Cryptoassets: Beyond the Hype, Market Outlook for 2023

Transcript

welcome everybody uh to this first public event organized jointly by the crypto value Association and the Cass blockchain and finance so I'd like to welcome you all um I'm the co-director of the cash the certificate of advanced studies on blockchain and finance which is here at the University of applied sciences so for those of you who don't know it's a university certification for professionals we're targeting Professionals in the financial sector and who are also interested about the financial applications of blockchain technology and so it's the first University certified program in

Switzerland that specifically deals with the financial applications of blockchain so all the way from the different verticals that the technology is used in to decentralized finance on-chain analysis and even the regulatory aspects and so this conference tonight is taking place on the side of this course and some of our speakers will be giving a master class tomorrow to the participants of the course um so the crypto Valley Association has the shared goals of the cast which is in my opinion to broaden the reach and develop our region as a

poll as a hub of knowledge and business um uh particularly effective in around blockchain Technologies the crypto value Association is one of the biggest professional associations in blockchain in the world with over 1100 members and more than 200 companies across continents we're very active in terms of events I just saw that this week I think just this few days there are events across four continents if I'm not mistaken so feel free to check it out check check us out and become a member so for this event I'd like to thank the university here the otakal digestion for

hosting us and for providing this beautiful room and I'd like to thank our friends at Bitcoin Swiss for uh well first of all because they're one of the founding members of the crypto value Association and they've been along supporters of the of the association and tonight they have graciously sponsored our networking apparel and a special thanks also to women in web 3 Group which is a group of more than 200 professionals across Switzerland who keep giving us a hand and keep finding us great you know speakers to participate in our events so thank you

thank you for them so now I'd like to introduce you to our speakers tonight uh we'll have uh four short presentations about 10-15 minutes each uh back to back and then we'll have a panel discussion and a q a so first I'd like to welcome Olivia Olivia finds he is the head of advocacy and policy research for EMA at the CFA Institute in London and Olivier quoted a a report for the CFA Institute that was published recently from which I stole the title at least parts of it and he was gracious enough to let me do that and it's called crypto

assets Beyond height so we'll start with uh with Olivier if you want to join us [Applause] thank you very much I can thank you all for making the time this is appreciated my name is Lydia fines as I can said I'm with CFA Institute based in London and today what I'll try to do with my presentation is establish an

intersection between Finance the world of traditional Finance and the very new world of digital finance and crypto assets and I have to say crypto assets digital Finance has been a problem for CFA Institute since the very beginning we didn't really know what to do with that we dismissed it as an investment because for us this was nearly something to do with payments and banking infrastructure not something that would eventually be considered by investors as a new asset class for example we were wrong on that on that point we have observed how crypto has started to pervade the world

of Investments very rapidly and also in a much more retail manner than what we had seen in other in other asset classes and as soon as this was a reality retail individuals investing through crypto this becomes a conundrum and a real problem for the world of investors for practitioners but also for Regulators what do we do with this do we dismiss it do we just tell people this is a scam don't go into that or do we address it seriously so that is what we have tried to do with the report that Arkin was mentioning what we wanted to provide is

a dispassionate a rational analysis of what is happening in the world of Investments as related to crypto penetration our observe observation at the time which was about two years ago is that much of the commenting the public commenting on crypto was very uh was very polarized either with this was the greatest thing since life's bread basically or it was evil and should be banned right so was there not a way to look at crypto in a neutral unbiased manner looking at what it actually means as a trend for financial services and this is what we've done here we try to provide through a series of interviews of technologists uh

investors asset owners Sovereign wealth funds can we provide a point of view of investment practitioners and investors as regards their exposure to crypto and over time what transpired is that crypto has three problems from a traditional Finance standpoint which needs some form of resolution before crypto can penetrate the institutionalized world of investors we will discuss each one of them briefly afterwards starting with valuation the distinction between a market price and what is the fun mental value of those Investments this is intimately related as well to the debate that is taking place in the US at the moment in other

words what are crypto assets Securities Commodities or currencies or something entirely new um the second problem and this is very core to what CFA Institute is teaching is the notion of fiduciary duty you're not making Investments for yourself always you can also make investments on behalf of someone else in other words the best interest of that someone else is what matters here how can crypto align with this duty if you cannot explain risk or valuation this is a conundrum that needs resolving and finally custody what we call referred to as safe keeping your client assets is to my mind the number one problem that

needs solving immediately if crypto is going to be taken seriously and I know from talking with Aliyah that this is something that her organization has tackled so it will be interesting to get back and forth on that point um now what we discuss the notion of value uh as a currency is considered a store of value at least in certain circumstances is Bitcoin a store of value right so when you compare Bitcoin relatively speaking to gold or the dollar index for example next to inflation over the last two years it has been difficult

to conclude that Bitcoin was actually a store of value in other words an inflation Hedge okay that has been a problem for those who tend to see Bitcoin as digital gold for example can it protect value in in inflationary environment and we can see here how over 20 um 21 and 2022 that has not always been the case so what is actually driving the market price of crypto and in here I used an example that took place just a few days ago on the 5th of February 2023 that's single day crypto trading volume Rose by 25 percent

we don't really know why except that a few whales were highly involved in transaction volume that vary day now that comes in stark contrast to a much more institutionalized world of equities for example so we need at some point to be in a position to explain those this volatility and those transactions and if they're always due to very large holders making a move from one exchange to another that has got to stabilize at some point in our report we were also making the observation

again on bitcoin I'm not saying this is true everywhere there still seems to be a high correlation between the price the market price of Bitcoin and the number of active entities in that coin in other words it is possible to think that the number of people getting active in Bitcoin follows the price of Bitcoin again that would tend to contradict the notion um that Bitcoin is a means of exchange right or a store of value and as you know to be a proper currency there's three characteristics a means of exchange a store value and a unit of

account it is possible to see that Bitcoin is failing on at least two of those characteristics so it's not a proper currency in the traditional sense of the term so instead how do how can you value crypto assets right so in our own report and in other reports that we've seen that there are various ways right so cost of production the quantity theory of money there's different ways it's not true to say that there's no way to Value crypto but which one would be the most useful what we have found so far is that one that stands out is to see crypto as a network right in other words value can be calibrated through

the number of active users in that Network and value is related to giving you access to that Network right so if you go back to metcalf's law is in other words the value goes up as the square of the number of users and when you take a look at the number of users across the crypto world over time it has gone up so there are more and more people using these instruments we don't have enough information to qualify their use but it is going up and from that perspective the network effect is also Rising

so from that perspective then if you are an investor or if you're an Institutional Investor making decisions on behalf of someone else why could all that be a problem so a fiduciary is someone who acts in the interest of someone else and there could be no conflict between the interest of the agent and that of the principle so when it comes to crypto if you're an Institutional Investor if you're a wealth manager and you're investing your clients money in crypto you need to be able to justify this Beyond excuse me for the pun beyond the hype that crypto represents you need to understand the business case that you're proposing you need to have some element

of information on the value of that proposed investment and you need to have some sort of rationale on the risk is this appropriate for someone who is not sophisticated for example if you cannot answer those questions for the time being we have problem reconciling crypto in some cases and fiduciary duty as you can see here and this is something that we've discussed with most of the people that we've interviewed for the report volatility can be difficult to explain this chart compares the Bitcoin the volatility itself of Bitcoin 30 day against that of the dollar Euro cost the currency pair

there's no comparison between the two how can I explain that difference that is something that needs to find some sort of answer or solution even when you compare crypto or Bitcoin in this case to other markets gold copper oil the dollar Index itself or equities through the msci world you can see a world of difference between those markets again stabilization of crypto will need to happen for crypto to become I would say institutionalized and and mature now we will end this presentation on the problem of custody and for us

this is the number one problem if a client at any point in time cannot be absolutely certain and obtain guarantees and verification that their assets are being segregated from the risk of failure of the entity holding those assets this cannot work right so we reviewed different ways to access store those crypto assets depending on whether you use a broker or crypto exchange there's different mechanisms for these um coins to be stored but until now it has been difficult for firms to justify how those assets were segregated from their own

and so somehow crypto assets crypto Asset Services firms will need to raise their standard to match that of traditional Financial firms if they want to stand a chance there's just no way around that problem so the principle of the segregation this one this is a definition that finra the regulator broker dealers in the US uses the segregation of client assets requires firms that maintain custody they hold those assets of customer Securities and Safeguard the cash to segregate these assets from their firm's proprietary business if you go down your assets your

client assets remain safe that is the standard and this is what crypto asset firms should be aspiring to realize whether this is done through organic development or forced through regulation there's just no way around resolving that problem so um that is the end of my presentation um again remember three major problem for crypto in terms of their relationship to traditional Finance valuation fiduciary duty and custody and I hope we can discuss those issues together tonight thank you very much thank you very much Olivier and this is

going to be a really nice intro to our next presentation oh no it's a PowerPoint so our next speaker is Gupta and she's senior vice president of Business Development at Signum bank and Signum bank is one of the two crypto native banks in Switzerland so licensed and regulated under Swiss banking laws and I won't say more because no this is a perfect way to continue the talk perfect so um come from a slightly different background than everybody else who's speaking here tonight both I mean you

can see that I'm obviously not the same exactly but also in terms of the organization that I represent so I don't know if you guys here have heard of Signum bank before maybe just a quick show of hands oh yeah most most of your apps that's fine but um Signum actually put out a puts out every year uh Market Outlook report on how we see the trends from the previous year or the key events from the previous year as well as how we see the market evolve going forward uh in this year in 2023 so I don't know if you had a chance to look at this report already but if you haven't um the this next few minutes I'll go over some of the key topics and if you

find something interesting there you can always go back and read the report in detail um the first topic I think that everyone knows and feels really sorry about is how the mainstream adoption of crypto kind of got a little bit ruined last year we had a lot of great Market momentum in 2021 and coming into 2022 we had a lot of optimism about all these big institutions finally coming into the space and to some extent they did but of course this became a slightly different uh Journey after the middle of the year and this is primarily because we saw a kind of narrative flip so crypto is always looked at until 2021 at least as a macro asset hedge and Olivia

spoke to this a little bit as well but going forward or somewhere around mid 2022 we saw the entire narrative become crypto as a risk asset and then and this was honestly a Pity because there's a lot of different of course risk assets out there but it did it didn't really do justice to where crypto was going and also the sorts of events that happened that caused this flip to occur so I don't need to cover these right everyone knows what happened first with Tara with um Celsius uh three arrows FTX all of these events that occurred were largely crypto generated crypto precipitated they didn't really have that much

correlation with the broader macro Outlook and so when we looked at the rate height so you looked at you know all these The Narrative of this recession coming up those things didn't actually impact the crypto fundamentals it was really all of these big events that came from inside of crypto that caused this flip to happen and hopefully in going into 2023 we'll see a sort of recovery back to the track that we wanted to be on um the other uh important one of course is that being a young Market there's a lot of experimentation that occurs which of course means that um experimentation comes by definition with some things that go well and then

some things that maybe don't go so well and one of these for example was um the weakness that we saw on certain business models so the play to earn model was um really really hyped back in 2021 everyone thought it was the next big thing and then somewhere around 2022 we really saw that this doesn't actually hold up over a period of time without it being playing out a little bit like a Ponzi and so not to say that platon is dead I think there's a lot of Hope and scope there but uh I think it it exposed that there was a lot more work to do in how these business models are actually structured um the other uh really cool takeaway I think from last year was to see the

dominance at layer one sector falling and that is to say we actually have a lot of focus now on building applications where these trustless systems bring actual utility so layer one was of course you know just the infrastructure layer and it's great that it works but it really shouldn't be the core um driver of the market it's there it serves us and then what can we build on top of it and that's what we started to see um happen last year um what hasn't changed and what I would like to point to of course is the institutional commitment so we've had a lot of players that came in loudly and noisily in 2021 and in 2022 early 22 we saw them still coming in and in 20 the

second half they were there they were just a little bit quieter about it then maybe not talking about it so loudly on the marketing side but the commitment to the space didn't fall and that of course is what we see as quite a bullish sentiment and in line with that there was quite a lot of price resilience so even though this chart obviously is not very pretty we see it slide downwards each big Market event so you see the cliff and then the straight line the cliff and then the straight line these sort of show how the people who came for the technology continue to stay of course the day Traders there are people who would you know got scared of what was happening on the macro scale but fundamentally I think the people who are really here to see the crypto Evolution

play out um continue to hold and are here for the long run we all hear you know building a black in a bear Market that is what uh um happened I would say in every bear market so far but this year we would say it's a little bit different we call it a reluctant bear Market that is the kind of existential questions that were asked before so you know um crypto is dead or there's no point to this so it's a problem looking for a solution or it's a solution looking for a problem and all of these sorts of questions that were really hopped up every bear market so far they're a lot less this time or arguably not really there at all

so that doesn't mean everything's Rosy and great right we're still living in a pretty uncertain world so one of these is that the uh contagion from last year isn't completely done we think like we're watching dcg play out in front of us right now and binance continues to be a bit of a question mark As does tether um and on the other hand I think there's been a lot of Fairly Justified criticism about the centralization of a lot of crypto platforms and one place where you can see this is for example the share of ethereum staking by each platform and to see like Lido have over 30 of what we pride in being one of the most decentralized solutions out there that is something that we are also seeing solutions to so we see this as a problem

but you also see players like rocketpool who prioritize decentralization gaining traction and market share so where does the market the value lie going forward um on one side of course I think scalability is um we're getting there there are solutions for scalability but I think as the CEO proceeds after the Shanghai up period we get to the the Splurge I think with Proto dank sharding with ethereum and then we'd really start to see the kind of scalability that we need for a lot of the larger applications to roll up um I think utility nfts is a really big topic I think everyone's waiting to see how these get implemented and more and more

um the use case for them becomes clear particularly I mean uh if you saw the Taylor Swift uh debacle with ticket Connor last month um security and identity I think are also really important topics because on one side of course security I don't need to say why that's important but um with the rise of zero knowledge proof Technologies and them coming more into the Forefront with their main Nets slowly being deployed in the next months going forward we will be able to bring that idea of compliance to crypto without necessarily giving up privacy as well so then identity with zero knowledge coupled together I think is a really strong solution for Value going

forward I already mentioned the ethereum upgrades and the collaborations point I think actually refers mostly for me at least to um the nfts or so when you have a big mass of people who maybe engage already with a web 2 player so I'm thinking about um you know how Instagram brought in nfts or um Reddit is doing something with nfts all of these bring those sort of triggers for Mass adoption of web3 and I think that's going to be very exciting to look at as it evolves I wanted to talk really quickly also about the VC side of things so last year turned out to be a record year and we see funding of course this was very front loaded the last quarter of 2022

was I think levels that we haven't seen since uh 2020 and uh also I think what was important was a lot of the projects that were associated with big VCS were the ones that actually suffered quite a lot so we just kind of got a little bit of bad name in the space because of the centralization that they bring and also for pushing up or pumping up projects that maybe weren't organically that strong however what we've got today therefore are lower valuations and these lower valuations it's caused a correction which I think was necessary in the market because now we've got a lot more uh Focus back on you know fiscal responsibility on due diligence and how things are set up and that of course

leads to Stronger products being built and so that means you look back at 2017 that was when we saw you know really young strong teams with a lot of conviction and great ideas get funded for the sort of big outsized returns that we saw in 2021 20 early 2022 and that's a little bit where we see ourselves now again today um just as a last slide what we think about you know the way forward um C5 upgrade so as Olivia was talking about I think C5 has a lot to answer for uh in 2022 and so in 23 it's going to be a real competition of how you how transparent you can be we all know transparency is much better than

regulation they'll both go hand in hand um and similarly greater compliance so ways to access defy without um necessarily being completely anonymous um we also want we'll expect to see greater dispersions so markets driven by projects and the outcome of these projects rather than um just big macro shocks that we saw happen last year and the best part for Bear Market really is the focus on value so to go back and understand like what utility can this trustless system bring what can it be used for where's the value for it and therefore how can it be built and developed into something that people can

use and benefit from so this is like a very high level uh overview of what we covered in the report but of course I hope to talk to author to my fellow panelists later this evening on um how they see the market evolving and so our next speaker will be Floyd rice and Florian rice is the CEO of kryptonite asset management company it's a asset management company that's Swiss based regulated by finma and specialized in digital assets so to Mark a difference first of all I'm

not having a presentation so I'd like to to share with you a couple of things first it's just what we have intended to do so five years ago in 2017 we on two sides almost at the same time in Los Angeles and here in Geneva Los Angeles they decided to go to the crypto asset management and here in Geneva I decided to go into asset management and I would like to share you why and why actually we think it matters 20 years earlier I was at picte a bank that you might know and um

we were having the internet and the.com that was our bread and butter every day internet.com and I remember I believe it was UBS who was saying that for those who are using their UBS credit card on internet you had your card cancel and your account closed and everything because it was bad right you could possibly only use online services for something that is not proper sounds familiar right with crypto today so back in the years I said well you know what the problem we had is we were a very Traditional Bank

so our clients were coming more and more actually and saying would like to invest into this thing called internet it would like to invest into those dot-coms that are all flourishing and coming and we were very embarrassed because we're looking at the people and they say well yes yes good idea but we have nothing to offer we don't have we don't have a research team we don't have products we don't have investment themes we don't have nothing so it was it was a it was a period that was very not comfortable for being an asset manager in a growing asset class in when in 2017 I was invited to join an

Advisory Board of a crypto project from California investors and the project was launched in Macau among all places and uh the things that Stroke Me entirely we arrived in Macau imagine 2017 I came as a you know traditional Banker very skeptic about crypto I got you know I'd done my research and as it was very clearly said the only narrative was oh this thing is going to replace the dollar and it's going to be the change the death of central banks and all this and you could feel that the narrative and all this was you know those people they were a little bit like the Woodstock of Finance right they were all this high this great idea of replacing things

okay and then but there was a panel of very bright people that were sharing their their the idea of how it should go and what they're going to do and what they're going to achieve and okay there was a panel but suddenly this thing was over four days and you had about 4 000 investors who bought ticket I think about 75 dollars a chicken and just to listen to what everybody had to say about this subject and they were as investors and I thought to myself 4 000 people listening to those guys most of them very bright now having

cryptos that we know of and it's this is an audience there is an audience so now we have to make a choice it's either in six months it's either going to be dead that's it we don't talk about it or it's going to be an asset class of course the path is going to be shaking we know that but we decided to go and to say you know what we want to offer and want to have an asset management company focusing on crypto because we do not want to be in the situation 20 years ago that we had no solution for something that will change our everyday life so that was we started Kryptonite in the idea of providing traditional investors

with a solution to invite to invest in crypto we want it to be regulated so we ask fina in 2019 for a license they were kind of surprised that we were asking for a full portfolio management license uh you know focusing on crypto they were actually surprised supportive not surprised um and then we wanted to have a structure we want to have funds AMC certificates something simple but something transparent and our approach was we do not want to do like crypto firms we are doing at the time we're not here to take the money on our own balance

sheet kind of manage it for ourselves and give some profits to the investors that's Celsius model I'll go back into this we want it to be wealth managers you have your account you have your fund you have your things everything is transparent we manage the money and this is it and then we are agnostic of using custodians and Brokers and exchange and everything the model that we have seen in traditional banking on the other side of the pond in Los Angeles completely separate from from myself was another company was born called wave financials today we are one group we we merged and they had a very different

approach the reason I'm saying this is because it's important um to understand our philosophy though in Los Angeles it was Venture Capital guys very early into the sphere ended up in 2017 with having quite a bit of money in crypto and they were faced with one situation and they say well I have all those tokens I have all those laptops and you know they had 30 laptops with passwords stick to it in Nathan beneath and they wanted to have their money managed Wealth Management so they went into local banks and they say can I give you my money and can you manage it

of course you know the answer so they decided to to found wave Financial but the idea with wave Financial was not as we were doing here in Switzerland to give access to traditional investors it was to focus on crypto wealth they said we don't want to focus on growth you remember the narrative with crypto when you talk to crypto about people they say oh I'm gonna make 50 times my money 100 times a million times now it was about I have that amount in crypto how can I live out of it how can I actually generate yield on the crypto I have I believe that this industry will grow

tenfold very good so therefore I just have to wait and see but what about during those years can I generate yield so that it started to generate yield combining traditional derivatives at the time didn't exist now it does and all various defy decentralized Finance tools so they became kind of a their their their trademark became that today as I said gonna move on and we have put together this group we manage about 1.5 billion dollars we are ranked it was in the paper the third largest crypto asset managers in the US

funny enough beginning of last year there was approximately 12 companies firms that were doing about what we were doing and today uh two every everybody's dead Celsius three arrows Gemini earn Genesis whatever you name it all the bankruptcies and that has happened last year with one thing in common and I rebound on what has been said before because this is exactly what we wanted to to to drive in everybody wanted to be regulated everybody wanted to do things in order to give Comfort to investors

Los Angeles I mean the US was regulated by the SEC still still today very quickly very swiftly and then here by the finma but what I'm saying by that is all the models we were seeing in the past two three years they were growing like this we were growing like that why because it was a model that says give me your money as I said before give me your money I'm gonna take it on my balance sheet I'm going to Churn it as much as I can I'm going to give you some percentage and you'll be happy and we met the guys from Celsius I'm not you know judging but our clients some of our clients wear with Celsius and he said but listen it

doesn't make sense if you go to borrow money at Nestle and they give you four percent and I have another guy who says I can't borrow money with Nestle and I give you nine is that something odd in here no no it was fine everything was fine you know no it's a new world so that's the thing that we actually said it's gonna end possibly badly so what does that mean today all of this story what we did in this and that we came with this strong assumption we do not make a an analysis fundamental analysis is you know crypto hedge against inflation no we started to say hang on

25 years ago something changed our lives and it was about technology okay today it's what people says no crypto is this odd Beast that is doing something okay well to me if I look carefully exclude Bitcoin exclude the payment coins it's not all about the same thing it's not one basket with everything doing the same stuff what is crypto what is it it's a bunch of guys software developers engineers had an idea hide various ideas and they said what I need 500 000 2 million dollars to launch my project well guess

what you come to VC private Equity you have a project for 50 million dollars you find it in 48 hours you need five hundred thousand to build a software impossible to find it too small to this to that okay they started to sell tokens they started to raise the money they started to say you guys developers all around the world if you contribute to my project I'm going to give you some tokens and guess what you're going to be able to sell those and if the project is successful supply and demand the simplest logic in having a token my

product is worth nothing there is no demand it's worth zero my product is worth a lot there's a lot of demand my talking is worth a lot simple right this is all the start of what is about technology into crypto and again forget about the payments in this this is another type of crypto most of it is about technology so if someone is able to tell me why in portfolio management as an investment why are we not capable capable of saying well you know what

this is technology this is technology I invest into this one I don't invest into that one because it's crypto I think it's a nonsense it's a nonsense you throw the rates on the charts that were shown before the adoption rate the more and more adoption use cases everything is in progress prices have dropped 90 percent on average 80 whatever hang on use if something is 10 times cheaper and there are about five to ten times the number of people using it I think it's

pretty good of a bargain in it so there is something building up and as it was said only they said it very very clearly we are in the process of being normalized regulated but organized organized what is a custody custody has this this this in exchange must have this is this everybody is in the process of accepting and making sure that we have we live with standards and this is very good this is super positive but let's not forget the point that I'm making and sometimes I don't understand we have our client we don't have individual clients we only have clients that are professionals family office

Banks we do we do help them invest and manage their crypto exposure and the last thing that come up of all this like one example before I moved to the last Point um Amazon is partnering with Avalanche Avalanche maybe you know it's crypto technology Amazon partnering with Avalanche if those two companies were in equity world you would have everybody trying to buy Avalanche as much as they can because Amazon needs to move from their model into the blockchain decentralized

model and they are using Avalanche to do and because it's crypto people say oh can't invest in it doesn't make sense it does not make sense absolutely doesn't make sense the last point I'm making and we're looking at this asset managers Banks private Banks what is their case to grow assets under management you need to find new clients right so there is a trillion dollar that has just been made with crypto so I had a banking partner he was saying well our team is preparing an offer

to go after this crypto wealth and we manage money for protocols we manage treasury through protocols we have 20 odds of this and I was sharing with him and say look what are you going to offer I'm going to offer cash out yeah they're going to go out of their crypto and you're going to invest in dollars and we're gonna have great dollar investment for them well since it doesn't go to work because if you want to address the crypto wealth the crypto world you need to come with a language that they can understand and they are responsive to

I'm going to invest your ethereum your file coin your smilecoin your smile coin whatever it is I'm going to invest it inside the field and the environment that you are comfortable with and if we're not and if the banks are not able to actually make a step and goes towards this well there's not going to be AUM for traditional Banks from those guys for a long time and this is what we're saying it's not about I'm getting ready no it's not about getting ready this is an ecosystem that has evolved so fast and is evolving so fast this is the time to partner and to find

capacities where they are that's why we have to ourselves we partner with you we partner with many others because you know what everybody develops something great and I made it all model doesn't work but what we have to do is if we want to really make this because we have we are convinced we're faced in front of the opportunity of a generation my kids understand this more than I do this is the opportunity of a generation and this is why why you need to have proper answers to proper problems that's it

and for our final speaker so we have Christian zulier who is head of investing advice at Bitcoin Swiss and I think it's gonna again fit very well because Bitcoin Swiss was founded in 2013 and it's one of the pioneers of crypto finance and as I said before a founding member of the crypto Valley Association so please welcome Christian this is yes let's see yes it works

so welcome from my side Crystal advice at Bitcoin Swiss um one of the oldest companies in crypto in Europe as some of you might be aware um me myself I'm looking back to more than 10 years in crypto market so far and I'd like to give you some takeaways also on the longer term developments within the overall crypto space crypto markets so where are we going ahead in 2023 and of course trying to give some insights to the currently hottest question of all when it comes to the market view is the bottom end

um as you might have already have already seen and we handed out some hard copies of the Outlook please make sure if it's of interest to grab one if it's not sufficient copies here you can easily get one online first of all I'd like to to step into a long-term macro view because especially right now again we've seen this before multiple times overall crypto Market is heavy correlating mostly with Equity markets these days um even more with technology companies as such

generally I'm more worried about Equity markets than crypto markets these days and as long as we correlate with with Equity that strong it is important to keep an eye on the at least long term sorry long term uh picture of of macroeconomical data mostly monetary monetary policy which also historically always had quite an impact on the overall crypto Market we're in funny times actually when it comes to to General monetary policies from all the central banks um on the slides it's a 60 years chart

to look back in the long term um on the slide you you see the the gray bars kind of with with major recessions from the last 60 years black line is the U.S inflation rate um red one is the real yield US based and then the green one the yield spreads the new treasuries against two-year treasuries and and of course also quite importantly um the money stock M2 here as a comparison so compared to the last 60 years um and and quite some of it is actually

the reason for the latest uh bull market so that the 2021 bull market compared to the past 60 years we currently have just as a matter of fact the most extreme Real Deal inversion um ever since we also have the most steep incline so Federate rate tax ever since in the last six years and and for only for the second time a negative yield uh spread on the 10 and two years as we also know historically the past Global recessions occurred when

inflation peaked Jack Maybe interest rate hike uh people has already occurred or at least announced I would say check real yields picked up that's what we're currently seeing also on the on the longer end of the yield curve check and the negative yield spreads are are basically there in the inverted the yield curve what you currently see also check so I'm quite worried about the overall Global macro picture even more than I'm worried about the fundamental state of crypto secondly so

which are if we compare Equity as an example s p and and the crypto Market here again these are on the equity design and s p side it's again the same 60 years historically um the upper gray top top Gray Line a dark gray line are all the best case scenarios of any bear Market in s p in the last 60 years the down uh second line Second Gray Line on on beneath it is all the worst case bear markets it's an aggregate of it from the last 60 years from s p and the

in between the light gray um that's very currently are in the in the s p so we're still in a bear Market uh best case scenario for the s p historically seen in the last six years and and that rather worries me because there's a lot of downside protection here historically um then on the on the bottom the red one these are from the last four Cycles in crypto markets um the upper red line is an aggregate of all the best case spare markets for a little more than 10 years now um and uh

the last on the on the on the bottom um the other red line is the worst case spare markets we so far experienced in crypto markets historically seen and the golden one basically is the current crypto bear Market chart currently sitting at 20 20 in the hot 22 and a half not not 23. that's uh data as of current yesterday more or less um so even also if we compare it historically with with the latest uh Cycles in crypto Market we're in a best case spare Market scenario right now um and not in the worst case

what we also can see on the on the timeline to the right side that could could last for longer that should also be said so we're still in the best case bear market and maybe just like half through on a historical comparison as an aggregate of the latest cycle that's what the numbers show there's also quite some positive again fundamentally speaking um I'm very positive on the overall state of of the um some speakers uh uh before I've mentioned all the the major uh sales details what's striking here

and where's mentioning is that the volume it's it's it's it's it more or less took with is is is exhausting so meaning there's it's it's kind of whatever bad news comes we don't really go lower uh most importantly we've seen this in after F takes such a it should have gone way lower but it is kind of their stress is it's quite resilient as we've heard before yes also um so that's that's that's pretty pretty positive something to watch out is is then also um some maybe painful death cross in the next

couple of weeks to 250 moving averages but that's maybe more a bit shorter question is the bottom in um trying to give some some evidence uh to to to to kind of try to answer the question again historically um this is a rather simple um logarithmic standard logarithmic regression so we have a cycle top on the on the on the red on the top end and and the bottom line um the confidence bands um around the the the logarithmic regression

so even even historically seen on a log scale we're pretty down there which should not mean we couldn't go lower of course but the deviation from the from the from the trend line is is pretty down talking about value are we over or undervalued currently this example again is is for Bitcoin only to keep it simple here so what you can see again is the is the is the black line look um lock to end line same same one as in the prior chart

um then of course see the the Bitcoin um also on the log scale and then the the red one the basically the Delta the valuation versus the trend line and here again historically seen going back to 2010 here on the on the on the chart historically seen the kind of green box here has proven to be not a bad timing to start accumulating again um also the the rather quick Spike we've seen in the last couple of uh weeks in regards to overall crypto prices um is is something that is not not new we've seen this before

um so yes overall um definitely not a completely wrong timing to look at crypto again um also something historically worth mentioning is for the first time the issuance rate of Bitcoin is lower than the issuance rate of Fiat that's also something uh that is quite striking when it comes to inflationary assets overall things to watch closely to give some more Deep dive here things to watch closely for for 2023 some hot topics that

we would say is is worth taking an eye on layer two layer two transactions are now on par with ethereum transactions on later one definitely something that might continue the optimism orbitrum all these kind of of projects take a look and then also something striking something new which could hold on in in 2023 is the very fact that layer wants more and more not compete with each other but with layer twos that's in in case of Market competition between the the Challenger projects on layer one monthly is is something new

which which we can now also proof with with data so all the solanas stuff are having hard times against some other layered tooth it's not just a race between ethereum and other languages later ones yes that's it disclaimer no Financial advice as always yes and then happy to answer questions in the unit so I've heard from our technician friend

that the mics you have to keep them very close otherwise apparently you get lost so thank you very much for all these uh really interesting insights before we hit the Q a I have my own questions so sorry to make all of you wait a little longer so I'd like to sort of go back to the let's say Layman picture and and start where Olivia left us because he I think is one of the only ones who said something with that regard so I'll ask the three of you uh who haven't answered that question that much maybe Florian did um what are the key features that you would consider uh when we're talking

about fiduciary duty uh so when you're talking about investing other people's money what are the key features that you would look for uh when you're analyzing specific digital assets so why would you advise one or the other and when you want to start from yes I mean it basically also starts on the on the as as we've seen before it starts on the costly side not to mingle the assets that between clients and and and and your own assets so to say if you have a known proprietary book um so so that is definitely key absolutely key to not mingle to really have separate separated addresses for for each and every client and also able

to prove this that's that's important um most players still can't still don't uh have segregated accounts for for or addresses at the end of day on chain and for for the clients um of course operationally for for especially for for smaller funds it's it's not worth doing the separation so there are some problems still um simply because transaction fees are higher than than the operational cost is higher to separate than the actual funds to be separated separated um but but um as As Good As It Gets technical in regards to technology operational costs and and and and uh basically technology and operational uh

from a from a pure risk perspective you you have to to to to to separate the assets from from the clients from your own and also separate As Good As It Gets separate the the assets from each and every client between the clients not to have uh not to pool the client tests As Good As It Gets yes that's certainly the most important take away from Celsius basically it is absolutely like I agree entirely but one thing is it's not it's not because you're talking about a different asset class that you have to revise the rules or you have to revise what has worked uh in in the past

I mean you have a certain discipline for if I have inequity portfolio that I manage it is organizing in a certain way if I start managing Commodities or if I gold or whatever I have the same rules with crypto it's not because it's crypto that you have to reinvent the wheel we just have to take exactly what the principles that are and that's why when I was saying we emphasize and we thought we didn't think otherwise we emphasize in saying you said people are entrusting us with their money so you can't just take the money on your own balance sheet and pocket and just

you know do whatever you want and then you return it when when you want or when you feel like it's time to return it that's not that's not the way the game works you you tell you take the money you remain transparent you show what the owner of the money is supposed to see which means what am I doing at every single point in time with your money and then I I invest money on your behalf and it has to be separated and this is not a matter of cost because if it is a matter of cost then the business is not sustainable then you can't have a business you can't say well you know what I'm just gonna pull these things right and yeah because otherwise it's

too expensive we'll see what happens right yeah I mean just to add to this it's I completely agree with what you guys just said and also of course at Signum Bank being a fully regulated Bank in this space is still I mean back in 2021 it was really we had everyone coming and saying like why should I bring you my money I'll give it a Celsius I get nine percent returns apy and um didn't really have that much to offer but after post 2022 I think the value of having the segregation has become so clear and so important that and like you mentioned having these segregated wallets where a client can go in and see their wallet address and see their

assets safely in that Wallet not being rehabothecated not being used as a slush fund for the founders really being trusted and safe and this is one of those building blocks that can enable broader adoption in the crypto space because till date you know managing your own funds of course Everyone likes to say burn the banks you know we do self-custody but there has to be a Fail-Safe to that I mean personally like if I die tomorrow my husband wouldn't be able to access my metamask he wouldn't know what to do with my seed phrase so having a counterparty on the other side is quite often is something that you need to have a broader less technical audience engage and um in this scenario these segregated

wallets is yeah it's it's a must-have um Olivia you you talked about the question of valuation and you mentioned you know Network effects as as one way to look at the valuation are there uh you you mentioned you looked at other things are there other let me formulate in this way Are there specific strategies for people looking to invest in crypto or you know institutions looking to get into crypto that they should look into well we're we're actually looking more specifically at the problem of valuation at the moment and let me explain what we mean by valuation when you

when you talk to people about valuation they go yes there's a price price out there what's the problem with value there is a price which is the value now anyone who's interested in fundamental analysis knows that what you're doing is a fundamental analyst is you're comparing the market price within supposedly intrinsic value of the asset and if you're estimation is that the price the market price is too high this is a signal that you should sell if the market price is too low as compared to the value this is a signal that you should buy now the question is what is the fundamental value of assets that may have no cash flows or no balance sheet or no economic

multiples to speak of so this is where the notion of a network comes handy because it allows to take a longer term perspective and a an industrial perspective on what crypto may bring if you look at use cases for example are we gradually in a position to identify use cases that will have real value for day-to-day usages right in other words can we identify users who will be using Bitcoin or other crypto currencies for something else then speculating on markets right when that cohort of people will essentially uh be more significant

than the core to people who are investing in those instruments for the pure sake of speculation I think this is where you're going to see eventually a stabilization and a normalization of those of those instruments but fundamentals do matter right this is the essentially what we're telling people in this report do look at the business case what is the industrial value here what is the economic value that you're proposing to add with that process that smart contract or this Venture for example so you're going back to basics I think you were saying for young there's no reason to look at crypto any differently than you look at any other form of economic

Venture for example go back to basics um one question I'd like to ask all of you basically who do you think drives this Market because there's been you know over the years the narrative keeps changing and depends on where you stand so institutional and more traditional players would say oh this is a retail driven Market sometimes the data says otherwise sometimes we talk more about whales moving the market so who do you think drives this Market if I there's one thing that always struck me in this in this crypto industry it is the first time

in financial history that there is an asset class that has been created or came from the retail if you think of it never in history something in financial instruments have come from the retail usually it's those guys up there who think about the brilliant idea they use it for themselves namely hedge funds then it goes to institutionals and when the valuation is very thick and heavy then usually you have access to retails which basically buy the ticket out of the institutions right sounds familiar this time it's all the way around it those who have started to invest in

crypto where the uh you know instagrammers with tattoos and flip-flops and this is great because this is what is the essence of a very very new trend but this is very difficult for the aristocratic Financial financiers to accept that and now we are seeing only now that suddenly okay Goldman Sachs is stepping in Goldman Sachs is saying this is an asset class I put this in my chart I'm starting to buy hedge funds I'm starting to bike so you have this trend that is coming into play 10 years later so it is fascinating so to your question I think

that the first Trend who was driving the market very insiders very groups of individuals whales whatever you name it they were moving this Market they were having control of many protocols tokens and cryptos now we are seeing the very first sign of institutional entrance and that goes back to what Olivia was saying this is about valuation that people will come with formulas and saying oh this is overvalued because it's whatever and and that will come in line and when the tsunami of money from institution will come into this Market well you know I mean it's simple you can't fit the amount of water in a lake

into a cup so just name it you have to get a bigger cup also look if if you look look at at the numbers for instance just just recently published Financial figures of coinbase and and if you check their revenues with institutionals compared to the revenues with with retail for for 2022 the picture is absolutely clear and coinbase has been a player in the institutional business more or less ever since so with with their Solutions so they service for quite some years some some quite some large institutions um so so clearly so still to a to a very large extent it's it's it's privately

retail let's say driven um most of it um the the the we still see this um the the first uh steps of a larger move from from big bag holders from Wales so to say then of course all the rumors the trending the the narratives through the whole crypto Twitter as as always and and then more or less all the all the retailers step in and drive the market up simply speaking simply speaking um institutionals on a on a on a price power in the overall Market not much yet yet it's about to come not much yet um so yes it's it's of course it depends on on on we have to differentiate

between uh several crypto projects but simply speaking for the overall Market uh it's it's to a large degree Still Still the large backholders um but that's no difference in in threat fire if you if you look at the blackrocks the vanguards the fidelities owning 70 70 with their ETFs seventy percent of apps s p three parties owning majority of of the bank it's no different no different um and and even the trend there is is in the opposite so even more centralization of ownership there in the ETF segment specifically um in crypto it's the opposite in crypto it's it's ownership um especially for for the projects which have been around for longer it's it's decentralization even more and more

um not so much for the early uh uh for the for the for the newer projects yet um but for for let's say simply speaking Bitcoin um highly decentralized ownership that that picture changed in the last 10 years maybe just to speak to your point right I think it's really important what you said because on the older projects and maybe the ones that have sort of been battle tested a little bit the ethereums and Bitcoins and so on you really do see quite a lot of decentralization and a lot of people when you think about crypto they're like yeah I own a little bit of Bitcoin it's still like the first thing that they go out and want to have exposure to maybe ethereum comes in quite close as a second now but with

several projects and this is what I attributed uh spoke to in my presentation as well you really see the large role that institutions have played and I mean FDX was part of the problem in that story right where you had a lot of coins and I would call them even to some extent coins like they had a lot if you looked at the wallet holders the concentration was crazy and if you know that your asset Salon I mean I didn't say my name but um if you know that the asset that you hold can be moved by a large institution who's always going to save their own skin before they care about the project or the ethos of building something you know Innovative new and different

that changes what we're doing here and um yeah I'm glad that going forward I think that has been identified as a really big risk vector and people are fighting hard against it I mean I don't know if you guys remember a project called EOS back from 2017 and it Rose and it basically got blacklisted more or less for the kind of centralization that it um kind of it supported or it resulted into and similarly projects that um we see in the market today will see them sort of dissipate now and the ones that are more decentralized hopefully are the ones that we see survive in talking about uh Evolution um I guess we've all been

mentioning and and Christian showed us the charts comparing with the SNP do you think that we're looking to a market that is further integrating into traditional markets or do you think about this Narrative of decoupling from the markets when it comes to price action well there are there are faces of of decoupling also to Gold um to other ISO classes um and and then again there are phases of high very high correlations to it to other markets um that's that's not not something new that's that's changing

um what what is what is even more striking is is is specifically now that the correlation is is very high with with with with with traditional Equity markets mostly um so so that is rather striking the very fact that that there are faces of of higher and lower correlation to other markets not new that's not not new I I don't see I mean the the decoupling or difference I don't I don't see it really logical because at the end of the day we're talking about trading assets drinking about simply think there's always a supply there's always a demand that this moves along the line but one thing that is you know we talk a lot about volatility and all

this and it's interesting some were making a comment in a paper somewhere that you know 2022 the best asset class was Private Equity because it fell less all right okay so no comment further but the point is crypto is what you create a project you list it of course 95 plus of the project will fail sure but what's what's bad in it you know you you have an idea you will succeed you will not time will tell but the problem with crypto it which has to be clearly uh thought is it is listed private Equity it is nothing less than listed private Equity if you had the

whole position in private Equity Funds that were listed and Mark to Market 24 hours a day seven days a week I can tell you that private Equity will not be so popular and and that's and that's one of the things so when we say decoupling not decoupling and all this I think it's impossible to have a decoupling there might be a time possibly that Bitcoin because the holding of Bitcoin will be widespread that it might be less correlated to the markets and more correlated to to gold I don't know possibly but let's not forget in my view crypto is a binary world you have one side you have Bitcoin

reserve of value whatever the rest is Tech that's it it's Tech it's listed tech companies and if you had a static portfolio in 99 it would be made of what Netscape you will have welcome you will have whatever companies you name it you will still have Alta Vista and all those guys they're all dead because it's stack and it evolves and that's why you have to be active into um I actually agree a lot with what Florian was just saying across all those conversations that we've had with very decent portfolio managers institutional managers alternative managers we have to make a

distinction between the coins and the technology themselves basically it is possible some of them were more enthusiastic about smart contracts and essentially decentralized Ledger technology as such then the points that can be in circulation out there in other words it is possible to look at blockchain as purely a wholesale banked interbank level and improving the processes that make the payments and transfers and clearing and settlement and middle office and back office processes more efficient and less costly without that necessarily getting into the world of retail that aspect at this stage the conversations

that I'm having with institutions is the most compelling argument that I've uh that I've come across at least for now let's see over time whether retail applications get to develop and become a bit more mainstream but the arguments I've heard from heads of Investments habits of operations were very encouraging at the wholesale and interbanking level that I thought was an interesting uh development that I've that I've come across thank you maybe maybe just to add on to what Florian was saying before um thinking of a lot of the crypto

project or the coins at least as a representation of the success of the project going forward um I don't know if you all maybe came across this project with the Norwegian government I believe it's called Brock or something like this and essentially what they're doing is listing private equity on blockchain and that's I think going to be an interesting addition to seeing how the markets evolve and how private Equity then continues to play a role in that as well and again this this question of listening private equity and what you just said now basically it relates to what the Swiss government has done with the ability to tokenize shares so the the easy ability that we have in

Switzerland to tokenize private companies uh when we look at the Swiss stock market I think it's about 10 or less than 10 percent of the maybe five percent of the companies who are listed because you know you need to be big and it costs a lot of money so that means that people only have access to investing in those companies so the vast majority of companies are not even investable for most people and tokenization helps with um what do you all think about sort of you know there's always an evolution in these in the narratives that are dominant sometimes you know I mean for many years of course it was always Bitcoin focused and you know is it against inflation is it digital gold

um is the you know nfts the new thing is the metaverse what do you think is the sort of emerging narratives at the moment I would say that uh web 3 seems to take the dominant part of it and I think it's the most interesting evolution of it because it's really what it is it's all about it's all about the evolution of Internet this is all we're talking about is what we do with a centralized network of internet and if you know who owns internet well people say oh nobody well that's not true people who controls the network owns owns it and that's why you need to have a an evolution into this and that's it I think that's that's very

uh that's very positive in in fact then the new narrative is is this it's it's a it's the integration of all of that into something that makes sense to people and and now you can see you see the use cases coming up very often you have real live use cases where people were saying oh it doesn't you you hear all the time there's no use but there's no use what this first of all what has no use in general but just even the the moving money around of course we are not the target of crypto for use of currency why because everybody has a bank account

everybody has a credit card everybody has a setup well guess what eighty percent of the people on this planet don't have a a reasonable currency a lot of people they have lost all their wealth in the past 20 years about five times so go tell an Argentinian and say well you know what you should trust the your currency and don't trust this Bitcoin because it's nonsense well the answer is going to be very blatant you have the naira in Nigeria who is suddenly becoming kind of convertible because you can you can swap best and they can now trade between Vietnam and Nigeria swiftly in a second while before they had to use the US dollar at a

gigantic premium and wait three weeks to have a settlement of a contract as if this is not Evolution I don't know what evolution is but going back to narrative yes web3 web 3 and the combination of all this oh I would just add that when we discuss with regulators and large institutions one aspect that gets them excited negatively or positively is that of stable coins in part related to what flowing was just saying and but also because these instruments if left unchecked could become ironically what Regulators

call systemic in other words if indeed a big chunk of interbank and inter-jurisdictional transfers take place away from typical dollar Euros Swiss or Sterling channels we're suddenly recreating risk in an area of financial system that is entirely unregulated so at the moment from a regulation standpoint the stable coins of this world are catching a lot of attention uh for lots of probably good and bad reasons including that quite frankly central banks don't want to lose control over the their Monopoly over um over money going back to what flooring was

saying it's a it is an interesting debate um that I mean we were discussing with the Federal Reserve themselves was they consider the launch of Central Bank digital currencies for example and we were asking them why are you doing that and sometimes they were quite frankly saying we don't really know but we were asked look into that because otherwise the treasury might feel they're losing control over the the main means of Exchange in their jurisdiction so it seems that regulators and Central authorities are afraid of playing catch up and losing control over what's happening which is ironically when you look at the development of capitalism if crypto developed as has been

discussed today it would be proof that you can develop from the bottom up as opposed to a purely centralized take on how economic exchanges are meant to happen this is pure speculation on my part but there's an element of fear of the unknown in in how institutions are reacting to to those developments thank you um I'd like to open the floor now to questions so if any of you want to jump in try to speak loud otherwise I'll just come to you with the with the mic and while people are oh I was going to say thinking about questions I had another one but now it's your turn thank you uh referring about the

comparison with Dr Mira and Technology what are you identifying as key trends in terms of technology in the crypto space and maybe advising your clients well the the I think the the key the key Trend really I mean make the comparison with uh internet.com where are we now I think it was shown in the slides uh the a we're now in a stage where I would I would say we are on the network time now we're talking about infrastructure we're talking about Network at the time uh you

know 25 years you can hear names Cisco Juniper Red Hat Foundry simantec whatever there were tons of Networks some find their places one became main others were becoming side networks but and most of them disappeared so now we are in the phase where we are still on the network buildup infrastructure layer one layer two then we will have the the trend or we will have the phase where you put apps on this and that's when the.com started really it was about people had an idea and they say oh I'm just gonna do my business on the internet and I'm gonna

open up my shop or my app or whatever it was no app at the time but then it was a nap the application that we're actually using the Network that has been built and offering something I think we are pretty much at the end of the at the end of the network first base network type of era and then people will say okay those Network are strong enough solid enough trustworthy enough and I can I can rely on and we will see applications built on it decentralized finance will be of course a big trend of it because people will use more and more of that and and that will go and it will grow in in parallel

so I I think this is this is pretty much what we we see now and we're not yet in the phase of uh applications it's too much of an early stage I think what we also saw um in the year of 2022 was how this focus of the dominance of layer 1 started to decrease and I spoke about this in the presentation as well but what this means is that there's a greater Focus now coming into the utility so building on from the infrastructure side today there's also new forms of technology that are being developed and the applications that these can enable I think that's still very much open and ready for interpretation right like how are you

going to use zero knowledge proof alongside soul-bound nft tokens to create really strong decentralized identification Solutions I mean the possibilities are amazing and the way incumbents either work with these new technology Stacks or people working with these Stacks eventually rise up to challenge the incumbents that's going to be a really interesting game to watch play out over the next couple of years anybody else uh thank you very much hi and thank you very much for your brilliant presentation I learned a lot tonight I didn't understand all

especially Christian I didn't understand all of your what you said and and presented but I will focus on that and thank you for that I wanted to to say something about the testimonial first and after I got a question that testimonology I'm Chris I'm a CEO of spotus it's a very early startup stage and uh the testimonial is about the we are we are about the the collaborative platform what's what we are doing about specifically in Mobility and for the last six months with my my associates and and friends we are really we are on very um traditional business and traditional startup business and I decided six seven months ago to say okay everything is

okay but there's a lot of a lot of things to say and to to expect about blockchain because some friends of mine are very specialized in this and we decided to because we are currently doing a funding about it with nfts so I'm really surprised because I'm learning this this topic and I'm running blockchain from the like seven months I'm very surprised about the Blue Ocean strategy but because it's a blue ocean Market with blue ocean people and what we are doing we are doing collaborative collaborative platform and we did blue ocean people for that and what is very interesting about the nfts and and Alia you mentioned it and I was very happy to

know that that we are doing funding through nfts because it has to make sense to the investors it had to make sense from the bottom to the top and that is the the real perspective on doing and I'm responsible of that is to make sense to our investors customers but Partners to say what is the nfts what is the sense it's a new tool but it's not a new rule and I really agree with you uh Chris Florian sorry and uh we can play with that we have to structure it we have to organize it that's my responsibility as a CEO but there is amazing and creative tools

about that so my question it was my my testimony and thank you to give me the microphone my question is how with those new tools because I speak about nfts utility tokens are amazing but it has to be regulated it has to be structured it has to be really what is your perspective or how you know that about the utility token utility tokens or daos because I believe a lot in that because it involves a lot of people and Connecting People is with the decentralization it was your question with web3 is of a real matter and a real um perspective we have to answer and I would have I would like to have your

your opinion about that sorry it was long and maybe not so clear but I can be so uh I think the the the the use the utility the regulations all of this nothing nothing will be able to be regulated at once I mean in one bulk that is not possible because there is a different aspect different use case different there's just different type of of of of of of of equities or or asset class there's different assets nft

as an example we all come to my goal come to mind that oh nft is yes uh monkey on the wall yes this this board Apes all this all that but nft as a concept is is a fit it's phenomenal you know non-fungible token unique digital identity and you know I give you just one example we it's public so it's known we manage a lot of money for the cardano ecosystem and Charles hoskinson's himself and we made a deal with the government of Ethiopia what does that matter because we made the blockchain and for the nft because

we realized and they came to adzilla in Ethiopia so 100 plus million country people one percent of the people one percent have the chance to go to university and have a diploma and guess what the challenge they face once they have that diploma is to convince the future employer the diploma Israel and is not fake that is their priority and lots of them struggle to prove it's right and it's and it's a true certificate through nft you triangulate blockchain nft app I come to you I have my diploma

show my nft it's a true diploma period that cannot be regulated the same way that you would regulate something that is a token for payment also or something that is a share of value or something tangible so there is a whole spectrum of things that will take time to regulate and will take a lot of efforts but I think that the Regulators will should take the easy case the low hanging fruit as we said and try to regulate things that looks like Securities like Securities what you know at the end of the day it's you know if it's uh if it looks like a like a rabbit and smells

like a rabbit it might be a rabbit right [Music] I can speak for a minute on you mentioned utility tokens right and these utility tokens you get to raise the capital using them through the concept of initial coin offerings right icos and icos are a major part of the new European regulation the markets in crypto assets regulation it is interesting going back to what cologne was saying at this very moment two years ago more or less the SEC in the US came out and said exactly as you said

it looks like a security feels like a security we're going to regulate it like they are securities guess what there were no icos anymore in the US right there seems to be some sort of connection between the ease and the laxity of the rules um and the propensity to launch those um those icos for example whereas in Europe they seem to be a major component of what governments and Regulators are interested in in pushing in other words finding new ways to raise Capital as you know Europe is much more intermediated by Banks as opposed to the US which has been decoupled this intimidate mediated

for a while so it is possible icos might be a solution to raise Capital more easily for small and medium Enterprises and new entrepreneurs for example so there's there's a lot by banking on um icos and utility tokens but again if there are major differences in how Regulators perceive those instruments to be we're going to be facing situation where regulatory Arbitrage may lead um to Quality concerns uh in terms of where you want those listed and the reason why you want those listed if you go back to FTX why was fftx in the Bahamas right well asking the question is is sort of answering it so that will need also to institutionalize and and

normalize to some extent but there seems to be a lot of potential on the Ico front at least in Europe for the time being I think what you were saying about regulatory Arbitrage is actually something that we already see quite actively happen in the cryptosphere and with any let's say I see or any token that you want to buy you have to first declare like 15 times that you're not in America you don't have any relationship to America you have no friends in America it's really really quite stringent and um I noticed this also when I was at the permissionless conference last year all of the projects that were being displayed over there I didn't really know them very well it was almost as though it was a new a separate crypto universe and so having this sort of like fragmentation between the regulatory

um zones has it causes a really strange approach especially to something that's meant to be Global and decentralized and not bound by jurisdiction fundamentally like we have teams that are so decentralized that you have a guy in America and a guy in Australia but the poor guy in America has to actually have a separate representative sitting in the BVI to actually legislate for him on all of his uh project outcomes and in Europe I think because we have this utility framework we have the payment tokens and then you have Securities there's at least Clarity to some extent that between at least utility and payment tokens there's a lot of flexibility in

being able to have a project and drive that project forward without having this incredibly over like um overbearing a weight of having to go through the Securities route uh having said that I think the Securities route is where we will see growth as well going forward it's been sort of in the offing everyone's been waiting for it waiting for this wave of like Securities to happen to crypto and I think um I think since at least 2017 there's been a lot of talk about this right but uh even today like at sigm we have a tokenization uh platform where we do art security tokens or other different collectible tokens but because of all the weight that is carried by a security

token it becomes really hard to distribute and so sort of bridging that Gap enabling people to participate in providing them access to things like a Picasso painting is something that um yeah I'm in the year 23 24 hopefully it gets to open up a little bit more that's definitely a positive positive aspect to have more clarity on the on the overall regulatory side and yes let's hope that it's not not like in threat fire it's America and the rest of the world let's hope it doesn't turn out like this because it's a global thing the whole crypto um yes maybe maybe also in regards to tokens it it the the whole business model

basically completely completely shifted from from the early days like like the first one ethereum back then um to to the to the current security token offerings that the whole business was completely uh um but not just because of regulatory um shoes also because the the very need of these projects in order to use token sale to raise money to raise funds for a project that their own needs their shift it has shifted from a from a pure crowdfunding kind of perspective into we need just something to sell to a VC company with with usually these days very limited amount of of different kind of VC companies so they all go into the same project and and that's something

that is that is that is is a trend we should shift to the to the other side again to the crowd sale more decentralization of ownership side else we end up with even more regulation at the end of the day well thank you very much um we're running uh behind on schedule so I'd like to conclude here I'd like to invite all of you actually to join us at a little um it's called a cocktail so just some food and some drinks um follow everybody we're going up one stairs if I'm not wrong and across the corridor but there shouldn't be any anybody else in the corridors so follow

our friend uh yeah from the team and just follow everyone please join us and keep talking three foreign