going to open up with a question which i think you know a lot of people have said to me the leading thing right now for institutional involvement in crypto is the discussion of what are the clients asking for what are the customers on the ground demanding uh because i think some of the institutions are quite uh you know quite cautious but also they want to keep their clients happy so with that i'm going to hand over to the panelists and ask everyone to maybe give a quick quick intro um you know a little bit on their own position and then perhaps answer that question you know what are your clients asking for today which end do you want to start at either ending who wants to go fast i i'm happy to start hi i'm uh seth gins i i'm one of the managing partners at coin fund uh we are a crypto asset manager that has both venture and liquid activities kind of our roots were in early stage venture back in 2015 we just raised our third early stage venture fund this spring i run our hedge fund which is primarily in liquid crypto assets we launched that in february of last year we launched an nft fund which is structured as a holdco in september and we're about to come to market with a growth equity fund so late stage venture so really cover the the full waterfront of uh crypto investing 22 people um and um very very deep focus on really operational excellence as well as having a full functional research team my background is actually public equities investing so i i was a large cap growth investor for 18 years at jenison associates in new york got into crypto in 2012 through my angel investing so i was an angel in coinbase and then for the next eight years it was watching going to developer conferences meeting investors figuring out if and when this was going to become an institutional asset class because i would want to launch a fund when when that timing came together saw that coming together in 2019 with the intersection of infrastructure for for custody and uh the the derivatives ecosystem for risk management um and uh joined coin fund at the beginning of 20. um to answer a question i i think what we're hearing from institutions right now is um they're they're looking to capture the asymmetry of the the return potential now obviously we're a bunch of directional funds and and if we had um kind of market neutral i'm sure we would be hearing that interest as well there's very broad interest in the space there's a belief that we're going through a secular de-risking right now uh like tesla in 2013 uh like netflix around original content where you you have a um a big step up in prices across the asset class and you don't tend to uh to look back so a lot of people trying to quickly pull together idd odd internal competencies and and get ready to allocate in the areas that really resonate most with uh with with their practices i guess i'll go next um yeah hi i'm johnson schmidt i'm head of strategy for talos um yeah my background um previously uh ran the crypto team at goldman sachs and then before that was a hedge fund portfolio manager for quantitative equities for about 10 years um and then before that i was uh you know sort of always interested in decentralized stuff and i worked at a company called limewire which was a sort of napster equivalent was an early developer there so that was sort of decentralization before we had decentralized money so the business models were harder um and then uh yeah talos is a software company in essence we are a crypto trading platform and the goal is for many different types of participants in the crypto ecosystem to come to this portal this fabric sort of plug in their services as well as consume other people's services so we try to manage the end-to-end workflow of the entire trading lifecycle so everything from free trade to actual trading to actual post trade uh if in particular if you're doing otc you actually have pushed our settlements in crypto um we're based in new york we are global though we are very much a decentralized company we have i think employees in maybe 10 countries now about 30 overall so i'm itai tuckman i run city's global foreign exchange business so we are the biggest fx bank in the world and i've been with city longer than i would want to admit i started at the bank when i was 19 years old i've lived in a bunch of different countries i had a bunch of different roles um in traditional finance i was out for a couple of years we could talk about that over a coffee or a beer but i want to answer the question really about what our clients are coming to big banks and i will just say like this in city's view but as somebody central to that client conversation i have a lot of them and we have on the order of magnitude 10 to hundreds of thousands of institutional clients that deal with us considering the scale that we operate across 80 80 countries where we have a dealing room and i have people there and it really started just with bitcoin right i mean that's the honest answer clients came and said particularly institutionally around march april last year at the peak of the pandemic to say the store of value narrative on bitcoin is a believable narrative i have nothing in that narrative um can you help how do i get access to a marketplace now if you think about what kind of clients we're talking about if you are a family office ultra high net worth individual the minute you had that narrative you can just act you don't manage what i call opm opm is a central problem of the ecology which is when you manage other people's money it's a different standard the way you act the standards and governance you need brings clients like that to a bank like ours and says can you help us with the problem of accessing beta in crypto particularly through the store value narrative the most inspiring thing about that whole thing is how quickly that narrative changed it was almost instantaneously a narrative about investing in crypto ecology and decentralized networks and a different kind of financial architecture and future it became a technology an innovation investment conversation within about a millisecond as everybody knows who's in crypto like that you know you start with bitcoin and you're you're down the rabbit hole very very quickly uh and so for us like what are what our clients ask us for well the only for the pieces that fit a bank operating in the penumbra of a crypto environment that's already extraordinarily robust and what are those pieces things like governance risk control you know so that they can go to their investors and say hey we have a blue chip custodian that has a 200-year brand that i know that if something goes wrong they will make us whole they will stand by us right and i think it's notable for example in the institutional ecology that no large bank has its own branded crypto custodian under its own brand and balance sheet yet but that's what customers come in ask for they also ask for us to abstract liquidity and to say you know for us to to set up a trading business that can manage and deal across all the things for example that justin's business lets people do it's very difficult you already have pipes to us you have documentation you already have is does you already have these things that we need because we manage money on behalf of pension funds and institutional investors can you help us with that um that's the second and the third thing that i would love to dig in further later is really about the rail of money things like stable coin environment can we get more efficient about fiat actually versus to be more efficient about accessing decentralized networks and the feeling that when we get safety and soundness around the stablecoin environment and appropriate regulation and governance can banks help make that a more efficient process versus you know traditional processes in fiat so plenty to unpack yeah so my name is fenbon i work for state sweden unfortunately it i just stole my thunder because my opening line was we are 200 year old bank and we have the pedigree in custody so that's where we started so but there's a point to this um when we started a couple of years ago to getting serious about digital assets and we've always looked at this like i guess most banks know very much from a technology perspective what would mean how can you deploy that but over the years really then flipping this around the way we should do it really looking first at what are the business problems so like we would run any other business we never start with what's the technology first and how do i apply it but you know you go the other way around and i think it was a bit of a learning for all the banks that you know we do uh we have to approach it in the same way um we have clients that get crypto exposure from various means there are some that actually acquire bitcoin directly or any other asset for that matter but i would say that's the smallest part there's a lot of exposure at the moment particularly from the more regulated institution investors getting exposure through futures that kind of structure as well as investments through etps etfs and in a way it's easy because it flows through the normal pipes in terms of trading on a traditional exchange and then being custodied as a normal instrument but also from a regulator perspective it's much easier a lot of um regulated uh fund structures like uses in europe for the act funds and u.s probably cannot right now invest in crypto because it would not be an eligible investment for those instruments for those institutions so we see if you want the the the the digital asset investments really come off from the alternatives as it owners uh and i like your point around sort of you know self-managed persons or private wealth type of organization being there first the key thing i think is sort of sort of the if you want how the these assets entering to before you then also changes a little bit how you have to think about uh basically your entire governance risk control framework and that's i think something that on the one hand side institution investors asking for so the idea is if i were to appoint a bank like state student we have been doing custody as i said for 200 years and to be honest we don't do anything else yes we do risk management we do the the asset management side as well but our focus and reason to exist is really managing assets that that's all we we do and so the expectation is if we were to do it it should be better it should be safer it should be more cost effective and that is nicely set but obviously it's a it's a complex task to do that given the the market structure around us so there are things like if you trade on the number of exchanges you don't really have transparency around your counter parties there's no matching processes boys who talked earlier you know the pre-funding requirements there's a lot of market structural issues that are absent from the traditional centralized marketplace and just plugging in a bank who is regulated doesn't solve for that so we have to actually engage with market structures and that's really what i find interesting at the moment that when we're talking about intersection it's not just we coming with our expectations in the crypto market with the expectation but i think both have to adjust and adopt to make that work for the institutional investor awesome um thank you everyone i think that was really interesting and it set something something something off in my mind where i started to think about the difference between the word intersection and exposure and um you know we're here to talk about the intersection of these two things but almost entirely so far the only intersection we've we've identified is that traditional finance is interested in giving people exposure to what they want and i think you know that's probably sort of the customer service driven or customer service led approach which sort of says naturally these people are defensive and cautious about this stuff and possibly even if it starts to get big threatened by it as an alternative and so really the place where we start to get this intersection happening is around exposure because clients are saying i want exposure to this but but the intersection of these things actually you know people will start off saying i want exposure to this asset class and then they will say i want access to this product or service and then they will say i want to use these things and then they will say i want my bank account to to have a public key yeah and so that sort of sets up to me this sort of interesting question of what is holding back from going from this sort of exposure to integration and access i mean maybe i'll start but guys chime in i think um the answer is a lot right like um and first like to your point we're in the business of serving our customers needs like we are not uh tesla which is in the business of inventing things that customers will want in the future that they don't even know they want yet and so we are very responsive and that's our core mission is to be responsive to the things that our customers are asking for so that's what i say it's a feature of trad fi not a bug that's the way that we um operate um in in respect of your question about you know sort of like how that how that develops and what's holding us back i mean everybody talks about regulation obviously so it's the like big elephant in the room um and banks it's not just that we're regulated it's that we stand for safety and soundness in the financial system i'll give you an example so i run up an fx electronic business that's as big as anything in the world if we have a single outage like that has any meaningful impact on clients it's a regulatory event it's an event that requires a ton of governance a ton of notice it isn't like what you tend to see in crypto which even the biggest this is like okay these things do happen we just kind of accept them as crypto people that they happen you know our customer base has an expectation that they don't happen and our regulators have an expectation that they don't happen so part of what's holding back is that it's that it's not just the regulators say slow down on this product or you can't do x or you can't do y but for us to add value to our customer base we have to add value in an environment that has the standards that we would expect from safety and soundness you know the other thing is this question about what's a moat you know what's what's a what's a windmill what's an opportunity i really don't see that in tranfi i think a lot of people from the outside see that like we think it's threatening our business models and therefore we don't want to engage i mean i think there's a lot of bs in that comment the reality is that banks are not natural participants in an ecology that evolved from retail and is now pulling itself into the institutional environment and our job is to go slow like and i think most people um like me feel like it's not a first to the post like in technology it's first to the post you know your etherium refers to the post right like in what we do it's not first to the post it's actually the person who can do it in the right way the way that sven was mentioning that that really wraps the customer in the cotton wool that they're asking for can i just say one thing sorry um there's one point and i mostly agree with you just for one thing it's like if this is one of the few areas and maybe that's why i would say the trade 5 struggles a bit if i just ask my biggest clients what do you want they may not necessarily be able to say i want this they may want it in years time but so you have to change a little bit i think how how we develop products and that's what i'm doing i'm thinking about future requirements and then saying what is it that clients want and how do i deliver on this but and typically what we do voice of the customer ask tell me what you want i build it for you we're very good at it but now i have to say i have a hunch i have a conviction and i can only be directional correct and that's something that is more vc type of work and it's not traditionally what you do in a large complex organization but i think that's why intersections so important and what we're trying to do and we also stood up a new business division estates digital it's like i need to engage with fintech and the innovation where it comes from and then be able to take that innovation in-house without necessarily building it all ourselves so i agree with you but also as a result of that i think we also have to work differently and for me this is a real intersection we're learning actually from the crypto world how to approach these business problems that's uh really really interesting points there and i think you know a couple of things i want to pick up on um i certainly see that see and take the point around stability and around you know going slow in a way i think that's something that relates to the kind of the maturity of the industry and the maturity of the technology and actually you know bitcoin you could argue maybe is even already there it's been around for a decade and more and has effectively no outage so i mean bitcoin maybe is already there and then you you listen to you know robert lesnar talk about things like compound is like we want to be boring we want to become dull you know and and that is that is right you know and vega is kind of in a similar place like we are evolving rapidly over probably the next two or three years but the goal is to become boring in infrastructure and and the kind of thing that actually that can get into that conversation about being going slow and actually becoming infrastructure is just probably the early stage of the technology so i think that's um that's a really interesting thing and then i guess the the other thought that i have here is that um one of the things that can be interesting is that if you're if you're not sort of going out and inventing the things that people don't know they want yet sometimes when there's a generational change in technology what that means is that someone else goes and does that and suddenly a bunch of the things you thought you could rely on in terms of business disappear out from under you and i think um you know i was talking to to seth a little bit before the session about some of his ideas around around equity and stuff and and i think that was one of these sort of cases where there are some things we can sort of see potentially happening that come as quite a surprise to traditional finance at this this sort of intersection and actually become a land grab where people suddenly uh suddenly latch on to this technology i don't know if you want to expand on some of those ideas yeah and and there are a few things that i'll i'll quickly touch on as well so when we look at valuations for borrowlend protocols there's definitely a component of time in market there's a temporal access to valuation of borrowland protocols which is very much that trust and the fact that it's been in market obviously for crypto it's on the the order of months rather than decades or centuries but but we actually see that as a quantifiable valuation factor um which is quite interesting um the the second thing that i'll quickly touch on more broadly and then go to where where you're going barney is on the um the cadence of innovation in crypto because this is open source open competition and global the cadence of innovation is just off the charts relative to anything that i've seen the investment world i was investing in the most innovative large cap equities i mean much slower cadence of innovation that was on a quarterly or annual time frame i also have a big angel portfolio that that's like very highly innovative companies but much slower cadence of innovation than crypto where if there's a hack everyone immediately sees what the vulnerability was they check their code bases and they fix it right away like you you don't have that in the traditional world and you get a hardening of security you get a an introduction of feature richness that just like the cadence is non-existent in the traditional world or it's very much niche to the the um kind of tension that barney was referencing um we think a lot about what the future of equities uh is likely to look like i actually had a cio ask me he said um bonds are the new cash equities are the new bonds and crypto is the new equities and he's like what what is the future of equities and um i said look i think the future of equities is equities on crypto rails and um that that sounds like pretty boring at first glance right so you're you're talking about t plus zero settlement yeah that's great 24 7 trading yeah that's great but then you start to think about what you can do with peer-to-peer equities and and just like humor me on like what a peer-to-peer equity environment would look like but my contention is at a high level if you have um take a unisua but you have kyc in the wallets and you have market surveillance through a chainalysis cypher trace elliptic you essentially have a securities venue you have the raw materials for a securities venue where you could be peer-to-peer in your interaction so imagine if on a a retailer on black friday wanted to attract shoppers 8 am to noon and they said come in 8 a.m to noon on black friday we'll give you 10 back in our equity for for shopping during those hours and you get into really interesting stakeholder blurring dynamics right because then that shopper is going to say well do i want to go and shop at the startup retailer that has this cool concept that has 50 boxes and they're doubling their store count every year or do i want to shop at walmart that's growing earnings 15 a year 10 to 15 a year and the the ownership dynamic of that rebate starts to play into their their consumer or their customer decision and you can kind of take this to the next level where you say okay so what does walmart do in response to that well they have to start thinking about regionalizing their business i don't know if people remember uh tracking stocks from back in the day but you could imagine starting to have tokens tied to different parts of the business where where you could have higher growth rates you could have them be more attractive from an appreciation perspective all of these businesses start to get much more responsive to their customer needs because guess what if you say come and buy the new playstation at our store on saturday afternoon and you run out of inventory all of your customers are going to be dumping your stock at 1 pm on saturday afternoon and you're going to be scrambling so there's a really interesting blurring of stakeholder lines new responsiveness that comes into play and the last thing that i'll say here is um on the startup side if you imagine that like elon did his autonomous ride sharing network and he said we're uh we're going to give 10 percent back and imagine he did it as a new company and he said we're going to give 10 back in equity in the new business uh for everyone that purchases rides and if you contribute your autonomous tesla into the network every minute that you're in the network you'll get a little bit of equity how quickly would that network trounce uber and lyft in any geography where it's operating everyone would want to get equity exposure day one everyone would want their friends to get that exposure they'd want to build up the network and if you think about it from the startup side they're going from these discrete valuation step ups where they raise capital burn that capital down over time don't get credit while they're burning that capital for their customer acquisition for the network fx and then they get a step up for their next race imagine them now doing that on a continuous basis right and as they get their network effects their valuation just skyrockets on uniswap right away so some really interesting dynamics and and the cool thread through all this is that it's basically what's happening in d5 today but it's just doing it with equities doing it with equity tokens and i think we're a half a step away from being able to enable that awesome thank you for sharing that and the reason i brought this up after our conversation was because sometimes it's really hard to imagine what the what this what this thing is that that sort of flips that uh flips that intersectional view of it's what the clients want we're moving slowly and becomes the thing where the clients are somewhere else and now it's actually the the traditional finance that needs to move back to where the clients are and i think what this does is present a compelling vision for one one thing that doesn't require technology that doesn't exist even the the kyc rails and stuff are being built and kind of they exist to an extent they're not maybe not widely deployed they're maybe not widely integrated as sort of d5 primitive as yet but i think as you say half a step rather than three steps and so that that the reason and that presents a very compelling view to me and i think the interesting question there is like as more and more areas of finance that people are involved in uh start to open up in that way as as they start to change and as these opportunities start to arrive how does that how does how does traditional finance respond to that and how does the kind of the intersection evolve once there's there's demand for more than just this exposure for things like that maybe just one or two comments on this and and first some of the technology solutions like taylor's can also help in making this happen and then over time i like that vision it's just regulatory wise poor imagine you drive on the uber car and every time you do that you get a little equity you know subscription you know that would be today regulated activities the problem we see this all over at the moment so it's not that traditional finance is intentionally boring we are subject to very significant regulation uh ita you mentioned resiliency and in terms of you know what's the standard would be held accountable versus the others but also the kind of products and and where they can be distributed so the fact like in europe uh best execution you need to be very certain that is this an appropriate product for that investor as you cannot distribute that and in a way what we're saying is with crypto i'm making it a little bit more loose so we may like this a regulator may not like it to the same extent and i don't think we have a good new balance how how the equivalent equilibrium how this would be settled going forward um but nevertheless i think it's important to say in a way this is what we're trying to do so for me the future of digital is not we're buying a bitcoin we're printing of our private key in every hotel okay maybe but is what we trying to do is we're trying to organize economic exchange in a different way in a decentralized way peer-to-peer big believer in this we're doing this already with our traditional channels and i just think digital assets will accelerate this but then i need to have if you want a technology stack that actually allows me to be nimble to work with all of these different protocols and in a way and i hear this all the time particularly when you talk about security tokens at this stage of the process it's a bit more complex we it's a bit more difficult it's a bit more less integrated so every time i go to a crypto conference everyone's talking about the you know death of swift etc there's a good reason for iso standards to exist that drives machine processing and i don't have that same level of standardization in the digital world and i will need that in order to deliver exactly on some of these models and that's for me uh a real issue i like that vision that's why we're in the game it's crypto is a use case the bigger thing is kind of we can re-architect economies and this society that comes along with that but i think we're quite far away from this in terms of making it a reality yeah i think this is a really really good observation i think obviously you know we all sort of it's come up a few times the regulation sort of element in the room and i think something i've been thinking about there is you know certainly with the infrastructure bill in the states recently one of the things that happened on the i guess on the crypto side is a huge mobilization of people who suddenly realize they've got a lot of money they've got a lot of power there are a lot of them and they can get listened to and i've seen this change over the last few months in quite a big way um what i'm something i'm interested in is on the traditional side you know actually what's the what's the intersection between how crypto is approaching you know trying to lobby for and deal with the evolving regulatory situation in crypto and how trad fire is thinking about that as well like uh are the traditional finance firms also going to the regulators saying you need to sort this out we want to play here we want to do these things we think this vision that seth has created is a good one or are the traditional firms going and saying actually we're happy to say we have concerns because it suits our business and it keeps things out of these competitive alternatives so i suspect i am the most heavily regulated person in this room i suspect i'm not certain but i suspect um you didn't see my ankle braces and of course like you know the way that a big heavily regulated institution or anyone approaches a regulator is with an extreme amount of like sort of like consideration and caution right and the reality is because ultimately and this is a post-financial crisis world it is not crypto that caused this it is the global financial crisis that caused this right like the regulatory stakeholder in his organization my organization and you know i think increasingly in a lot of again when i use the word person's capital p persons not a d5 protocol you can't regulate a car or the internet or a code base you can only regulate a capital p person a human being or a corporate institution incorporated by the law and the challenges i think the regulators have been catching up not just the regulated and part of that is the understanding that they know that they will have to engage in this conversation and we also we talk about service providers and central counterparties like ourselves and regulated but investors are heavily regulated too participants are highly regulated too and they have to think about that so this is a journey i think everybody is coming to again i can just tell you from my personal experience as much as there is a moat which is created for tradify by regulation right i mean there's a reason why banks don't go by each other all over the place and consolidate anymore um that doesn't seem to me in the conversations i'm in to be really that relevant i'll be honest it's more about we want to do this in a way that makes sense okay when you talk about the tokenized rail of fiat like one of my core intersection is crypto is going to come out of the crypto world into the real world in a very big way but fiat and crypto will live together for some period of time uh maybe my adult life might be faster than that who knows we can have that debate how do these things coexist in a way that is enabling both to perform the function so how does a vendor in nigeria who actually wants to take fiat get that on a rail that is unlocked by the technologies and efficiencies that we all are here like wowed by and love and and spend a lot of time learning and understanding and that is a conversation which intersects technology business models and a regulatory environment and i think everybody is just learning including the regulators that's what i see yeah i think that's again a very good point and i think um we often we often forget that the regulators don't necessarily know what they're doing even though every time they talk to the capital p person they're regulating they have to pretend that they do so it's definitely something i think where where that that's evolving too and i think you know something i we've seen is uh traditional finance starting to get more involved in in the exposure to the asset classes i think they've probably been slower to get involved in the kind of the regulatory conversation like you say maybe they're a bit more cautious maybe they have to be very careful since the financial crisis certainly i remember the way banks were talking to regulators about cdos prior to the financial crisis i wish they would talk to regulators about crypto like that now but uh certainly that's there's a really good point there i was just going to sort of hand over justin if you have any points any sort of points on any of this um just want to round out the conversation before we open up maybe to a few questions from the floor um sure um yeah i mean i obviously enjoying the conversation tremendously you know i think there's sort of a lot of like non-intersection of crypto and trad five that we probably could talk about too where there isn't that much actual intersection um and i think one of the things that that really differentiates crypto and tradify is it's really culture and the triad and tradify obviously means traditional but i think a lot of the crypto people are a little bit younger and they really don't understand how really conservative a lot of traditional finance is particularly in terms of risk-taking and when regulators or large financial institutions like banks and broker-dealers come in and look at this space they primarily do a risk analysis right so they look at market risk obviously sort of crypto prices go all over the place that's probably not that big of a deal they're used to you know prices going up and down there's operational risk there's tech risk and there's obviously reputational risk and i think reputational risk is one of the most prominent things that is is still to be worked on i think in a lot of ways the crypto ecosystem has made a ton of progress on operational risk on tech risk et cetera like the the infrastructure that we have now is so much better than in 2017 when the institutions first tried to take a look at crypto and we're like oh my god what is going on here um and in 2021 i think the entire ecosystem has made uh great strides and just making all that be much more mature um but also the same time like crypto is quite different right like i literally just had my picture taken with an alpaca like out there you know it's like super like it's fun i think i think crypto is meant to be fun i think part of that fun is that you can move fast and break things if you are a systemic large organization you don't have the luxury of moving fast and breaking things because that's what the regulators really care about the regulators really care about systemic risk and things that are so large that if things go wrong that people get really materially affected um so you know i think we will continue to see the intersection of crypto and tradify grow i do think if you're a personal investor and there are a lot of various different types of clients right you know it's a very common mistake is to talk about clients is like one monolithic thing where they're actually very nuanced and have very different wants and needs and demands um if you're waiting to get into crypto say by waiting for your traditional financial institution to offer you a market access product that is like highly regulated you might have missed a huge part of the run-up and one of the things that crypto brings the potential of which is very disruptive very interesting very challenging from a regulatory perspective is in many ways you can be your own bank you know you can custody your own tokens you can move them around you can annihilate them accidentally this happens um but it's you know more personal responsibility but also at the same time from more of an asset management perspective with crypto you're able to get into some of these assets and invest in them at much earlier stages than you would be in the normal life cycle of an investable asset if you're waiting around for say a traditional ipo to come onto the market so those are awesome can i say one quick thing while we're waiting for questions um so it just on your point i totally agree with what justin was laying out and barney to your point about the regulatory environment around the infrastructure bill in the u.s i think that was one of the most important uh moments in crypto history i i think we can not overemphasize how important that infrastructure build debate was as a pivotal moment in the regulatory trajectory where you had bipartisan senior senators saying crypto is about technology crypto is about innovation it's here to stay we need to keep it on shore and even though the the negative language around crypto state in the infrastructure bill like the the awareness and engagement uh was accomplished and you saw senator toomey when the pboc banned uh crypto a week and a half ago senator toomey tweeted crypto is about crypto and bitcoin are about democracy and freedom so this is the ranking republican on the banking committee um so like that in my in my view is one of the biggest de-risking events for the space any regulatory mandate that comes out of congress is now going to be colored by by the engagement that came from that even in the past week or so and not to be the two americans in london talking about american politics i agree i mean both both the both you know the leader of the fed and the leader of the sec both have come out recently saying you know we're not going to ban crypto like broadly you know which is and i think the the other thing that's been interesting there was at one point more than half the mining was in china for bitcoin so bitcoin was an agent of the china communist party china has cracked down and so now you've lost the you've lost that potential narrative against it and and that's been a huge huge benefit as well um the other thing that just before we open up the questions that i thought when um the comment a second ago that you made justin which i totally agree like a lot of people are young and don't understand how conservative traditional finances something that made me think about the kind of generational cultural shift that's going on in finance is i can turn that around and go a lot of people in traditional finance are old and they don't understand how the young think about money and how the next generation of their customers think about risk and that's probably true of both traditional finance and regulators and this is one of the the reasons why it's so hard to get right and the reasons why it's going to be is going to be very interesting because you have the old old guard wants to make money out of this and want to offer clients to make money and the new guard wants to replace the old guard and see them die like not all of them but realistically there's a lot of people in the community who think and act like that in terms of building products and getting it out there they don't really care whether the bank exists because they want these products and these things and they're super passionate about it and that is an interesting kind of cultural thing and maybe it goes away as this stuff matures or maybe it stays a kind of you know a vein throughout some of this as we go forward and with that i'd like to open up we've probably got time for two or three questions if we're quick um i think there are some mics around yeah thank you it's a brilliant panel so um i i i was a banker also so now i moved to the crypto field uh i have a question for sat and it is so i heard that there was a deal this year for digital bonds goldman sachs santander and sustainable issue digital bond and the settlement bank was settled this in digital currencies and settlement bank was the bank of france so my question is like i heard that bank of new york doing some kind of stuff so the question is t tai what do you think can this instrument issued by the cd maybe next year and question to sat i mean what do you think about a risk assessment of such instruments can we put something exotic there like nft collateral so we can do a pipeline between institutional investors or retail investors in my brave dreams to substitute ico instruments on digital bands so so so way we can support creative industries so maybe i'll take the first bit right and i'm i'm not i mean i'm here in a personal capacity so i can't talk about cities plans et cetera but let me touch upon settlement risk because i'm really passionate about this particular topic this is a solved problem thank you to everyone in crypto let's go and unlock all of this capital that is sitting trapped in these processes to the betterment of businesses and human societies by kind of getting on with it and you know if i think about like we will remember not in many years the absurdity that you're going to send me 400 million euros about right now maybe a couple hours ago i'm going to hold them it's great and you're going to wait until about 8 p.

m london time and then i'm going to send you you know 300 million dollars and how crazy a system that that is like the anchor of a lot of the like financial you know settlement system how we solve that who which protocol which group which organization etc that's the detail that everybody is working on now so those things i think we will solve and it'll be for the better of everyone crypto non-crypto fiat equity bond that's what we should be doing we should be looking at these puzzles that have very honest intersects across everything yeah i can chime in actually really quickly because i was part of that deal um there were three banks um you know i was the one who flew the luxembourg and gave the pitch to eib um so you know generally speaking that innovation i think there was particularly was a primary market innovation right it was an investment in banking innovation right and in order for you to in the secondary market trade things you need to issue them in this native context right so you had an actual native bond issued on public ethereum you had it actually paid for and settled with a prototype of cbdc from the bank of france and digital euro um it's going to take many many more of these things for this to come about you know i think we also believe in the t equals infinity you know that all these assets are going to be tokenizing blockchain of five they're going to be doing interesting new novel business models um but all of these things are going to be slow you know i think all these things are going to take time and i think you do have these large institutions that are very much looking to get into this and are looking for clarity from the regulators to say like what can we do what can't we do and the real and the real challenge there is just having those conversations and that just that just takes time and the the quick answer on the nft side is uh we absolutely think that nfts are starting with collectibles in art today but they're very much a core d5 primitive this is an area that we're investing a lot in on the venture side and i think one of the core representations will be credit worthiness we were having a conversation about this um a few nights ago so uh absolutely brilliant and unfortunately guys the the flashing display in front of me is telling me i don't have time for any more questions and that we need to start wrapping up i want to thank everyone on the panel for for joining us and having this discussion um i think it was uh fantastic to discuss this and i really hope that as much as there's a friendly rivalry between the two two spaces i also hope that actually by uh by you know taking the legitimacy from tradify and the new ideas from crypto we can make both spaces bigger and better and uh and bring the benefits to everyone thank you