Making Cryptocurrencies Bankable - Mauro Casellini, Bank Frick

Transcript

[Music] hello and welcome to the blockchain and us we're pioneers and thought leaders talked about their journey in blockchain technology crypto assets and the token economy and I'm your host manuel staggers if you enjoyed this podcast please give it a top rating and review on iTunes and feel free to follow me on Twitter at Manuel's dagger this episode is brought to you by the card Finance the cart is the leading swift Digital wealth manager providing its products and services to individuals family offices charitable organisations banks and asset managers its investment strategies lead the way they harness the

largest know-how and only a digital investment advisor can to learn more please visit [Music] my guest today is Muraki Cellini who is responsible for the blockchain business lines at Bank Frick in Boulder's Liechtenstein he heads up a team of 14 employees responsible for advising business clients and payment service providers as well as for icos and all requests related to cryptocurrencies Moreau mainly focuses on the question of how to increase the efficiency of business processes using blockchain technology he began his career in the financial industry in 2006 has an MBA in

strategy management and is a cryptocurrency expert and now to the interview hello morrow and many thanks for making time today Aleman oh thank you all so that I'm able to speak here review we met at an IC o---- conference in Switzerland a few months ago and you were on a panel on that conference and you were actually one of two persons from a bank on stage there among hundreds of speakers at the conference how did you end up on that panel that's a good question so it all started with the panel wassouf in tech and the future of banking in the crypto

world and that's exactly where Bank Frick is focusing on so Bank freakiest is a private bank privately owned bank Englishman Stein who is focusing on FinTech and payments since about 2011 and then I jumped on a crypto by myself in 2013 and realized that same tech and payment together is crypto is blockchain and that's a future and then I dig deeper and realize that this will definitely change a lot and therefore I spoke with the management and the board and we worked on solutions how we could jump at a train and help the industry of the blockchain encrypt the world to get bank accounts to help them to realize the project and that's why I jump even

deeper into these topics and then oolagah from this I CEO summit asked me if I would like to be a part of the panel of this panel about the future of banking and finance in the blockchain world and I was really happy because I I'm here to share my know-how and I'm here to share my way of thinking about the future of thinking and finance and your bank is it's really one of the first in the world to offer I think it's a direct cryptocurrency investment and cold storage right yes exactly bentrik was one of the first in the world who started 2017 with allowing their clients to invest directly cryptocurrencies we store the cryptocurrencies in our cold storage who is super safe safe as

possible and we help the clients therefore to jump on that group the Train without opening accounts and exchanges with brokers or whatever we help them we store the private keys for them and they have the bitcoins really a time for extort and on the other side we offer also a lot of other services with this cold sore it's set up so even I SEOs can store their race video mine cryptocurrencies at Bank Frick we store it for them we help them with debt to keep the asset safe in a safe place and that they don't be a target for audio guys who would like to steal their tokens and we also made some kind of a special way of helping to crypt the

world with making crypto bankable we set up some certificates and we were are all to the custodian of some fully regulated crypto funds under European law that allow to invest in the cryptocurrencies so you could buy funds that invest in the cryptocurrencies and you do not even need to open a wallet or whatever and you have your securities account this crypto farm to invest in the crypto and therefore invest in the future do you also I mean just curious the cold storage I I spoke with with Olga recently about her adventures with example in the in the Swiss Alps where they had this cold storage in a hollowed-out Mountain do you also go to that length with with your cool storage so we have different

levels of security in our cold storage setup so we have some Maggi redundant setup that is really super safe and we have only access once per to this setup so it it's more or less comparable to the example setup who is really super safe and and great but we always store everything in our own hands so we never give some part of the private keys to a third party because it would be too risky for us therefore we go some steps back are low slower because of that but the security is as high as possible cool how is you know I'm wondering how it's the the buy-in into this whole direction with cryptocurrencies and IC

OS and and tokens in general how is the buy-in from the top management of the bank because I'm I'm sure you know there there must have been people who were you know not so embracing of this whole direction that's quite a good question but it definitely it was was for me but for myself really I was surprised because everyone at Bank Rick was completely 100% for it I spoke if the management in the board and they said yes Laura that's cool that's definitely the future because it's saying quick it's a FinTech Bank since 2011 and so they realized really early that this is the next step this is the next big thing is the financial revolution it will change a lot and therefore as a model we

need to be a part of it look into it show us some business cases how it could work how we can make it possible how we can help the industry with banking services and that's why yes we jumped in really early read a lot of things about it made a lot of things below the radar and wait till about two years before we even started with getting out with our with a service before we started looking into it mm-hmm was there a specific event maybe you know that prompted you to bring this to the bank I mean many people tell me about Cyprus you know when that happened and they said oh yeah then it became obvious that this is going to be the future was there something similar for you for me not not really I first the

time heard 2011 about this Bitcoin I realized that this could be something interesting what I thought is too early in 2013 again I jumped on it through my studies and and realized okay now that's definitely going to a big thing and from this moment on I knew it's going to change a lot of things and I I definitely didn't need it some kind of specially went because as I say which diapers and everything is there are a lot of events who help the industry and on the other side who are a problem for the industry there are still some problems that are out there that say oh god oh god it's it's really difficult and it will take longer than we expect but I'm still really sure that it will be faster as we all think and it will

change a lot and really really soon mm-hmm you said before 2011 you got into touch with cryptocurrencies how did that happen I mean did somebody tell you about it or did you dig around on the internet and find a white paper or how did that happen during my studies of of Business Administration I had a teacher who was really really deep into IT and technology and he he saw Bitcoin first time I think in 2010 or 2009 and he showed it to us that this is the new way of everything decentralized storage of well you this is better than everything and we can live without thanks and then I I looked at it and I thought I okay live without banks that's fine but then

I started to realize okay there is something that is really it's not only it doesn't show that Muraki Shalini has won Bitcoin it really is there it's in my wallet everyone can see that it's there and it's not only a bookable asset it's really there and that's why I really really liked it and I thought okay this can definitely change a lot mm-hmm now when you you're running this whole this whole sector of crypto at Frick currently right yes I'm the head of blockchain and payments always provides a bank frickin responsible for the blockchain part but I also work really close together with with all the departments in the bank that I really needed for example with Rafael out from the funds and product side who was the

guy behind his crypto certificate and the crypt of AAF so we need the whole bank to make this possible because it's every single employee of the bank is somehow touched to this block Channing the world it's not only that my team of 15 guys in the Block C department are affected to block change it's the whole bank and it changes the whole way of thinking of the whole bank mm-hmm how how easy in your experience how easy is the regulation part of it the regulation part is a really important topic and it's a really difficult topic because it's it's the actual world works pretty easy with the systems that are out there that can filter every transaction and know exactly what happens if I receive

money from Germany I know okay it is more or less safe and Mike song checks and it's easy in the crypto world we jump a lot of years back because we do not know where the money or the value comes from so we need completely new tools that are there and make some chain analyzes who look what happen if this token where it comes from where will it go to how what happened with it and that's really really a difficult topic and it's not as easy to solve and at the moment it's not that regulated but I hope that the regulator really chomps on it looks at it in detail regulates it but do not over regulate it because if there is too much regulation it will

destroy the technology and that's definitely what should not happen mm-hmm but in Liechtenstein I mean Layton is a pretty crypto friendly jurisdiction right I mean I'm sure it's it's probably one of the better ones when it comes to regulation I mean what are your experiences there exactly so what the crypto friendly is a good word but it's it's really also on the regulated side really strict so we have some really really good discussions all the time with the regulator and also with the government so I met them really about once a month speak with them about the new ways what happened and we decide on that topics how we can go on so we do not make something without even speaking

of to regulate through every decision we make is 100 percent spoken about it with the government and the regulator and they help us to really make the things possible in this whole regulated environment that out there so it's crypto friendly but it's really also going deep into the regulation part and looking at kyc AML and all that stuff because that's really essential for all of us that we only work with clean and proper business in the crypto world mm-hmm do you also I mean I'm sure it's pretty tough sometimes maybe for the further regulator to even understand what you're doing or what you want to do I mean do you also help them work and design regulation that that is safe and

and helpful for you we work really close together with the government also with some kind of special lawyers leak insurance for example there is Thomas Nagel a in module since really he comes originally from the technical part he was a programmer a techie who jumped on to the legal side and is now really the crypto lawyer of Liechtenstein or one of the crystal waters of Liechtenstein and therefore we work really close together with all the parties that understand the business but also to be honest at the regulator of the financial market Authority they understand the technical side and the whole group decide really good they are by themselves really deep into crypto Saints in years and that's

really really great cool that's quite unique I mean I'm sure that one couldn't say that for example about Switzerland definitely that's that's really was also surprised for me because that's for example Patrick bond who is by himself also into crypto he is a lot of meetups and it's great to speak with him about this new technology and how he thinks I will change everything mm-hmm do you look at I mean even though you're you're in Liechtenstein and you're working with the bank of course in Lake Houston but do you sometimes look also at other jurisdictions like Gibraltar or Malta and then see what they're doing yes definitely we will look a lot at all your restriction as first to Switzerland

secondly to Gibraltar Malta and we see what they are doing but it's the same what we are doing they are actually working on a blockchain regulation we will see what it includes but I'm definitely looking forward to it to see what happens and how it will be regulated and treated in done because it's it's great that other countries are working on it the same as we are working right Lynch time because it will be a big thing and we have to work on it because otherwise we will lose the race hmm yeah yeah and least it's done I think made a lot of efforts also recently to make known that they're very open for business and they want to attract krypton blockchain startups right so if there has an ecosystem

formed already I mean are there a lot of companies that work in this field and think about it and you know they said we all do meetups exactly yes there are a lot of companies coming every week to Liechtenstein to set up their companies here to to live here next week and to work in the engine to build their new blockchain technology mission Stein and there are definitely a lot of really important parties as already discussed if the lawyers we have also really good text experts we have the government we have to regulate we have IT deep Department IT companies who work really close with us we have Bank freak who is really important for the whole ecosystem so it's really a great thing to be here apart in Liechtenstein because I can

really see how everything changed and how everything is going on in the engine and would like to be a blockchain nation how how often does it happen that you know clients maybe move their goals into cryptocurrency or something like this in a word they said aha you know you convinced me now this is available now this is safe I always held off on you know investing bigger parts of my wealth in cryptocurrency but now I'm taking the jump I mean have you have you observed something like this so it's a very freaked by itself is for example not an asset manager so we are not kind of a private bank we are really a fin tech bank who is focusing on intermediaries so we have this asset managers that are now really going to

look at it they speak with us and say look how can you help us how can we make this cryptocurrencies bankable s we are already doing it and they are looking at it to really top it up to their investment strategy for their clients it's not that there are all of them chomping on it and say okay we now have to invest 10% of every clients money in crypto but they're really looking into it and some strategic investments are already done into cryptocurrencies and we can see that even that every week more of the clients of us so the investments and the lawyers and all of them are looking into it and are interested in it and would like to learn a lot about it we have a

lot of requests on the what is it how does it work site and people still want to also get their feet wet maybe and try now that they don't run the risk of right you said it before being being hacked or their assets being stolen what do you think this move in into cryptocurrency and blockchain technology for you on the bank side how do you think this will influence the operations of the bank in the future I'm definitely a guy who really really believes it so I think a lot of things will change because it's it's perfect way of dictating to send assets from A to B to send shares tokenize chairs from A to B

to send money from Switzerland to the States in seconds without having some counterparty involved so no correspondent bank in the whole set up so it's really I think a lot of things will change definitely financial sector but I also think that in all other areas of the industry out there will a lot of things will change in recent - blockchain and how they are doing their business how they are making their bookkeeping and that's exactly the way I'm believing in it for me it's really a new way of an industrial revolution that will come out that because of this new technology because of this distributed ledger

technology that is out there what kind of what kind of challenges do you see with that I mean I'm I'm sure you know some people at banks or insurance companies they told me they tell me there's kind of a skill gap and then there's a cultural you know some some issues that they have to overcome before they can you know put automate things and make them turn spare in a way that blockchain technology allows I mean have you have you seen challenges like these as well that's a world first or the regulation is a challenge if it will be over regulated you like a problem state will be regulated properly the first way is ready to go on then the the thing of the scalability I'm someone who really

believes into sight chains so the way that actually for example Bitcoin is working with the Lightning Network is for me a really good way to go because not everything you work on needs to be on the primarily change it can be on side chains and that's really the way to scale it up and to bring it to the next level but definitely it's at the moment a problem scalability a lot of blockchain companies and working on it I'm looking forward what happens but to be honest we are at the moment at the beginning of the Industrial Revolution we are at the beginning like for 20 years ago in the beginning of the internet I'm too young to really see what what really happened but it's really what's happened to it in

the beginning you had a minute to to download a picture actually you press the button and the picture is already loaded so it's it changed the scalability and it will definitely happen the same in the blockchain world scalability will not be a problem in a few months or years let's take a quick break for a message from our sponsors the cart finance takes tradition into the future harnessing a combination of cutting edge technology and personal advice in the service of your personal interests the card cuts through the financial noise and focuses exclusively on scientific and evidence based investing to give investors a better understanding of how to view the financial markets and

provide them with the respective investment strategies to learn more please visit www.techyv.com that des dar tes - finance comm when you I mean you you mentioned scalability in in which other respects do you think the whole crypto ecosystem or you know it may be the the blockchain technology ecosystem has to evolve and and grew up in the coming years to have more adoptions the blockchain companies have to deliver because actually to be honest at the moment we have a lot of locking companies out there but not that many of

them have really delivered what they are telling they will deliver and therefore we need to see the use cases we need to see the insurance companies who use the blockchain to ensure their clients - to pay out if something needs to be pay out we need yes we need to see the use cases that really happen because actually all of us believe in it but we haven't seen that much until now but it will definitely change and I hope it will change really soon where do you see the cryptocurrency and an ICS base where do you see all of this heading in the coming months or maybe years even that's a good question because I think it's really I see owes for example will definitely change we can see it now a

lot of this IC OS that are now going to happen they were in the beginning some kind of utility but now everyone realizes these are security tokens they are really a part of a company or fair or whatever and it really voices that direction but that was really good way to go because it's with this decentralized network you can reach everyone in the world so for example if I would have a small company based in Switzerland and I need new money I can go online I can make it correct and make a prospectus that is allowed to issue shares and I say look guys I would I need some kind of investment who can help me and what are 10,000 Swiss francs if you can reach the whole

world so there are a lot of people out there who would like to help other people and they say yeah that's a cool thing I'm always doing that this new new thing and it looks cool and I would like to spend him 500 Swiss francs so the first 500 Swiss francs I realized and I received them from a county from a guy I never spoke before and it's really what's out there and can really help to change the way of raising money for a company actually you only have this possibility with an IPO or with venture capital and that's a new way of raising money that the big market out there everyone in this world can help you with your company he can give you money you can invest in your company you can invest in what you believe and that's

where I think Isis will we'll go through it will not be always this blockchain company who really make something on the blockchain it will be company XYZ who raises money and will tell you out of some dividend and that's where I see the way we'll go through you mentioned before you're a big fan of flat structures of decentralizing things with blockchain technology how important for you is that ideology behind this movement you know be a beyond just the technology but that's a really good question because I think there are two ways so somehow that's what I get into feedback from the ICO companies they have problems with too centralized systems that's again why they come to

Switzerland early finish line because we are some really open and open thinking governments that for example inch time is somehow really close to so it's led on on the other side really close to you Europe with the European Economic Area X so it it thinks more or less decentralized it has this deep this centralized hub who is a stable government to really go discussion just to regulate and on the other side it's really decentralized we are thinking because since a lot of years the finish line is open for companies from all over the world and that's they that's why they do not think only centralized they think forward-thinking and on the other side if you can store some things decentralized you make it safer because

it's not that easy to attack you if you only have a centralized way or centralized storage solution for example you only need to hack this one point and you have everything if it's decentralized it's really difficult and therefore it makes it safer and therefore I'm now really deep believer into decentralization of some things which are stable and safe centralized government behind but you know I mean absolutely I agree with you I think decentralization has has so many benefits but still right if you look at a bank or even a government that's like a central structure were there ever any fears or maybe doubts you know of these players that maybe at some point they

could get competition from from decentralized infrastructure yes I think so that definitely the government's and other banks are thinking about oh god what oh gosh what will happen with that because there is this decentralized thing out there who could destroy the financial market but I'm on some kind really believing in this decentralization but on the other side I'm honest and I think most people out there and I speak a lot of my friends and say is they love what I'm doing but all of them say Maru I don't trust this this private key thing I'm not weird to store it by myself I do not trust myself enough that I do not lose this information and therefore they are really happy to come

back to a safe and centralized world that our banks for example but that's what we speak about in the in the really good developed world like Switzerland Liechtenstein all over Westeros but if we go work to Africa for example South America we do not have this working centralised structures it doesn't work at the moment and therefore this decentralized thing where you can get with really easy access your own wallet so Bank the unbanked that helps this countries really much and that's why I think some kind of businesses will definitely develop in Europe and we'll have a lot of good

things in Europe but really the first quick wing of blockchain will happen in the work that is actually unbanked and is underdeveloped because they do not have the access to a working system at the moment and blockchain helps them to have access to a working system mm-hmm mara your your whole career was in banking I mean you've always worked in banks yes how did you originally decide to to choose that career I was this young guy and I was always impressed by these bankers this guy in the suits and they are working with a lot of money and then

I grew up and I realized that banking how it actually is will change and that's why I was really motivated to jump into it really early after school and then I started part-time and then the long I worked in banking I realized this will change and this was for me the best thing to end up as Bank freak because it's this modern small Bank who is really open for new things and as I told started in 2011 to work as a FinTech bank as a payment bank and that's for me areas that's the future because everyone needs to buy and pay things so payment is a important thing and the other side FinTech is the future we are getting a lot of new technology

so we need to hurt and FinTech and then in 2011 I already thought is blockchain and 30 2013 we were really at Bank freaking were able to look at it and it for me it was amazing to see how the financial sector can change and how Bank freak has changed since I'm here and I'm working at Bank Lexus 2013 and it's amazing to see what happens in this four-and-a-half years do you feel sometimes that you're changing the world some kind I think I'm really with Bank freak and Liechtenstein and Switzerland we are here really changing the world and I love what happens in crypto alley a lot of what happens in for dudes and

in least instant because we are here we work together we help each other we motivate each other it's really great to see what happens and how I think that least in shyness richland will definitely change the world if they keep on trekking if they find a good way of regulation and not over-regulation mmm it's interesting you know I mean I made in 2016 I made a whole interview series with people at banks about FinTech it was called FinTech made in Switzerland and whenever I spoke to people there at banks you know they were very cautious of the whole thing tech thing and they said ah you know I'm not sure people really want to have their money with a

tech company they trust in banks and you know they trust in us but not necessarily in Google and Facebook and and all that and I think blockchain technology has really changed that right I mean it was it was clear that all of a sudden there could be new technology out there that that would really change the game it's true this morning because I said what a lot of people say to me but why are you as a bank open for this is Krypton it's blocking because this will destroy your worth nothing no definitely not because and then it's how it at the moment works you have your private key and you store your assets in it the blockchain needs trusted entities in the end because I I store for example 100

feet cards by myself that's worth one 800 K so if I really would have that amount of money in a non Electress or whatever in an HSM module and someone knows it I'm a target and I'm scared to start 100k at my home in a safe in a world because to be honest it's the same like you would have cash under your pillow and that's not what it should be so there are for me to waste so one thing is would I like to store it at a tech company I would like to store it at a fully regulated entity so a bank and that's for me where banks should work really closely together if tech company some kind of this new modern technique together with on the other side this

fully regulated entity that's very that's in the Sun for example so therefore it for me I say blockchain will change everything but if banks make it right financial institutions make it right it will help them to make a lot of new business with new things it will be new way of thinking it will not be the guy in the suit who sits there and goes eating with the rich guy it will be completely new it will be a technical driven banking it will be a modern autorai of banking and that's why I really think banks will change completely and if they do not realize it they will have a huge problem mm-hmm yeah exactly you just said it I mean that was my next question I mean when you were at the die CEO conference

there there was another guy from Credit Suisse he was the guy from the other Bank conference and he was pretty cautious I think about what they want to do and what they can do with cryptocurrencies so do you think when you look around right with your peers or when you speak with your friends and colleagues who work at other banks how do you see them handling the whole topic there are the big banks they are slow that's the problem they're big they need to have all of decisions made by a senior management and even higher time management and it's not that easy for them to beat that fast but it will be like always that's why I think if the

Train really goes on and it will be fast they will buy other companies that are doing this blocks you think so at the moment banks are definitely looking at it from the end from the back and say look guys we will look at it we will let you know and we will hear what happens but if it really happens they will be really fast and buy some tech companies and make it possible by themselves do you is there a time frame maybe that you see even that could happen that's really difficult I definitely it can be really fast but it can take out of time it's more or less the same like of the beginning of the internet if now really we have the scalable solutions that will come and for example blockchain lightning Network and everything on

Bitcoin it can be really fast but if it takes longer it will take longer and we need to look at it and should not be too fast we should really focus on it look how it works and it's good that the big banks are not jumping too fast on it because it can somehow be done or finished in a year but I really really believe in it I think it will change everything but take for some things longer than we expect and for other things it will be much faster than we expect do you also have contact with institutional investors yes Emily we have also contact with institutional investors who are now really looking into this this blockchain

world and what it is and yes how it can be changed and they say yes okay actually we would like to invest money in this ICO how can we do it we do not like to have our own wallet can you help us yes cool so there they are moving into this space as well I mean sure not with with huge percentages of their assets under management but with maybe a fraction of a percent or what exactly yes except that that's really what what I see at the moment that they are really looking into it are interested they are still somehow scared but they are now really looking into it there are some solid family offices who are really interested to jump into it there are some VC funds who would like to jump into it there are a lot of companies who

think that it could be also fast money and that's for me the wrong way of thinking because it's it's about technology and about the things that will change and not about the first money that is into this blockchain investment mm-hmm you said they're looking at it right there I mean that's what I'm also observing many people are interested in it but they haven't pulled the trigger yet do you think there is a risk maybe that they miss out on on something good that's always possible because there are a lot of big big companies in the past who forgot to jump on the new train if we look at for example in the the photography industry with Kodak who totally forgot to jump on this digitalization point so it's it will

definitely happen the same some of the big players will not be here anymore in ten years but I think a lot of big players realize it will jump on it and we'll see what's possible and what will happen and at home and I hope that it will not be too late mm-hmm Mauro if you if you weren't working in banking what do you think would you do I think for especially now why would I work in a blockchain company how I'm kind of an ICO to make their business possible and be out there speak of the guys about it advertise it and really I would really be in the same position and would like to change the world so thanks a lot mom for taking time today thanks um I know a lot of

pleasure thanks so much for joining us today more info on our guests and our sponsors isn't the show notes of this episode and on the podcast website the blockchain and ask.com to help people find this podcast it's important that you download subscribe and give it a top rating and review on iTunes or on the podcast platform of your choice I'm Manuel stackers and I thank you very much for listening [Music] you