The role of tradfi in Defi adoption

Transcript

foreign [Music] can hear me that's great umta I lead business development at Signum bank and if you're looking at the title and wondering who the hell is Signum bank I just wanted to start with a quick show of hands how many of you guys have heard of us or know a little bit of what we do really that's that's more than I thought but still less than 50 so I'll give you a really quick overview just as a palette cleanser or a wetting your palette so uh Signum was actually established

back in 2017 when our co-founders realized that there was a lot of exciting things happening in the world of crypto and a lot of things uh that the traditional Finance world wasn't ready to engage with and so back then they already started working with finma in Switzerland with Mas in Singapore to words getting a banking license which we finally received in 2019 and so Switzerland and Singapore we look at as our headquarters but recently we've also gotten an investment service license in Luxembourg and uh Financial Service license in adgm in Abu Dhabi so today we have over 3 billion in assets under Administration and almost working towards 2000 clients now

uh in terms of what we do right you're like you're a bank why do you need to be a bank in crypto but um the first thing of course is that uh being a bank means that you get access to Fiat you know iban accounts and Swiss franc euro US dollar Sing dollar and more traditional banking services like Asset Management products if you want to diversify your treasury treasury Management Solutions and of course lending against your crypto assets and of course we're an Institutional grade custody provider as well as a broker and all of these things I can talk a lot about but that's not really why you're here because these are standard banking offerings what is cd5 so but the last important thing I think that's really

um especially after the year we had in 2022 that our clients are especially Keen for us to reiterate as well is that what differentiates us from a typical you know a regulated financial service provider so fully licensed banks are very hard to set up there's not that many that are working in the crypto space and that's for good reason but um regulated financial institutions we have several in the space and last year we saw sort of the difference between working with a bank versus working with you know financial institutions and the most important differentiator is essentially that all of your assets are held off balance sheet which means that in the event that Signum screws up or if

there's a bankruptcy proceeding or anything like this you simply get your private Keys handed back to you and that's uh and they would never be used in any bankruptcy court or anything like this which means your assets are your own or they're just protected by Signum and uh again after 2022 this was an important differentiator for us in the market so what do we do with defy or how can we work with D5 the first sort of question is that the D5 World kind of works you know in its own sort of non-regulated space by definition can't be regulated at this point and then you have a lot of players that are offering sort of more centralized gateways into it but at

signal we really have to think about how we can integrate these two worlds or how we can find a way to come towards using the power of blockchain while still following the sort of rules and regulations that Regulators are so fond of so at signal we really like to say uh The Future Has heritage and that is of course everyone wants to talk about a world where everything is tokenized and everything just happens really quick on chain no problems but the journey there is actually a little bit more deliberate and the journey there involves working with the established regulatory Concepts and Frameworks and bringing together sort of the best of both these worlds

and so when you look at uh in the world of D5 I mean I don't need to tell anybody in this room but what's uh what's really great is that it's inclusive it's permissionless but there are risks involved right like if you lose your keys um it can be anonymous which is not great if you're working with people who are sanctioned um but also there's a lot of flexibility and immediate settlement but on the C5 side we've got a very slow segmented multiple intermediaries but we do have someone who you can call when you've lost the password um to your account and fundamentally if you want institutions to play with you you have to be able to show them how you are

um working within the regulated rules rule sets and so how do we do this right so as I was thinking about the stock I was thinking about the last five years that see them's been around and the various steps we've taken along the way and it's it's actually really funny because we think of ourselves as a bit slow moving compared to defy or everything that happens in crypto but actually there was more topics than I could actually cover in this talk so I'm going to try and cover as many as I can the first and the the most I guess obvious one is in ecosystem support so what this means is you know running validator nodes for different ecosystems uh participating in their governance and being that regulated

voice even in a sort of non-regulated space the second is to support younger players with their fundraising options um helping them make sure that all of their fundraising is completely compliant and working within kyc rule sets and also kind of helping them build those hubs and connections with um players in the space and then of course uh because a custody in brokerage is our bread and butter having all of these ecosystems supported with the traditional Financial setup is something that they all actually usually benefit from so like I said first is like to be the network partner

um having access to crypto banking for all of these different players I think is something that uh I think everybody in this room really wants and so where we try and we work towards making sure that this is something that is available to them and then because we are quite Global now right I showed you on the different uh countries that we are regulated in you're also able to leverage some of that Network for your own growth and um again working with the hubs that we have uh developed within the bank as well so um the second kind of point right is uh everyone's talking about liquid staking tokens everyone's talking about

how we have uh different yield opportunities in the world of regulate or regulated staking Solutions so we're actually very proud to be the first bank in the world to offer um regulated staking so this means that in your regular banking setup imagine logging into like you know your UBS account or something and then seeing your ethereum there which is already the first big step but the second being also being able to stake that ethereum and then being able to see an overview of all of these taking positions with the tax report on how to report for all of these things and then me and then knowing that the counterparty that you're working with is a super um audited and constantly reviewed by

the regulator by the the amount of risk and compliance oversight that we have is is not funny and then being able to also participate in the governance of the network while still um being within this regulated framework so these are the assets we offer right now but this is a constantly growing thread this one is kind of interesting right I don't know if some of you saw the headlines from last year where um maker Dal actually had its first uh one of its first quarters where they didn't actually make a lot of money and this was because of the macro environment where you had a lot of increase in the bond yield which meant consequent decrease in the default yield and so

um our team actually worked with monitors to come up with this proposal where they'd moved 500 million in usdc into liquid Bond strategies and this was a first where you see a massive chunk of crypto assets still benefiting from a macro interest environment to which I mean some people will say oh yeah it's just crypto assets moving out into the real world but what we're really seeing is like there was a flexible doorway where you can move your assets between what is actually uh you know lucrative at that moment because it's not always the case that the bond environment is what it is and tomorrow let's say say when the bond interest rates go back to like one percent or whatever we can see the same sort of gateways already open

for assets to move the other way and this was actually a big really big deal for us and maker now uh decide to work with us and move 500 million and I believe they're doing another large tranche relatively soon um and this one again might be interesting for maybe some of the D5 Asset Management Solutions who are uh or guys who are working on that sort of product in the room because um when you're creating a bank right the first thing you do is you sort of work with Okay let's give people the opportunity to buy Bitcoin easy the next one is okay how do we create maybe a product that they can buy into and then still get exposure to the market and

once those kind of baby steps are done which we've done of course the next step is really um how can we make all of these processes a little bit easier using technology and that's uh um that's a little bit where we've reached now and so um first of course you might ask why should you use a blockchain tech for Asset Management Solutions so the obvious I mean I don't need to convince anybody in this room I think that blockchain uh is a good solution for uh Asset Management products but still to cover it right so we've got increased scalability increased speed it's obviously a lot less expensive and what you can really do is look at different

profiles of different sorts of clients and then really build customized solutions for each of these guys and what's also really nice is that these they get immediate transparency they can constantly see how their assets are working and what their daily nav is or their hourly nav is really and all of these reasons were why we said okay we have to give this a go but the question is with whom right and so we started with working on a pilot now with the enzyme Finance um and why did for a lot of D5 protocols who want to move into the institutional space there's a bit of a question on why uh or how a regulated player like us would choose to work with a specific

counterparty and so in this case it was looking at the sort of long-term record that these guys have they've been in the space for a while but also the fact that they thought about all these institutional great features that are really important for this kind of integration so let's talk about like um subscription queuing how do you make sure everyone can enter an exit at the same time or how do you have governance models around this how do you make sure that there's nobody else who can change different assets as a change let's say the rule sets governing a specific Vault while it's still being active um then you have uh access to Market of course there's a lot of different uh

ways in which or different types of assets that can be included and then of course are they audited have they taken the precautions necessary this one's you know a no-brainer but also working with these kind of teams is making sure that they understand the level of compliance and risk oversight that we have I talked about it before and I can say it again they spend a lot of time checking and rechecking what we do probably for good reason because it's uh we are kind of pioneering into the space but um when you as a I.T security person are hit with let's say a 30 page request on how a specific I.T contract a smart contract was written for a lot of smaller D5 protocols this can be really

um daunting right how much resource do you put into just answering these sorts of questionnaires but um working with enzyme has been really let's say they've been really open to addressing all of these questions with us and taking on the adventure with us that's not to say that we are you know we've solved anything and now we can go live or anything like this but hopefully at the end of this pilot what we will have is um some more answers on how these two worlds can work together and then also potentially how we can roll this out on a more commercial on a wider scale and the last one that I'll talk about today is

um on social recovery so I don't know if you guys got vitalik stock earlier this afternoon it was all about account abstraction and one of the key topics around account abstraction is on social recovery right so if I lose access to my keys tomorrow let's say I die tomorrow okay would my husband be able to get access to my assets I think not I've explained it to him a hundred times and it's it's just not a process I trust and so it would be really good to have a third party a trusted third party who I can delegate this sort of trust to where my husband can go and eventually get access to my assets and so especially after again last year we saw there was this massive rise in non-custodial wallets where everyone is

kind of bantering this uh not your keys not your crypto no no which to some extent is true but also just holding your own Keys is not for everyone not everyone has their is it responsible enough to take care of their own private keys and so uh we're now working on developing a solution this is still quite early stage but you know here's the alpha on being able to customize um an admin key or a backup key for these sorts of multi-stick solutions where in the future um if there's you know a disaster scenario there's three co-founders on a plane the plane crashes is the Dow done or is there something is there something you can do about is there someone you can trust to get back access to these

funds and keep the dream alive right so I will stop there I've been given totally there's only a minute left hopefully maybe one question or so but uh yeah thank you so much for listening to what we've been working on [Applause] there is time for one or two questions anyone hey on on the stacking product you mentioned it's something that is actually released yes yes absolutely it's live and so how much usage do you have like how many customers like how is I would say especially since uh shabella uh we've

had a massive increase in the number I would say something like 30 to 40 percent of the eat that's at segment but don't quote me on that number and I'm happy to find you on email afterwards and give you the actual number yeah hi my name is Julian I'm in a similar role at Solaris berlin-based banking as a service provider also doing crypto but now in transition the big question and the biggest threat we had from the compliance side of things is always AFC and pro you work with chain analysis because you need to check the Fanta coming in and out and how do you work with the regulator and loads of inquiries and also uh what is this uh

stats in in Switzerland what is it like a law enforcement what's the experience there so actually before we could even take on our first client back in 2019 we've essentially first waited until we got a banking license before we started any of this stuff and at the same time we developed a caml so it's camel or crypto AML and this is kind of uh internal tool that we've used using the best practices in the market and any single transaction that enters the bank goes through this process and CML itself is a tool that's then audited and reviewed and approved by finman enables us to be able to play in the crypto space we are also now licensing crypto M uh CML so if your bank is interested happy

to talk about that it's uh I'm gently my question is a bit the same um what are the biggest issues if you're facing with regulation um so in terms of Switzerland's actually a bit of an island right like we've got uh we had already in 2017 or 18 this no action letter set up from finma and then in 2021 we had the DLT framework put in place which gave us a lot of legal certainty when the rest of the world was still kind of figuring it out um today you see the Liechtenstein rule book the one in um Mika that's just come out of Vara and Dubai all of these are somewhat working on the same premise and so

um finma is still let's say every single new product that we come up with whether it's a staking solution or a pilot case all of these things have to go to finma and fermaster give us their kind of approval or no objection at least that we're going to try this out and that is I think one of the biggest barriers to us ruling out your churning products out every month or so because the ideas and the opportunities are in myths but yes it's it's not the easiest Journey we have to constantly work with finman take them on this educational journey to let them also understand how we're going to stick to the rule sets that exist perfect I think that's time and thank you so much again you've got that part okay [Music]