Crypto Regulation and Banks

Transcript

Welcome everyone. Welcome to the speakers. Thank you for joining. I see that there we have a lot of people in the room. So I think that crypto regulation is a topic that people are interested in. So I'm glad to hear that. So we have here two very important people on the stage. So Andre, if you don't know, like he he's quite humble person, but he's actually the person who understands crypto the most in the Czech political scene. So he was in the European Parliament and he was actually one of the people designing Mika regulation. So he's got a lot of knowledge about the crypto regulation, how it works and everything. And then we have Tomas, who is more from the practical side. He's from Raiffeisen Bank and so I would like to talk with him more about what banks are currently

building in the crypto space. So please, could you introduce yourself briefly to the to the audience and tell us a little bit more what you are currently working on? >> Thank you. Well, first of all, good afternoon everyone and thanks thanks for the invite. It's always a pleasure to come to Eat Prague. So my name is Ondřej Kovařík and I'm former member of European Parliament, legislator. And as Ondřej put it, I was um one of the negotiators of marketing crypto assets or Mika rules, but also AML rules for crypto, etc. I finished my work as a as a politician last year and now I'm an advisor to a newly created European Ethereum Institute which is

established in Brussels and uh has sort of a vocation of providing data research background, but also some policy advocacy towards European institutions and institutions in in the member states. Raising awareness on crypto and then Ethereum community. >> And I have a follow-up question. So, I I noticed that the institute had a different name. It was a crypto institute, not Ethereum something. >> Exactly. So, it was actually established on the basis of already existing entity, >> Mhm.

>> which was very active in in Brussels. It was called European Crypto Initiative, the EUCI association. And yeah, we we announced 2 months ago in in Cannes at the at the ECC the rebranding and and basically also broadening the mandate of the association, changing the scope, and I think also raising the level of ambition. >> Okay. Thank you. So, Tomas, could you tell us a little bit more about what you're working on at Raiffeisen Bank? >> Nice to meet you, everyone. Uh my responsibility at Raiffeisen Bank is the whole crypto topic. And then we have like multiple projects that we are actively working on.

And then we have multiple use cases that we are actively exploring. Also, uh I take part in everything around crypto which bank is concerned about. So, uh we have various companies coming to us, and we are talking with them what we can enable for them. Uh but actively we are working on the use cases that I will talk about further. >> Okay. Thank you. So, I would like to go a little bit more into the MiCA regulation and what does it actually mean for people who are building stuff, who are users. So, I would like to ask what actually changes with the MiCA regulation. It's coming in

and like now this year is like the the most important year because who doesn't have the license, there's going to be a lot of changes. So, I want to ask what does it mean in practice for stable coins, for exchanges, for DeFi, yield products? And is actually Europe helping the adoption of crypto, or is it slowing it down because of Mika? So Andre, could you tell us a little bit more about how does it mean from a practical side for these these projects? >> Well, I think all these questions together would would require proper lecture.

But in a nutshell, I think what really changes in the European landscape is that basically any entity that is wishing to provide a crypto related services would have to be authorized by supervising entity. In the case of the Czech Republic, the the entity that gives the authorization is the Czech Central Bank that is interestingly enough sitting just across the street. And I think this is this is the main changes that it brings. So any entity that wants to carry out the operations on the European market should have an authorization. But I think this is also what is what has to be clarified. I mean

it's not every entity in the system, right? If you're developer or software provider, you don't have to necessarily be authorized as as such. We're speaking more about the exchanges, advisory companies. Those that are actually handling or providing services that are linked to sort of a financial services provision. Uh it also establishes new set of rules for tokens that are that are used for for crypto related services such as stablecoins.

So the issuance has to be also authorized or at least has to be notified to the authority. With obligations such as issuance of white papers etc. etc. So I think there are fundamental changes in the way the the services are now being provided. But as you said, I mean, we are as of this year in in the first year of full application of of MiCA rules cuz now in several member states by the end of June or beginning of the July will end the so-called grandfathering period, so the transition period for those companies that are providing services without the license to switch to the

fully licensed regime, and I think only as of the second half of this year we'll see the full full impact on it. But you also mentioned for instance the DeFi. I think it it's it's it's always worth to clarify that the current MiCA framework actually doesn't touch the fully decentralized projects. So they are not in the scope of MiCA and the for fully decentralized projects, fully decentralized entities including decentralized tokens, there are new not new obligations to be to be respected at this point, but obviously we'll see how this will evolve in the future.

>> So does that mean if I'm building something in DeFi, MiCA doesn't concern me at all? >> Well, DeFi as such is not covered by by by MiCA rules, but obviously I think we always we always will see in practice how different authorities will will see what happens on the market. We also know that not every DeFi project is fully decentralized, so I think um what is happening is also a sort of a market survey from the authorities looking at what is happening in the DeFi ecosystem, um but I think this is also um some kind of testing period for for the supervising authorities to first

understand what DeFi really is, what what it what it means in practice, how it functions, and then whether it is or it is not understood as something that may be covered covered by Mika, but if you if you read the legal text, the the decentralized entities are not covered by Mika rules as it as they stand today. >> Okay, thank you. And Tomas, how does it look like from a bank perspective? Like the Mika rules and everything, how does it influence you or does it influence you at all because you already have a banking license. So, how does it how does that change for banks?

>> I think that Mika was crucial enabler for banks to even care about crypto. That now since there is a clarity on like what banks can do and how they should do it, now there's a clear business case to be built for multiple use cases. But before there were like a lot of unclarity, which means risk, which means that it's not as attractive for bank to start doing some efforts around crypto. But since Mika, there has been clarity of how we should do it and what can we enable for our end clients. So, I think that in the end Mika sort of helps adoption even among retail clients because banks can be like now the entry point for

retail clients to the crypto space. >> Okay, thank you. I would like to deep a deep dive a little bit more on stablecoins and tokenized assets because these two things are probably currently like the biggest topics in in crypto. Like stablecoins are going up not only the US dollar stablecoins, but also euro stablecoins and other currencies. So, I would like to understand more about uh what is the current framework actually trying to achieve because currently under Mika, but also other regulations, for example, stablecoins issuers are not allowed to redistribute yield directly to the users.

And uh why is it such and what is it trying to achieve this this uh framework? Andre, maybe you can start. >> Yeah, so maybe just a quick follow-up to what was mentioned on on the banks. Just a a little a little behind the scenes story when we were negotiating MiCA. It was proposed back in 2020, right? Before the COVID or during the COVID pandemic, but the situation was like um the crypto markets were booming. Uh there was a lot of available capital on the market and traditional institutions such such as banks were desperately looking for investment opportunities, right? So when MiCA was proposed um and me as a as a legislator, I was

constantly lobbied at the beginning by banks how MiCA should be designed because banks saw a great opportunity in it. Then they realized because they well the idea was we want to buy Bitcoin in our balance sheet and make sure that that in retail investors go through banks to to buy to buy Bitcoins. Then they realized that it won't be that easy. First of all, MiCA doesn't regulate Bitcoin. And second of second banks are regulated by a bunch of different rules such as credit risk and and capital requirements, etc. So they realized that it won't be that easy actually and then then they then they left left the table and then the big crypto exchanges came

in. But the banks are actually now exploring much more what's what's what's going on in in the market because of stablecoins. Uh and I think because all these um tokenization trend that is inevitably happening. Uh if Well, you you asked the question what is the current framework trying to achieve? Well, I think real realistically saying and like with all um with the with with all the seriousness that I was also around the table when MiCA rules were were negotiated, I think to put it bluntly, the MiCA framework is actually only trying to limit stable coin impact.

And that this is because when Mika was designed, there was one systemic threat pending, and that was the so-called Libra or DM stable coin introduced by Facebook and alike. I was not actually personally, I was not perceiving this as a threat. But around the negotiating table, the majority of people were saying this is actually a potential threat to financial and monetary stability. So when you read the the specific titles three and four in Mika on stable coins, they're not called stable coins in Mika. It's it's asset reference tokens and and electronic money tokens.

The framework is extremely restrictive. And today, we are hitting the very strict limits of it in in Europe. One of the one of the consequences of it is that, well, we don't have Libra or DM anymore. I mean, you know, the threat has disappeared itself, not by Mika. But we have very limited uh issuance of euro-denominated stable coins. Uh we have uh one of the largest global stable coins, which is now delisted from the European exchanges because they voluntarily decided not to comply with the EU rules.

And uh we don't know exactly what we will do in terms of promotion of stable coins in in Europe. So this question about promoting innovation or or limiting, I think Mika as it stands today, it doesn't really help much in promoting the stable coin ecosystem to grow in Europe. And unless we change this, including with our approach to it, even from the main institutions such as European Central Bank or the supervisory authorities, I think we will have we will have troubles. But looking from the financial the entire financial sector's perspective, if you look at it like who is

for or against this promotion of stable coins, I think now we have like a very powerful partners on our side and that's the traditional financial institutions because they all now see the the potential benefits of the broader the broader use of stable coins. And you mentioned the the yield. Personally, I tabled amendment like back in 2021 removing the ban on interest on stable coins. But I again I have to admit I didn't have the majority. I didn't have the the shooting power to actually convince everyone else because there were arguments that we want this allowed to this you know the stable coins allow for for interest and yield. This debate will happen. It will happen this and and next

year and it's actually it will be much more open than that. But the reason is why the stable coins at this point are not allowed more or less globally to distribute the yield is that at the very large um perspective, I think they are mostly seen as a means of payments only. >> Mhm. >> So basically a vehicle to transfer value from point A to point B. The transfer of value is is the key and that's that's why a lot of people believe that the the yield thing should should be actually out of out of question and out of limits of what is what is possible. But I really believe this debate is is now fully reopen and it will it will be reconsidered in in the in the next year or two.

>> Thank you for such a deep dive insight. Thank you very much. Tomáš, how does it look like from a bank like stable coins and tokenized assets? >> Uh about tokenized assets in Czech Republic, we are not pursuing efforts, but on the group level Raiffeisen Bank International, there are some efforts. There is some development, but I can't talk specifically about it. But I can talk a little bit about stable coins because we are currently working on a project involving stablecoins. First thing is that we see demand for on-ramp and off-ramp to crypto. Like people have fiat in their bank accounts and they would like to, for example, go to DeFi and they could go there using

stablecoin which they can obtain for their fiat using the bank. So, this is the use case that we are exploring. And second use case around stablecoins is actually payment. Uh and payments to the countries where the financial services are not yet super developed. So, it takes, for example, multiple days to send a payment there. It takes extra fees for for the uh inter- interbanking. And what we can do with stablecoins, we can basically send a transaction to South America where we could find only one off-ramp partner there and he could help us to facilitate the whole international payment just between us

and the off-ramp partner. So, we see a huge use case in making the payments faster and cheaper for the end users which are companies and businesses in Czech Republic, for example. >> There are many use cases for stablecoins, but now I want to understand what is Raiffeisen Bank building today. What are the products that are already live or are going to be live soon that touch crypto? >> There's one project that will be live this year >> Mhm. >> and this is actually investment in crypto assets because there's demand from retail clients and we already have investment application. Easy digital investing is already open for retail client and there are traditional

investment instruments like stocks, bonds, mutual funds, etc. And one asset class is missing and that's crypto. So, what we want to or I I clarify that there are like paper-backed crypto products from BlackRock etc. But there are no spot crypto offerings. So we are currently actively working on bringing spot crypto to our investment application. >> Mhm. So me as a as a customer of Raiffeisen Bank I can invest in these products today.

>> You can use the paper-backed crypto products from BlackRock or like ETFs. You can do that right now. And this year you should be able to buy spot crypto using our bank. >> Okay. That's really interesting. And you mentioned the the way to actually enter the crypto space through a bank. So I can basically have my check koruna or euros on a Raiffeisen Bank. And then basically I can convert it to a stablecoin. Or I go to Ethereum. Is that something that's going to be live soon?

>> Unfortunately I wouldn't say it will be this year. It could be in 2027. >> Mhm. >> But right now you can enter crypto when we will enable the spot spot buying spot investing then you can buy Ethereum there and then you can actually withdraw Ethereum. >> Okay. >> Because there's been a new regulation I think in February that investment applications should allow withdrawals for the client. So we need to enable that too. And we will enable our clients with withdrawing the crypto that they actually invest in. So you can just take your crowns, put it in our investment application at it and then you can withdraw the Ethereum and use it in DeFi.

>> So you hear that Raiffeisen Bank is going to be working directly with Ethereum because my understanding was that a lot of the banks they're going to be working with the permission chains or they're going to have to go through some compliance layer. So is Raiffeisen Bank going to be working directly with Ethereum or other chains as well? >> Yes, exactly. Like when you need to deliver spot assets to the client, there's no other way than the way than to work directly with chain. And also, like Ethereum itself, it's there's no like restriction for banks to actually use it. We just need to use it in a compliant way. That means that we need to scan for anti-money laundering, we need to obey the travel rule. We need to solve all this, but then we can use

Ethereum directly. For example, for the stablecoin use case, the international payment, there's like probably the Ethereum will be used directly because since the gas fees are significantly lower that than they were like multiple years ago, now we have the opportunity to use Ethereum directly for international payments. >> Mhm. And what about other DeFi projects like staking, lending, borrowing? Is that something that you are planning as well? >> It's something that we definitely think about and we have it on like a road map that it might happen someday. But my approach or like how we are thinking about it is going step by step. So, first we actually enable clients to

invest in the spot crypto assets, and when clients have the assets, then we can think about what more can we bring to them? Can we bring yields to them? Can we bring the yield using staking? And then we can explore this further. And I think, for example, Ethereum is a great example because some people maybe don't want to use Ethereum directly in DeFi. Uh mainly, I'm talking about retail clients who are not that skilled with DeFi or they want to feel safe in the bank, but they want to take advantage of the technology that's rapidly evolving. So, they can buy Ethereum using our app, and then maybe we can bring staking for them, too. So, they can have the advantage that staking provides for them,

and they are also protected from all the threats, hacks, etc. because they are shielded by the bank security. >> That's really good to hear that I'm quite surprised by this and I'm amazed that Raiffeisenbank is doing so much in crypto. So, it's very positive for me to hear how many new things are coming. So, maybe let's So, this is a lot to kind of like get in from the practice. Let's go maybe back to the regulation because I want to understand You mentioned few things that you were voting against in the MiCA and of course like it's not just about uh you to decide, but if it would be up to you, like the MiCA regulation, what would you change today?

Like if everything would have been up to you, what are the maybe three things, up to three things that you would change? >> Yeah, I Well, those would be the three things that I was criticizing on MiCA since we finalized the discussions. So, obviously the the the part on stablecoins, that's that's one thing that definitely would need uh some uh some readjustments and I think not only minor ones but real like systemic ones. >> So, sorry, so do you mean like you would allow stablecoins to pass on the yields to users, for example, or what are the other things you would change?

>> I would not limit it. >> You would not limit it. >> It's It's really, you know, then I think up to do um up to the market players to decide whether whether they want to propose and and offer this to the market or not. I think what is interesting also the to see in this debate would be how uh stablecoins and tokenized deposits will work together on the market because from from bank bank's point of view, I think they will push more for having the possibility to offer and distribute the yield from tokenized deposits because this is basically a a product that they already have today.

And uh it also it's a different thing. They They many of them see stablecoins as basically a means of of payment such as a transfer of value, but a tokenized deposit it's basically something that sits on the balance sheet of the bank. And they can actually work on it in terms of distributing yield and and and providing working work with it as a as a regular financial asset. So I think this is something that was not that much a debate back in 2021 2022 when MiCA was finalized, but it's it's a debate now. So I think whatever we do with the stable coins in in the MiCA framework, I think should also take into account other tokenized classes of assets including the

tokenized deposits which I which I think will play a a huge role in in a foreseeable future. Second thing, I will definitely change the proposals or the provisions on the obligations of for CASPs because what MiCA doesn't have at this point in my view is a proper proportionality. So basically a global global exchange that is operating on on all the global markets or a small advisory company here in the Czech Republic, they will have to under MiCA comply with roughly same amount of rules.

So MiCA doesn't really differentiate between small and and and large players and I think this is a this is a critical mistake. So in my view there has to be this differentiation. If there are systemic players with the global outreach, I think they should be obviously scrutinized more. They should have a even like more amount of obligations to to comply with. But for small players, if you are talking about you know supporting innovation, helping startups to grow and and everything, I think MiCA is actually not a very good example for that. It it really lacks this proportionality. And third third thing um MiCA actually doesn't have anything related to international dimension.

So you mentioned you know what's happening on a global scale. We everybody looking into and scrutinizing the genius act in in the US, but also there's a there's a stable coin framework that is being developed in the UK. Mika doesn't have a a specific answer to it. And I think it would be good actually to look into this international dimension and look into possibilities of provide for instance equivalence acknowledgement between the jurisdictions. So if there is a regime that is being established in the US and there are tokens that are issued under that regime, we should be able look into this regime in Europe and say, "Okay, do we believe that is it compliant to our rules that we already have? If so, let's

just allow it for for trading in in European market without additional rules to be met. If not, what's the change? You know, do we need to reauthorize it?" Mika doesn't really sees this. What Mika says is you want to trade on European market, you have to fully comply only with European rules. And I think in the future this is actually not something that is very handy and not very flexible. And I believe that this would require some changes in the future. >> Okay. Thank you. That's very interesting inside. I hope that other politicians will follow through and they will listen to your advice.

>> We'll try to push for that. >> Thank you. Um so I I when I was researching both of you, I saw on your LinkedIn Andre that you were talking about how compliance and licensing is actually it's increasing the abstraction away where a lot of these licenses not if you launch an app like not you don't need a license for everything. You can abstract it away where you can have a stable coin issue that has the license. You can have some some other provider that has a license for another part like issuing cards.

So, do you think that in the future companies and users will use blockchain infrastructure without even realizing they're using crypto? >> I think this is very likely with the sort of like this democratization of user of of DLT based products. With further tokenization of financial services, I think you know, the the big integrators um and also traditional financial players will will sort of integrate the DLT rails into their uh internal operations and the client would not even have to be aware of the fact that the the product or the service they are using is actually based on or driven by by DLT uh based technology or it's

it's based on the Ethereum ecosystem or any anything else. And I think this is a sort of a trend that that will that will happen in the future. I think it's not something very surprising. If you if you look at how how people or bus- businesses think about the financial products or financial services they are consuming today or using today, they don't really care much about what's happening in the in the back office, right? They don't really care much about the the the the rails that that the that the financial um intermediaries or financial institutions are are using. They they don't really think about, you know, whether we are using a um instant payment infrastructure in Europe in

order to settle quickly the the transactions. What they really care about is that when they when they send or when they are expecting amounts to to arrive, the amount that they arrive in in a expected time, in expected uh volume volume and and uh from from the expected sender. So, I think as long as the trust is is respected in the system, um the the sort of awareness of what is happening in in the backstage would would not be the key or the critical considerations for for the final users, be it retail or or business. Um, for for the for the decision-making, I

would say. Uh, but I think it would be it it would be more critical for those entities that will, you know, require authorizations or licensings and those institutions that will actually provide um, these these services. >> Mhm. You mentioned the word trust, and I think it's a big topic in crypto. Like, who do I have to trust if I'm using an app? If I'm using a self-custodial wallet, I have to trust all of the code behind it. If I use a custodial wallet, I need to trust uh, the wallet provider that they are not going to run away with my money. So, I actually want to ask a question that's more like on a personal basis. Like, do you prefer using custodial or self-custodial wallets or applications?

And where do you see the future for both? Because I think they are quite different from like the uh, regulatory perspective. Yeah, they are different. No, I mean, preference um, my preference is to is diversification. So, I'm I'm using both. Uh, but uh, to be honest. But I think um, as you say, they each have a special role in in the ecosystem. When we had discussion about the travel rule, uh, the AML provisions in Europe, there was a lot of people pushing actually in banning uh, self-custodian wallets and and, you know, just to actually get part of ecosystem outside

of the scope of the law. I don't think this is this is a good way forward. Exactly because there are different rules and different roles that the these different instruments can can play. So, I think that my approach would be let's let Well, final In the end, it's the users decide what what kind of instruments they what kind of tool they will use for for their own benefits. But, I think uh I I wouldn't foresee any any specific changes in one one or or another. And I think also talking to companies that very much focused on on the providing the self

self-custodian wallets. I think they they also see a a future for for the products in in this, and I and I believe that rightly so. So, yeah, I think the the key is is actually, in my view, to make sure that any kind of future regulatory framework or policy framework is not by this like decision excluding uh some of these uh some of these instruments, unless obviously they are they are used for strictly illegal purposes. That's That's for sure.

>> Okay, thank you. Tamash, what about you? Like, what's your opinion on the custody versus self-custody? I know you're from a bank, so maybe you are not allowed to answer that question. >> In my personal life, I do self-custody. >> Mhm. >> But, from the bank perspective, the custody of the entrusted entity is supported, and I think that for retail clients the the preferable option would be to have a custody with a trusted entity because, as we know, self-custody also brings a lot of responsibility on the on the final retail client, and that means that there's a risk of losing

funds, which is the worst thing that can happen in crypto in the end. So, I think that for the people who want to be safe, the custody by the trusted party is the best option, but I personally do self-custody mostly. >> Yeah, that makes total sense. Um I saw that Raiffeisen Bank is part of the Qivalis consortium, which is uh issuing a euro stablecoin. I think there are 12 banks in total or something like that. And so what problem is this trying to solve? How is it going to compete with other European stablecoins like the one from Circle or from Monerium, which are already quite established and they have a lot of a lot of uh use cases. So could you tell us a little bit more

about that? >> Uh I'm not super familiar with all the details around Qivalis because it's not the main area that I would be solving. But I know that we are part of the consortium and basically the consortium aims to solve the disbalance in domination between like dollar stablecoins and euro stablecoins. And that euro stablecoins need to catch up to get some market share. And I think that the approach that multiple banks as like trusted uh traditional institutions uh go together and create stablecoin issued by the consortium is a great idea for the adoption and not another fragmentation of overall smaller market

share of European uh euro stablecoins. But I'm concerned that we are not catching up fast enough to catch up to the US uh stablecoins because there's a fierce competition in the dollar stablecoins market between like Tether, Circle, then DeFi protocols issuing their own stablecoins. And all of them are trying to mm give something extra to the users like potential airdrops or the yield that we are talking about. And I just don't see uh And I think that it's difficult for Euro stable coins to get on par with the benefits that the dollar stable coins might be offering.

So, I think it would actually be a good move, as Andre mentioned, to enable the yield for the Euro stable coins, but we will have to see if European regulators allow it. Okay. >> Tomas, I know you your background is actually in crypto, not in banking. >> Exactly. >> And I have a question that's kind of like both-sided, crypto versus regulation. What is one thing that crypto industry still misunderstands about regulation? And you you you were working for a crypto community. So, is there something that people misunderstand about regulation? And also from the other side, what is one thing that regulators still misunderstand about crypto?

>> I think that this is super difficult question to answer without specific examples, but like I think that regulators often are too cautious about like regulating crypto. That I think that giving more freedom to the market and letting market sort of figure out would be beneficial for the whole space because we see that there's a stark difference between like really unregulated stuff like meme coins where people are losing money every day. And there should be some regulation.

There should be some regulation about like monitoring the market against insider trading, etc. But on the other hand, then there are regulations around like travel rule, KYC, AML that are maybe even too strict. Then they might be more like user-friendly for normal person to have like shorter way of getting into crypto through traditional instruments than like the risky stuff is super accessible in DeFi. And then like the overall safe stuff like investing in Bitcoin and Ether is more difficult to access. I think that there should be better balance between those.

>> That's a very good point. Andre, what's what's your take on this? Like what is one thing that crypto industry doesn't misunderstand about regulation and what do regulators misunderstand about crypto? >> I think maybe to start with the latter. I think what regulators still misunderstand is I think it's more like a state of the mindset. I think the regulators a lot of them, the decision makers and policy makers would just look at the crypto as a as a as a gray area for scams. And and I think this is it's it's it's more sort of an approach where they believe that there's something that they should be cautious about.

And and I think um this is also what what I see in in the global debate that the even like the traditional crypto companies are trying to maybe sort of put a little bit aside to the the world the word crypto but now we were talking about more like digital assets. Right? But this is this is something that is much more acceptable. And there are there are no negative connotations in like in crypto so what actually are you hiding from us?

And and this is also because of the level of awareness of a lot of policy makers and regulators on crypto and it's getting better but still it's extremely low. So something for that is for you guys like your daily bread and butter for past 5, 10, 15 years like for for those people it's something still extremely exotic. And that's that's also why they approach it in a very in a in a very cautious manner and to be honest we also see uh the opposite what's happening in the US where possible you know market abuse done by by the basically from by the administration or the authorities are linked to to the administration. I think this is not helping. So,

this is this is one of one of the aspect. The other The other part like what crypto doesn't understand about regulation, it's um Yeah, I think crypto crypto is based already on like originally, the way I understand it, is is based on on a very specific ways of creating trust. You know, by by actually creating a community um of validation of of uh of various transactions and and operations, you know, across its community sharing the same amount of values or something.

I think what regulation is trying to bring is actually to sort of enhance and upgrade this trust even beyond this community. And I think sometimes then the community believes like this is the regulation is bringing the trust from us to a the entity that we don't as a crypto community always see as a trustworthy right? And I think this is something where also would require a more more of a more of a change of mindset. Um you know, I remember I was speaking like to huge crypto crowds when the MiCA was negotiated here in Prague, in other capitals, and hundreds of you know, crypto founders, developers in in the room

about the regulation. I can tell you that environment was extremely hostile, right? And and rightly so, uh but um I think now it it it has changed. We see that I mean, not only in Europe, across the globe, there are different regulatory efforts in in the crypto or the digital assets area, and I think it would require still this gradual change of mindset on both sides, which in my view is basically based on more openness, understanding, not actually looking at the other as a sort of a potential threat or potential source of of problem, but as a as a sort of a cooperative

partner in a in a way. And I think we started both sides started from different places and had to go very far away. Not all the sides would understand from where the other side is coming from and what is what is the other side trying to achieve. And I think, you know, building this cooperative culture is something that would still require some some effort, but I think it's it's actually it's a good thing to invest in. >> Okay. Thank you. We're running a little bit out of time, so I have one last question to close the session.

And Tomáš, you mentioned that Mika was actually an enabler for banks to build something in crypto. So, if you would have to predict and we come here in 5 years, what percentage of people, I'd say in Europe, do you think are going to be using financial products that are powered by crypto and DeFi blockchain infrastructure? Just behind the scenes without people actually realizing it. How How How much How What's the percentage of the financial system that's going to be run on crypto in 5 years? What's your prediction?

>> Uh this is a little bit of a long shot, but since I see the development that we are actually pursuing, I think that at least some amount of crypto in background of the financial product could be around 40-50% even. That it could be quite a lot because the space is innovating quickly. And there are a lot of interesting products that are emerging. So, I think that when the traditional institutions will be more interested in enabling them, and 5 years is enough time to enable them, then I think even 40-50% could be realistic.

>> 40 to 50%. You hear that? 40 to 50% of financial products on crypto. I hope you're right. And follow-up question on that. We are at a Ethereum conference, but uh for Raiffeisen Bank, are other chains relevant as well? >> Um like when I mentioned that we will allow the investments in the investment app and there will be, for example, Solana, then like we need to enable people to withdraw Solana on the actual Solana blockchain. But I think for building some products like the stablecoin payments, for example, the Ethereum is the best chain to build on.

Because yeah, it has a awesome history. It has a great builders, so I think that Ethereum is the place to be. >> Perfect. I'm glad to hear that. That's a very nice way to to end it. And Andre, same question for you. In 5 years, we come here. What's the percentage of financial system that's going to be run on crypto and blockchain? >> To be honest, I would I would see that proportion much higher than than Tomash's. Also, I have to say I was I was in San Francisco last week and then talked about, you know, with developers and and they are all around it. So, maybe I'm just a bit too biased, but uh uh I think what I see as a critical factor is actually what what do we do with the

with the with the regulatory framework that would either enable it or slow it down. Because to be honest, at this point, we don't really have a specific regulatory framework that that would help in Europe, that would help uh the DLT-based infrastructure to be to be more uh mainstream into the financial services one. We can do some some efforts in in this regard. There's a debate in the US on the Market Integrity Act. This is exactly what what it what it is trying to achieve. We don't know if if it fails or if it if it delivers. But I think if you have a a specific regulatory framework, then I believe that the um many institutions will just provide those those services either visibly on on the front end to the

retail or or just, you know, hidden in in a in a in a backstage or at least will try to try to experiment with that. So, if if the enabling factors are there, I can see this this proportion even higher than than 40 to 50% because I believe that first of all a lot of investment going on into it in volumes and and and and also from different sources. There's a lot of developers that are working on that. A lot of founders actually trying to try to work on it. And there is one thing that if again, if it's really if it's boosted in in this 5-years period, that will basically make a a deal breaker for

for DLT-based technologies include mainly including stablecoins. And that's basically the development of agentic economy and agentic commerce. The agentic commerce will not happen without stablecoins. If this is happening and people will start regularly using any kind of agents to carry out transactions on the internet for them, it will all happen on the DLT rails. So, and then then then the this market of 40 to 50% will just grow exponentially to something much much higher. So, I think these would be in my view the two factors, but I'm I'm more optimistic than than than than that.

>> I'm very glad to hear the optimism. Thank you very much. Please give a round of applause. >> Thank you. Thank you. Thank you. All the best, man.