Digital Assets Reshaping Macroeconomics: Markets Move First, Do Regulators Follow?

Transcript

thanks very much we're super excited to be opening this conference um we have an extremely diverse panel we have an asset manager a rating agency a lawyer an exchange and a journalist SL editor so it's going to be an interesting conversation how about we kick off with some quick introductions James maybe let's start from you and go this way yeah hi everyone thank you for having me uh yeah I'm an analyst at coindesk um I'm also a board adviser for a UK public company managing their Bitcoin treasury um I've been in the Bitcoin or crypto space since 2017 and uh my primary focus is on looking at all

these public companies uh around the world using uh Bitcoin as a treasury asset Bitcoin as a treasury asset is a super hot topic that we're going to be covering later okay next we you have hi guys I'm uh Dennis I'm working at Bitcoin SS they're part of the invest and advice team so sort of uh the future Asset Management division working there in investment strategy research and advisory um yeah excited to be on the panel also believe we're uh pretty much the crypto native company here on the on the panel very early in uh in the crypto Valley already so looking forward to give some insights Bitcoin SS for those of you who don't know is one of the crypto champions in Switzerland and I believe the first um company to set up

and push for crypto adoption so thank you for your continuous effort and Paving the way for crypto adoption in Switzerland all right how about you hello everyone I'm chrisan velli vice president in Moody ratings uh I work in a team that oversees the old things digital Finance we rate and assess instrument issued on distributed ledgers we provide market research and we try to be technologically ready to connect with all the infrastructure that our clients are using um very excited to be here and it's always a pleasure to come to Switzerland would you say just a quick one would you say that Moody is ahead of the curve with regards to other rating agencies uh for when it comes to crypto I couldn't say otherwise so absolutely

yes good all right Andress good morning everybody um I'm Andreas I'm heading the mme web 3 blockchain team we're law firm based in Switzerland we've been shaping or helping to shape the Swiss crypto industry for more than a decade now awesome John Lui my name is jigi everybody calls me Gigi so we free to call me Gigi H I'm the CEO of binance Italy which is the subsidary of the bance group in Italy bance is the largest Exchange in the world for volumes and I've been there for uh well three more more than three years now I joined in September 2021 so it's been a while now GG's a fry of mine um so my name is Denita I work on the business

development team for Europe at bullish exchange for those of you who don't know uh bullish exchange is a centralized regulated institutional exchange we kicked it off around 3 and a half years ago and now we're top three globally for spot Bitcoin and E volume um in 2023 we acquired coindesk uh with their media and index verticals and last year we acquired CC data also known as CP to compare so we also have a data business so you can think of bullish as a crypto group now awesome so let's kick it off regulation versus innovation um where where do we stand since we're in Switzerland I believe we should start with this country Switzerland was one of the Pioneers um with f f m leing the way many many years ago it's also home to

the theorum Foundation which I believe you you Andreas worked on can you talk about how far we've come and what is there to look out for and also do you think that Switzerland remains a regulation Champion or it's probably overshadowed now by the Trump Administration and on the MAA regulation wow a lot of questions in one yes U let me start from the beginning um or the end do we Remain the champion I think it's a good starting point and then kind of circle back how things developed over time um if I look at the current Global landscape on a regulatory map I still do believe uh that Switzerland is among the top jurisdictions for most or many of the projects of course not the only one anymore and uh you mentioned the US

which we yet see a lot of activity but we don't certainly know in which direction it finally will go when I talk to my us colleagues they they you know they're very Progressive uh they they kind of bullish on how things will develop but the timeline of that we'll see um if you look at Europe uh with Mika in place since January 25 now this year for three months has kept us all in Switzerland terribly busy um definitely a milestone in regulations and adaption for the European market but it's a European market access regulations so I my personal opinion but happy to kind of hear your thoughts on that it does not

serve as a global hub for many businesses uh I think it's quite formal uh it's designed to keep lawyers busy which U I like of course uh but uh I think from a b industry perspective uh it's great to have the market access but it comes along along with a lot of burdens so uh the global business Hub I probably would tend to still base outside the Europe for example in Switzerland yeah we're going to talk about Europe uh in in detail more briefly just want to hear from Bitcoin Swiss because you guys started off in Switzerland then moved elsewhere they then came back here because you realized this is the best place can you talk about your experience and have you noticed any recent Trends reversing uh and having regulation be seen a bit more

hostile or it still is it still a very friendly place to to do business in sure um I would actually also have started out from that standpoint I mean if you look at the very early days of crypto Valley then you could even say Switzerland was really the place where the global crypto foundations came to all the crypto business really came onshore to Switzerland um in the early days even the ethereum foundation Etc they really came to Switzerland to really be onboarded here have their token sales Etc and the foundation uh Incorporated and I would say nowadays it's really more the trend to offshoring um more globalization in terms of also companies having to go B where the crypto business is um so in terms of attractiveness I would say Switzerland still definitely is is high up there but

it's also somewhat falling behind to more jurisdictions opening up so it's more competition I mean crypto has no flag it's quite Global and diverse so um in that case I would say Switzerland also has to ramp it up because in the early days there was a lot of bottom up push for Innovation or regulation through Innovation um and I would say nowadays that uh that changed a little bit I would say also the the trend came maybe a little bit from the US we know the past administration over the past four years was quite hostile the European Union there was not much different so and then Switzerland also has to follow suit somewhat always and that I think stifled then also bit the regulatory approach and uh and openness in Switzerland out would say since roughly 2020 is but I also believe that it's going to yeah have to catch up in the

near term and I think they also will be now pushed and forced by for example the US Administration opening up to crypto to really step up the game and uh and promote more open regulation again to really keep crypto businesses in Switzerland and and keep it also attractive for businesses yeah we're going to talk about the the Trump administ Administration and the promise for crypto there but let's briefly touch well probably it's not probably not going to be brief on MAA so we're in 2025 we've been holding our breath for this regulation for for many years now it's finally finally live um GG what do you think do you think that it's delivering uh to the promise or it's adding more complications um be I asked the question because bullish is

regulated in Germany um we have a brokerage uh custody and um uh broker and principal trading licenses there that was very long very expensive and very complicated right and our starting point since we we serveice exclusively institutions was that you get licensed You by tier one regulator um so you not just get the license but you're continuously monitored by debt regulator um but we're probably going to be paying a very high price other exchanges are taking different approaches right so what's what do you think about how do how do you think uh about MAA and do you think that we're going to enter in a

situation of regulatory Arbitrage where players are going to go to less requiring jurisdictions just to get the overall me license or will it matter where you get license and also if you can touch on Italy um since since you're there well congrats first of all because I I I guess it was not easy to Bureau crate in Germany right okay so congrats well let's say that uh in general uh the rules chese technology right it doesn't happen well very rarely happen uh the opsite it's not easy to to draft Ro rules that actually can keep the pace with the technology and I mean

I was uh in my previous experience I was at Italian government and I had the privilege to draft a law and one of the actually the most difficult part was to draft some rules that were uh actual with the for the technology with the technology they you know it's it's it's hard to predict where the technology can go so it's hard to write to Draft rules that can actually do that uh but I think maika is a is a very good start uh at bance we welcome MAA uh with favor for two reasons basically because first of all it's an objective reason uh Europe is the first example of a group of countries actually also quite

important countries some countries of the EU are part of the G8 right so uh this helps a company to you know Focus maybe just on one country to get regulated there and then he can passport the license around all Europe and this is unique the US still doesn't have they do not they do not have this kind of framework there are you know other countries in the world Hong Kong Singapore Switzerland obviously they are moving fast and they make maybe they understood the potentialities of this technology before but Europe I think is doing a good job in this sense in the sense that it provides Clarity which is

important uh it give com it gives Comfort to players and to those who want to you know uh Embrace this technology stared from zero uh so this is an objective uh benefit the uh subjective benefit for companies like BS is that uh up to before Mika the European framework was really fragmented Italy had its own vasp uh rules Spain France uh Sweden Poland they were all different so a company like C like binance had to register in different states in order to provide the services and think how complex was that also in terms of

resources now it's uh it could be easier let's say this way because you know we can focus on one two count depends on the strategy and then we can passport it but then different countries have different translation periods right ex so that's where the difficulty comes from how do you pick how do you pick a country and Andreas I'm also curious to hear from you have you seen a shift from your client base um you know people coming to you saying now that we have this uniformity in regulation in Europe we'd like to open headquarters there or do they do the minimum required in Europe and keep still keep their operations abroad um well I I think I fully agree what what what Chichi said on the

harmonized European market access I think that's a big benefit it's a big market and and so having clear rules to access that with one license being able to um provide services into the whole of Europe is is a great benefit um what we have seen from our client base uh which you know comes or intends to come to Switzerland to Europe or build up a global business that they of course if they uh want to provide a a web three banking Financial Service style of activity exchange custody whatever that is which on a MAA that they need to have a Mika Hub um what I don't see that they generally intend to kind of build as I

said before the global hub for the global business out of Europe so normally they tend to have a a a structure where you would have like a holding company an operational company for the global business somewhere that maybe Switzerland maybe somewhere else and then you would have a licensed entity for the European market now that may be Italy that may be lonstein um t will show who has the most benefit quite often it helps to have a proximity to the kind of the the global entity to be able to share certain um Human Resources but I think that's the P I see and then uh I think that's goes a bit beyond the financial service business for all the companies in the web 3

Industry who still issue token um there for that part you can easily and probably easier do that outside of Europe and just then f is the European regulations from from abroad and maybe the last thing I want to mention that while MAA is quite comprehensive there's still substantial loopholes in it not in terms of in Clarity between uh I think there's still a lot of clarity to be gained by the regulator and the practice in the coming Futures and years so the big topics will only arising now but also in terms of services so for example one of the key services with many of our clients uh who are in this web 3 banking industry provide and do a lot of kind of business with it is staking so staking

as a service and staking is not covered by MAA so you still have this issue that you need to go jump from one jurisdiction to the other to make sure you comply with the uh regulations within Europe yeah I mean I guess we need to wait until year end and evaluate right because it's an extremely ambitious regulation and I think what's very interesting is that for once Europe was leading the the way uh we got our act together before the US and that's a huge achievement but we'll we'll see whether that was a good or bad thing moving over to the US to Cristiano and James so huge Promises by the Trump Administration we've seen crazy price action at the beginning of the year now

things seem to have towned down a little bit um can one of you maybe we start with Cristiano talk about what's been promised what's been done so far what can realistically be done so far and the impact that we expect these to have on the overall market so maybe first part of the question to Cristiano and then the second part to James sure thank you we can categorize what is happening in us along two um features one is assets and the other one is infrastructure let's start from assets there are two main asset classes that have been impacted by uh the new uh Administration the first one is stable coins and we have seen

huge progress on that because actually I mean us said we don't want uh retail cbdcs and I mean they didn't explicitly say that but probably the message is that stable coins are supposed to cover what retail cbdc will probably cover in in in other countries and actually yesterday Wyoming uh announced that they will issue a a stable coin uh and the important thing is that they are not issuing a stable coin on a permission closed Network they're issuing on six public blockchains so that's the other element that I was mentioning before infrastructure um the what this Administration is trying to do is to make it easier for companies to interact with first assets that were

previously uh Untouchable or almost and one is stable coins and the second one is uh cryptocurrencies in general no I'm not referring to mem coins I'm referring to uh uh the likes of Bitcoin and and ethereum and that's where the whole discussion around Reserve iic resolve strategic stockpile comes into play uh that is much more nebulous for the time being uh but it's not ex it's not really relevant at this point what the what the states and the US are doing let's look at the private sector and let's look at what corporates are doing I mean Bitcoin is already playing a huge role in a lot of corporate treasuries and I'm not

naming any names but you all read the news and you all see that many corporates in us are actively uh pursuing uh strategies where Bitcoin becomes a core part of their treasuries and this of course could have implications and and risks uh across the board um so we talk about stable coins we talk about cryptocurrencies let's talk about infrastructure on the infrastructure side us is trying to make it easier for companies to interact with permissionless networks that were previously uh Untouchable by Banks and other regulated institutions we have seen first the sab1 121 Amendment and now crypto custody is much easier for companies and the second one is the OCC

issued a letter reversing previous guidelines and now uh for for banks and other institution it could become uh a little easier to interact with permissionless blockchain to run nodes and and things like that so these are the two elements we are seeing again it's early days and it's not like we will see anything materially approved uh in in a matter of months it will take a lot of time even the even the stable coin bill which many people think it's the lowest thaning fruit uh still need bipartisan approval and it will be a long process but that's the that's the direction of travel I would say thank you yeah the world needs more stable coins we don't have enough of them right

now uh James what about um the fact that in the US we have regulation leading the price action um as I mentioned before we had crazy price action at the beginning of the year looks like the Market's taking a breather now um what are you seeing as key catalysts going forward going forward and you know not investment opinion but can you comment on the Bitcoin price yeah so um the the 30% correction we've just had recently um looking at previous bull market draw Downs is very similar um to previous bull market so a 30% correction is quite normal um actually if you look at 2017 um it was quite an immature asset

class back then but we had 50 60% draw Downs so this was quite normal and then if you remember in January 2024 when the US ETF launched uh Bitcoin actually had a 20% correction um just after the launch and again we just had a 30% correction so it was very similar it was kind of a sell the news um the US announced a strategic Reserve that would they would purchase in a delta neutral way um so yeah there was a of synergy there as well but in terms of the the price action from a corporate treasury perspective uh especially strategy and then it's kind of tying in with UK regulation um as a UK retailer uh I don't have access to any Bitcoin ETFs be

it in Europe or the US um so the FCA have effectively banned it so um if you look at UK brokerage accounts um strategy was one of the most most traded most purchased stock for a number of years it's actually now gone down I check last night to about 15 which uh makes sense which has coincided with the draw down um but that with that retail access that's developed a premium to strategy which has allowed him um to essentially uh for many reasons the stocks trading at premium but that's one of them and that's allowed him to do different Capital raises such as ATM share sales um um but his stock has been

the best performing stock on um out of any uh S&P 500 company since he launched the strategy in August 2020 um so now we're seeing a lot of copycats as well meta planet in Japan was the best performing stock in 2024 and there's definitely a first mover Advantage um so again with my uh company in the UK coinsilium um we've seen um huge share price appreciation as well and um it's a way of trap Capital that can't access bit spot Bitcoin so I think what Sailors found that he can access Capital markets through preferred stock or convertible debt where Pension funds

insurance companies uh aren't mandated or aren't allowed to buy Spot Bitcoin or maybe not even the ETFs so he's trying to find uh as much trap Capital as possible to purchase stock and this is one of the reasons why we're seeing huge share price appreciation yeah let's talk about Bitcoin as a strategic Reserve asset um I want to hear from the the guys based in Switzerland there's increased talk about um change about a referendum where the idea is to add um Bitcoin uh next to gold in terms of a strategic Reserve can one of you explain what's going on uh and is this realistically going to happen I mean it's Switzerland so we'd

expect anything maybe let me first uh talk from an industry standpoint then I give it to the law guys in terms of feasibility um so basically what this is about is really changing the the chart of the Central Bank of Switzerland so the Swiss National Bank uh which currently reads having the having the option to invest into gold in terms of Reserve assets to basically add gold and Bitcoin into that Charter so it would of course give the option to now also allocate part of the treasury to the to the reserves basically in terms of Bitcoin uh by the way actually the Swiss National Bank has indirect Bitcoin exposure already as James mentioned micro strategy it's on the Swiss uh reserves in terms of the central bank so there is some

exposure um actually also our chairman uh lus is always talking to the Swiss National Bank he's uh there's a lot of videos and clips of him talking to the to the bankers basically trying to sell the idea of uh also allocating to bitcoin um I would say it's uh it's going so and so um there is some progress but it will still be some time before that that will be possible and the chart might be changed um but I think also out of the European countries if one country shall really change the charter for the reserves of the central bank then Switzerland has a quite decent chance but happy to hear Andreas in terms of feasibility what's uh his thought well U well thanks a lot uh Dennis I think there's very little to

add uh we don't know what's going to be happening in principle it's about you know as you mentioned uh getting the possibility to add Bitcoin to the reserve whether or not this will happen we'll see certainly will be a strong signal on the market and put Switzerland on the map for a certain time but uh yeah we'll just need to wait and see and yes it's definitely a hard project of Lucius he's been working hard on that yeah these are super exciting developments Let's uh take a step back and talk about the role of banks in crypto adoption uh I know that's an area that binance has been really active in you're launching a whole bunch of new products spe for banks specifically why is this important why are banks important for crypto adoption and how

are you guys catering to that well um first of all let me say that in 2024 we saw an increase of new registrations by institutional players Corporation not only banks by 97% compared to the to 2023 so it's it's clear that there's much more interest than before uh why well why the reason why they come probably is because they understood now the potentialities of this new technology it's not just trading okay trading it's a part but let's let's remember that behind there's the blockchain technology

which is really disruptive right so maybe they understood I'm quite sure actually they understood the potentialities of this technology for several reasons I mean you can talk about organization you can talk about payments and going along uh so this is now clearer clearer than before how useful this technology is and that is here it is here to stay it's not going you know it's here to say we're sure we all know that come on but now they know it too H some time ago it was uh it was hard to find a bank that actually was you know advertising that they they had a internal um departments dedicated to technology to blockchain technology

sorry but they actually did uh I know several Banks and some several institutional players that they been uh analyzing and studying this technology internally for a while now the point is that nobody wanted really to to say this in in public now that you know uh many uh investment banks in the world they they made the first step it's easy also for the rest to follow and some time ago you didn't want to be the first but for sure you don't want to be the last because if you're at the last you're gone you need to close the business right so they they they have understood this at bance for example we are we have

developed couple couple of interesting products and services for institutional institutional uh clients uh one is the wealth Pro the other one is three-party agreement maybe I know if you have time we can chat later about this and uh and we want to act as a you know a bridge between uh this technology and the institutional players we know this Evolution I don't want to call it a revolution it's an evolution of the traditional Financial system this time came from the retails the retails first understood the technology and they started to buy and sell cryptocurrencies and now it's scaling up to the uh

institutions in the past you know Journey the traditional ways it works the oppsite now it comes from people that are very knowledged about financial uh uh finance and then it goes down to the to the retail so it's interesting to see uh what's happening and this so-called bull market this new uh phase of the market uh we we see it's it's driven by institutional players compared to the Past One the past one was dominated by retails in this one institutional institutional players are actually having a an important part here yeah it would be great to see if institutions are able to adopt the incredible Innovation that's coming out

of the retail space and not just crash it and force their way but I guess we we'll wait and see I think we we can all agree that crypto is now seen as an additional asset class to the traditional asset classes um can we talk about the intersection between crypto and uh and trfi and maybe just go this way and see the the latest developments that we're seeing um just have a an open discussion uh yeah from a 6040 um portfolio um I think the the rule books kind of changed um you've got uh Bond yelds globally uh blowing out uh currencies inflating well the uh about the M2 money supply is

growing about 133% so you've got huge uh currency inflation uh embedded inflation um so Go's now gone through I think $3,000 an ounce so there's talks now of that 6040 portfolio being ripped up and where these alternative assets should actually have an allocation now so where you're thinking 1% I think three 3% uh is being discussed for Bitcoin to be part of the portfolio now and then you just think of that on a global scale it becomes such a huge number thank you um maybe we can also hear from Bitcoin Swiss what are your clients looking for more more Bitcoin that's for sure um but on a serious note I think also adding to what what James

said just being here in 2025 now and no one's really blinking anymore when you say or talk about shall we have Bitcoin in a strategic Reserve or shall maybe a bank or or a nation state Reserve shall they maybe allocate one two 3% into Bitcoin that was uh basically the dream or the end goal we had always in in pre-2020 eras basically so just that you can talk on that level already about Krypton I would say is already a huge attestation basically that the asset class has matured significantly um so i' would say the demand is ever increasing and also what uh What uh G said earlier right it's it's basically the the age of banks now or institutions one could almost say we're entering now even the age of uh of sovereigns nation

states so the topic is becoming even bigger even faster one could say yeah I mean the fact that we have moody here at a crypto conference says it all so crisano tell us no I just want to add the um we always think about crypto mainly as a SP as a clas man in my opinion it's interesting to see what is happening around spot instruments uh there is a whole world of derivativ and I'm not referring to ETFs only but I'm referring to uh options perpetuals and other instruments that is yet to flourish and it will probably do in the next few years and traditional financial institution are leading the charge in that respect um uh recently a binance competitor announced no they they

haven't announced but they are you know in Advanced talks uh to acquire a a strategic player in in the crypto derivative space and that says it all um so my point is spot the asset class at the spot level is super interesting we all know about that but we should look for uh the development of a derivative Market which is I mean if you look at traditional asset classes this is what uh operates under the hood and it's sometimes mostly overlooked but it's an essential element to uh well functioning markets and it will improve liquidity and and uh and depth of the market as a

whole Andress thought yeah maybe to add on that from one of one of our key roles is always to help building new infrastructures for digital assets and uh so we have a bit of an Insight who's building what and who's investing in what type of infrastructure and we've seen a lot of activity obviously over the past um five six years in building banking grade infrastructures to custody staking trading and and now we have a situation where if I count it correctly I'm not entirely sure I think 14 Swiss banks are now providing digital Asset Services we have um two with sdx and BX digital now for since two weeks to

licens DLT security trading venues but uh I think if you look bit in the future and how much it being is being invested in integrating defi technology and defi setups in in a banking rate setup um and make that compliant for banks to be used and Financial Service provides to be used I see quite a promising future binance the crypto giant how are you thinking about the interconnection between crypto and the traditional markets are we going to see B binance offering stock docks on their plat on your platform anytime soon I really don't know as of now um there is obviously an intersection and the fact

that there are now in Europe and in other countries in the world uh rules that clarify how to work in this sector for institutional players is very important because we know these are supervised entities and they they know compliance very well so for them it's it's hard to to take a risk if it is not you know uh well um well planned and you know clear rules help uh them and also us to make more informed and risk-based decisions so the fact that there are rules now uh they they they give they give this player more comfort so there

will be uh we will I'm sure about this there will be more and more an intersection we see that you know some uses of this technology are are very useful for them too I was mentioning before payments a crossb transfer of value I mean it's it's obvious that there's business for for them too so there is an intersection that's that's obvious thanks um and just one final question which I'm actually really interested in because we're running out of time just very quickly what is the most exciting thing you're seeing in the crypto industry right now or a project you're working on we have literally three seconds per person James let's start with you yeah it's just to see how uh the the Bitcoin treasury adoptions

going uh last night uh GameStop announced a 1.3 billion 0% coupon um on their convertible notes even though they have4 billion dollar cash on hand so um the the appetite for for purchasing Bitcoin now is huge cool Dennis G to agree on that one for sure in terms of uh of that part uh what maybe to add in a different topic would definitely be tokenization real world assets so we know of course a large share of the world currently is already banked but I think roughly 80% of the world is still un brokered so tokenization and efficiency gains and also access to Capital markets that's definitely huge uh thing coming up in the next Cycles also for crypto thank you Cristiano I

know that's for you it's the most boring asset class ever but it's for us it's able coins okay DZ uh many great topics but integrating amm in in institutional great uh setups I think very automated market makers yeah that's what we do we can talk about it GG regulatory developments obviously and um I mean uh products and services for institutional as we said earlier and um and see the adoption that is growing especially also in so-called third uh world countries it's impressive the because there's your real use case for crypto there I guess yeah oh yeah for sure awesome thank you

guys so much we've covered so much ground I feel like we sprinted through these if there's any questions please grab the speakers afterwards and ask them all your questions thank you thank you thank you