Powering the Next Wave of Institutional Digital Asset Adoption

Transcript

and to help us make it happen obviously institutional infrastructure is crucial so we'll have an amazing fantastic panel discussion um led by our dear moderator Ian Simpson seems uh Ian I will give you the floor and please feel free to introduce your panelists very interesting participants so let's bring them out have a seat and we'll get things started thank you

have a seat have a seat bring your coffee bring whatever water yes um oh there you go good yeah coinbase is taking care of us okay good good good everybody feeling comfortable good settled in great so the topic is powering the next wave of digital asset uh institutional adoption I'm going to give time for our panelists to quickly introduce themselves first of all Victor busson CMO of Taurus what is Tauros doing so we are a tech firm that

provides infrastructure solution to both financial institutions and non-final institutions so infrastructure it means custody yeah and tokenization so basically without Tech those players will be able to manage both cryptocurrencies tokenize Securities or assets and the digital currencies good Eva Lawrence and Emir at figment yes that's right what is figment figment are the leading institutional staking provider so we help institutions from crypto hedge funds asset managers all the way through to Banks trading platforms to enable and launch staking strategies so it's a stake proof of stake tokens

via non-custodial protocol staking super Frank from from Tauros Carlos excuse me it's a mismatch um yeah good morning everyone uh Frank sackfeldt I'm running sales in emea for Telos uh we're an Institutional technology company providing uh the full trade life cycle in the digital asset space with one single entry and I'm looking forward to this discussion today super and Amber Subaru CEO of kaiko kaiko is okay Keiko is a market data provider in the crypto space we work with financial institutions regulators and large crypto corporates with

anything that has to do with financial data which is stuff like prices of crypto assets so data is the new oil okay we'll come back to that and finally from a company I think we've heard of coinbase what are you working on or what is coinbase working on right now con base is primarily seen as a being an exchange but we're actually much bigger than that and we see ourselves as being a bridge and stay as a bridge from Fiat into crypto and today we have evolved into what we're seeing as a bridge to bring a billion users into web3 and on chain uh on the institutional side of Flagship product is called convex Prime and it consists of three important parts one is case study the second is trading

with multiple new executions and the third part is prime Services which are financing staking and so on good super so we have a great lineup today just to tell everybody in the audience and also online we're going to take a quick look at the current state of institutional adoption we're going to look at a few barriers and problems in the space and then how all of our panelists are potentially addressing these barriers and then take a look towards the future and just to warn you there will be a reference to AI somewhere in the panel watch out and see if you can catch it um so to set the stage for the first question right um there's a financial institution which I think most of us have heard of at some

point somewhere Goldman Sachs which said in 2021 that among other things due to the scarcity of regulated exchanges requiring rigorous and verifiable Reporting standards they would not recommend their clients to invest in crypto assets then in 2022 they started doing Bitcoin backed lending for their clients and then recently some time ago announced that they would be perhaps deploying Millions to acquire crypto companies kind of hot and cold if you think of it from the institutional players like Goldman Sachs so the big question is

where are we actually in this whole space and I start with Frank what do you actually think in the space um I think institutional adoption is General it's still in an early stage but it has arrived and that's what we see across the globe and you see a bit of a miss or not mismatch but more like a difference between the various regions if it's the U.S if it's a Mia or if it's APAC but you definitely see that there is a demand and a growing demand specifically coming from emea region at the moment and even announcement yesterday with regulation in Hong Kong in APAC you now see that more institutions are gearing up to be part of this this industry so from our side

and the interest what we see in the market definitely an optic company okay and and Taurus do you feel it's it's at a Tipping Point or what do you say so the way we look at it and it's less from our investor it's more for from an infrastructure point of view so what does it mean is that we give so that after clients can offer Financial products built a bitter for digital assets and the way we look at it is more from a depth point of view of adoption so it's not are they in or the nut is more where the in the journey so usually um like three to four years ago it was all about crypto okay offering custody of cryptocurrencies so

after clients and clients could actually purchase it purchase them now it's a bit different because the acceleration is more on asset tokenization so what does it mean it's all about digitizing private assets and changing the infrastructure so the demand and the requirement is kind of different and then where it's going probably and I will comment more later on this is more on cbdc stable coin also so if that first was the cryptocurrency recognition as an asset class okay now new use case appearing a bit more complicated touching more the Securities World okay so the financial and then probably it will be more tokenized cash but with the

legal tender that's how we sit okay we'll come back to that of course as you mentioned Eva from from your standpoint figma figment um what what what are you seeing so I think that at the moment the infrastructure piece is the most important so companies you know that are building around the infrastructure piece are where the institutions are looking at they're going okay how do I enable my business to support um crypto assets from whichever aspects you're looking at if you're looking at you know investing if you're looking in custody they're all thinking about how do I integrate my existing setup with new digital assets set up and so I think that you know we do in the crypto space

like to get excited about any hint of institutional adoption you know even the smallest things seem to make large headlines but I think we're still in that building phase for institutional adoption yes we have definitely seen institutional adoption but what the focus is still has been how do we have the building blocks in place that when we are able to move forward or as we slowly move forward with launching products we have the back end set up we have collateral risk management set up reporting tax Etc that enables exactly it enables us to support those products okay so I think it's very much the the infrastructure and building phase and

and so what other sorry to say boring topic data no I shouldn't say it like that but but what do you think um but I mean people have said for several years the last Bull Run 2021 institutions are coming institutions are coming what does the data say so uh before going into the boring part of that answer I so I come from tradify and I've done Equity derivatives for about a decade before before getting into blockchain and I think to your point uh Victor I completely agree I think there's a difference between the perception of that institutions have of crypto today versus what it was a couple of years ago before there was this

sentence that I hate which was you know blockchain good crypto bad but it was very dumb because they were trying to rip off crypto from crypto like it was it was it was about crypto a couple of years ago but they were still trying to figure out a way to say yeah we're in an institution we think crypto is good but we don't really like crypto so blockchain is good crypto is bad and I think this was a little bit short-sighted that this was um not fully understanding that a blockchain without a form of payment which is the crypto to remunerate a network to maintain the database would not be a blockchain and I think there was this misunderstood standing from institutions I would say five years ago or seven years ago today indeed we are going a little bit back to crypto crypto

bad blockchain good but in a very different way I think they've understood what crypto was but because of the regulatory environment that is not really in favor of Institutions really moving into crypto institutions are going a little bit of a kind of a step forward thinking about what I believe to be the future for them which is uh tokenized assets using blockchain for triggering operational efficiencies is in the way the capital markets industry function I talk about the Capital Market industry because that's my DNA but the reality is industrial applications across all industries that relies upon the execution of contracts Finance is obviously a very obvious suspect and I

think that people have understood now institutions have understood now that crypto is not a threat I I personally and that's a personal statement but I'm personally don't believe in a fully decentralized world I think we will need exchanges we will need custodians we will need Market infrastructure providers to bridge kind of the world of crypto and the world of finance and other Industries but that where the big opportunity lies for institutions and industries is in the execution of contract and the operational efficiencies that that brings which means if we take the financial industry we will still need a front office we will still need the bank we need people to structure contracts between parties what we can disintermediate using

blockchain is Middle office back office and settlement right I mean 90 percent of financial flows in the institutional world today are cash settled what we really need from blockchain is the calculation the computation and then the kind of delivery of flows we don't necessarily you know I think need a fully decentralized a little bit utopian future where we disintermediate Banks and I think banks have now and financial institutions under to that and everything we hear about asset tokenization real world asset tokenization cbdcs Etc is about that so I think we really made a step of a step of giant in the institutional adoption but just not the same adoption that it we thought it may be five years ago so

you would say people are beginning to understand the the connection between blockchain and the incentives behind blockchain yes which leads to cryptocurrencies and the native token of of the blockchains yeah yeah so so that brings me now to the topic of like adoption now a majority of the people on the panel here also from my side you know we think of it more from the investment side adoption being how many people are more investing into these assets and putting them in a portfolio and so on and so forth but there is a crossover between that and the blockchain use cases and coinbase brings out base the layer two uh set up what how is coinbase thinking about that

and what is what is your big picture of you thank you well first in terms of adoption I think Tina from Circle studied very well when she said like FTX puts us back a few years behind um definitely slow down the the adoption that we're seeing on the institutional side um for from my vantage point I can share a few stats um well first like we have the the largest asset manager on the planet BlackRock who has signed an agreement with this so we have this partnership and Larry thing doesn't like go into blockchain and crypto just because he has decided to to do that independently they've been surveying their clients they're receiving requests from clients

and that's the reason why they're entering into the the crypto space um in terms of other institutional investors that um and I'm speaking mostly as as well from from an investment point of view hedge funds is uh is the bread and butter of what I'm doing at the moment I would say 25 of the top 100 H fans are already connected on our platform um on the larger such friends like Global macro multi-strike firms and 50 of the 20 top 25 are also connected are on the verge of being connected um there's not a lot of flow I would say right now there's not a big rush of buying Bitcoin but people want to be prepared for the next Bull cycle people are waiting for more liquidity uh in

order to deploy their Capital when you speak with hedge funds they're going to tell you I need two things to deploy my capital and the strategies that I'm working with on the traditional Finance side one is I want liquidity and they want the liquidity coming from retail the second one is volatility so we have volatility in crypto markets but right now we're still waiting for um for the liquidity from from retail it will come back um there are other topics that we're working with with clients which is uh corporate I would say we have like roughly 100 big corporates that are connected to the platform and of these 10 are probably part of the Fortune 500 and 90 of these are doing these to access web 3 or for

their web training initiatives the remaining is probably for usdc or stablecoin purpose being able to transfer value from one place to another very very easily and we're also working very closely with big Banks I would say we have a couple of tier One banks that are already connected on the platform and we keep receiving rfis like we have like I would say at this point in time probably like 20 rfis from very large Banks and that we're responding to so so there is interest it's it's it's growing it's coming it's it's developing slowly still yeah and you you hear crypto not blockchain blockchain not crypto or or it's simple or agnostic on this uh not

an agnostic I see like the big Banks and like if you look at JP Morgan uh Jamie Diamond is always like bashing on on crypto yeah yeah but they're very strong about blockchain and what they're doing is uh they're building like massive instructor infrastructure on the blockchain side tokenizing money market fans together with black work using their JPMorgan coin so it's not really crypto it's their own coin yeah um for settlement and repo purpose so it's really like at this point in time really blockchain and not crypto okay let's let's drill down now just a little bit before we move on to talk about some of the problems or barriers and things that are that are still out there but institutional adoption what does it mean what are the institutions so you know you've got Banks Securities firms you

mentioned hedge funds asset managers family offices there's there's a whole array of Institutions so to say corporates then who are using blockchain and various things we had two things come up in the news recently write Deutsche Telecom is going to use polygon for some some things and what was it PayPal Ventures is invest in Magic so so there's there's a lot of things on on different levels but Frank like it Talos how do you offer or what do you see from different levels of Institutions is that is there a different need there definitely is I think there's also um institutional adoption means

different to different players in the market I mean when you talk to hedge funds it's all about trading yeah topic um no it's not so much on you mean the speed on the technology side of things or more on the adoption itself yeah um no it's more right in general I mean they're having interest to be part of this game and be part of this industry in this ecosystem from a trading perspective where you speak to Pension funds it's about investing and being part let's say on securing their uh market share in this is this exciting space and when you talk to Banks it's more like okay facilitating the marketplace and provide let's say payment services or custody services and just beat it more towards their client friendship so it's more from different

segments of the institutional players out there with a different interest on participating in this game okay and and uh ever figment has on their website a very clear Focus towards asset managers with staking what what is the feeling from so that sub-segment so I mean for me when I talk about institutional adoption I'm not really talking about asset managers except for the large asset managers to me institutional adoption is about the banks and the multinational asset managers money managers coming into the into the space you know as um as Guillen was saying earlier the hedge fund types smaller crypto VCS

small asset managers they are very much already in the space right they're able to move quickly they're able to you know get approval they don't have as much red tape um so from a staking perspective those smaller firms are able to launch taking strategies quite easily but the real institutional adoption when we use that phrase to me what we're talking about there is your tier one Banks your Global asset managers maybe your you know large Pension funds those institutions that have so many moving Parts internally that they have to navigate to get sign off on you know the tiniest of things so I think um you know when we see bureaucracy exactly so when we see more

movement from from those entities I think that's the that's the piece that makes people sit up and take notice rather than say you know a a small fund increasing their position in in east or you know looking at offering additional cryptocurrencies okay and and there's an interest in staking I mean staking as a one of the more interesting crossovers between the the blockchain technology and usage and the potential investment return aspect yeah I mean there's interest in staking from every type of institution to that small VC uh or asset manager all the way up to tier one uh tier one Banks because for everyone who

holds or is thinking about holding an asset like ethereum it's quite an easy concept to understand if I'm holding this set do I not want to look to receive some type of return do I not want to try and hedge against the volatility of the asset price so I think that as a concept is something that all institutions can grasp it's about the speed at which they can deploy Solutions or offer Solutions around staking based on their size okay now we talk about holding things we come to custody big Banks Taurus is focused on this segment of Institutions are they fast are they are they doing it how no so I

think what what needs to be taken into account is really first it depends on the Geography okay I'm gonna get into more details and geography because of regulatory for regulatory reasons yes and second it depends the typology of clients yeah and third it will depend on the probably the type of asset class which is linked actually to the typology of clients so if I being more specific recently you have the Central Bank of Brazil that release their framework for cbdc's which is a Sandbox on hyperleader Basu where this shortlisted basically a set of financial or set of Banks and Tech providers that will actually enable and do testing for stable coin and for the new basically digital real which is

a local currency so we have a bit of regulatory framework now if you look at Switzerland so basically it will be different so here in Switzerland so big advantage and we will come back to it later but you have a clear set of Regulation so you have what you call ledger-based security that is recognized and the Catalyst for that so it was back in February 2021 with a Swiss dltilo and the consequence of that is that it opened the door to tokenization of equity that structured product fund um and then basically you can go beyond uh to more and more assets and the beauty of it is that you we and we saw investment Banks starting to

tokenize even uh or private Banks corporate Banks tokenizing those Structured Products and we did it for instance with concrete example and with um another good example is Credit Suisse actually back in 2021 end of 2021 actually integrated our Tech and the tokenized SME so a mid cap company the first High Growth Company on their core banking system so basically and then what's what's interesting is that it goes back to the point blockchain not crypto because the compliance team it's public so I can share this information who are saying the candles don't give away any secrets

they cannot book cryptocurrencies on the balance sheet okay so that they can if they want to do a set tokenization because asset organizations but digitizing the value chain and basically the tokenize the asset using like what you call a gas station where the deployers must contract they pay for gas fees without having the credit suicity but actually having like a fee payer externally so basically like at the end of the month the centers like a utility bill to us where we will actually be doing the investing but it goes back to this point the depth of adoption will only depend on the regulatory framework in Germany you have the ew PG electronic Security Act where the only framework to be able to

tokenize is actually bearer bonds so each time you have a regulatory Improvement you will be able to have more depth of adoption and then cryptocurrency will only follow in youth one since once Mika will be clarified and for sure for instance because of central banks or big banks are just waiting for this regulatory equality to offer those new products uh yeah yeah interesting there's one segment of the institutional space not many people mention this is Pension funds big space lots of money there but um what is it the Ontario teachers

pension fund got a bit burnt in FTX so um is that off the table now anybody have any views on that segment asset allocatos are are not like big fans of crypto at this point in time yeah um sorry the counter argument would be I mean how would you convince them um today the discussions are not about like investing directly into crypto it's more about a Hera defense where you can use like some active managers to invest in crypto part overall as at coinbase because we are like really in the middle

of the ecosystem we see all these hedge funds being connected to us and we're doing some capyo with these asset allocators um another huge demand right now but it's a lot of education and bringing the right managers in front of these allocators and Amber would you say the data so I support that I agree with everything that's being said I think we can split institutions financial institutions into regulated versus unregulated clearly uh you know to what um said and we see that a lot on the unregulated side of relatively large Financial investors they're all into crypto I mean they're you know they need volatile assets indeed we like liquidity and we know that this is a problem in all honesty like apart from Bitcoin and

if there's not much liquidity right now um kaiko one of our business units is is it's called kaiko indices it's a regulated entity where we do data products for financial products and out of the world of I think 10 000 plus crypto assets that exist and that have somewhat some liquidity uh if you you know consider and put some threshold on minimum liquidity assets that can be traded on reputable exchanges and assets that can be stored at reputable custody Solutions you end up with less than 50 assets and honestly out of those 50 probably five are actually decently liquid and two are really liquid enough so we still lack liquidity we have

volatility all of the unregulated financial institutions are already doing crypto because they know how to deal with risk and they know how to deal with liquidity risk Market risk Etc where I think uh what if I was saying is I think the big question here is tier one Banks is you know when are they actually going to get in and that is highly dependent on regulation what we see so in our client base we have about 200 clients at kaiko it's only institutions and corporates and 30 of that are hedge funds and active investors that's why they need data I mean it also makes sense right what we do is historical data real-time data so if you're an active investor you need to have this visibility on your risk management and trading capabilities so we don't do

execution by the way but we do the real-time data that triggers the investment decision so we do see that already being there Pension funds we don't either conservative very I mean risk-averse yeah and also Buy and Hold type strategies I would say so you know not in need of real-time data so I I don't think don't they understand the long-term Bitcoin uh I mean the charts are there you guys make great charts I wonder if they're not a bit like regulated institutions as in you know they cannot afford to take bets on volatile asset classes and even though they kind of do without you know they're like I don't think they can do it

consciously crypto has a perception of being a volatile asset they end up you know investing in you know well we know mortgages and real estate and stuff like that that can be 10 times worse long term but on the other hand their perception is different exactly um so yeah and then on the speed of execution I mean we're all set up from an infra standpoint to support lower latency type activity it doesn't not really exist today in the space I mean you know you don't have high frequency trading as in the tradify type high frequency trading it's still relatively you know why is that why why is there not that going on yet I think one of the reasons and guillem can probably have an advice an opinion is just the

infrastructure in the state of also the trading infrastructure even though it has significantly matured most exchanges still run on the cloud on AWS and there's no you know in order to have a low latency game you have to come in and plug cables in a data set in a physical Data Center and there's this notion of you know almost distance so you can shorten the length of the cables we're not there yet in crypto and and I don't know if there is a very very short-term uh Target for exchanges to get into that game I feel for that we need to have liquidity you know still a few things needs to happen so low latency play high frequency trading is not yet a thing in crypto and in my opinion it's not a bad thing because like we don't necessarily need that

yeah let's come now to maybe three barriers right and talk about that and let's start with that one liquidity um coming back straight to you but then then going around the the room and and some of kaiker's data has shown that right liquidity has dropped significantly liquidity is um right now a bit more in derivatives than than spot right how much of that is a barrier to to institutions I mean liquidity is uh not to execution but liquidity is a barrier to everything right it is a barrier to people building also passive investment strategies on top of crypto a lot of the regulated financial institutions the only thing they can do is regulated ways to invest with a

synthetic exposure to crypto and that's CME derivatives mostly right so that limits what you can do um so clearly well you know liquidity is a problem one thing interesting that we see in the data is that the volume not just daily traded volume as in executed transactions but also Market depth as in how much volume is currently sitting on exchanges on the order books of exchanges on the buy side and sell side has also reduced significantly and I don't think that's necessarily a sign that people are um less willing to trade or less interested I see that as a consequence a direct consequence of FTX as in people don't like leaving as much funds on exchanges and they would probably bring

in you know transfer the funds when they're ready to actually make whereas before what we saw was much more and again I'm I'm talking under you know please correct me if I'm wrong but I am feeling that people are more moving to different type custody solution versus leaving too much of their funds on exchanges and for me that's just a direct consequence of FTX about where do you store your coins while they're not being actively traded yeah and that's not necessarily a negative as in it doesn't mean that people are less willing or interested that's a really interesting point when it comes to liquidity so I mean you don't correct me if I'm wrong but mostly when you trade on FTX you pre-fund right or excuse not FTX coinbase sorry sorry oh sorry oh I

hate it when that happened that was not intended but it's basically the same everywhere right you send in then you trade or you get a line of credits or something like that so is that is that a liquidity barrier I mean institutions are not necessarily used to trading that way yeah you typically have to to prevent all your trades with big institutions we give them like lines of credit yeah and so they can just trade in and out all day and there's a net settlement at the end of the day um to your point just coming back before to hft is I totally agree we don't have that in in crypto where it's all about low latency in international finance we don't have this in crypto we still have a lot of market makers that are very

active they're just like behave like slightly differently and it's not about like being like just next to the to the server we don't offer collocation um people know more or less where our servers are because AWS and and you can see um like the the volumes and what is going on so people are trying to just get get close to it but they can just like collocate there um at this point in time do you think that will come I mean collocation high speed I I don't see I I don't see it coming um we could ask like we have someone from IMC just yeah he's funny but I don't see it coming I actually

went not with us at least okay um in terms of liquidity today uh you still see some liquidity in the market but there's a lot of market makers trading against each other and so it's a bit toxic some of the big fans that we're seeing uh having large positions are telling me like I'm a bit scared right now especially entering to the summer if I have a big position that I need to cut I don't know how how much is going to impact the market yeah um okay let's let's jump to one other barrier uh that we we talked about uh integration right so financial institutions have their systems some of them very old if you're talking credit Swiss or whoever ancient right

um Talos is trying to integrate across various exchanges and various things how do you address that kind of I think one of the barriers right now is still the lack of tooling tooling what people are familiar with in the threat fire space like if it comes to portfolio or risk management tooling or let's say you have an holistic view on what's happening in the market and be able to address and act on it and I think that's a role we try to play in this market to facilitate that kind of tooling and level of support to optimize that kind of of surface so I think when we speak to institutions it's all about risk see what's let's say in the portfolio how it automatically can rebalance uh have full visibility what's happening in the

market with the help of data providers with the help of custodian service providers with the help of transparency what's let's say in their wallets and from their perspective and I think that's a level where people are asking a lot of questions about even today when you take a look on rfis or rfps risk and not so much risk itself but risk management and tooling around that is taking a big portion of conversation especially after FDX or what's happened in the market that's what we see on the technology side of things and your development at Talos is this is this um like based on on crypto technology and and focused on working with crypto or is it not actually trying to give institutions what they want it's a

combination of boats and maybe some people saw it in the news we recently acquired a company called d3x portfolio engineering and optimalization Tool uh familiar for people who are trading on the threat fire on equity and fixed income which we then let's say converted to make it in the same level of institutional rebalancing of your portfolio for the digital asset community so I think with speaking and also being proactive on finding Solutions which suits this industry as well and tailor let's say customized solutions for clients who need a different way of managing their risk that's where we definitely play a role in and be proactive on that on that side and Taurus what what challenges do

you face or how are you addressing the challenges of actual integration in in systems for the banking systems Beast right and also even so the big Banks has not only one car banking system but it could have several yeah so ultimately you have different layers but first layer is you think about the deployment model that will be chosen you raise deployment model will depend on the regulatory framework so if you have a regulator imposing on-premise setup on-premise is basically a local setup within the server of the of the bank by itself you need specific setup so you need to deploy the full infrastructure behind the firewall of the of the bank basically then you have more straight forward minor services like cloud-based

deployment third type of deployment will be kind of hybrid sometimes you have some data requirement that needs to be on-prem then the nodes can be managed done as managed services first layer then you have the integration with car banking system the reconciliation with the car banking system so like terminal server lock whatever whatever it is how easy is that today so today is done so for us we have API then the next level would be what you call Direct connectors what you call STP integration straight through processing so that it's way more it's still more seamless fast to deploy you but to give you an example like could be as fast as 10 days deployment for managed services

uh then if it's on-prem or something more sophisticated where you need to build a middleware between I don't know the order management system um yes the car banking system the the connectivity to exchange it so you have different layers that will appear can take two months three months something like this if it's kind of big then what's also quite interesting is you we also need to connect basically the different bits and pieces of the different provider so you have like staking obviously stacking providers you have AML kyt providers like the forensics on blockchain I'm not going to do advertising for for any that commenting on name you have pricing feed obviously like gecko is here you have

um you you have counterparties like exchanges so you need to plug all of this so that at least from a banking Point of View you can coordinate you have a view on everything and then also coordination between all the exchanges also with style so you have tons of different layers to be taken into account and this is where the complexity comes in and after your study provider like us or others basically the job is really to take everything to have something really to coordinate and to um to give the tool so that the team and as a legacy technical team can really be able to adapt manage and and I imagine as you're working with say mid-career

mid managers at uh tier one tier two Banks the thought of trying to integrate all of these different levels is it more the difficulty that some of these systems and infrastructure are from the 1800s you know pretty much you know so it's not necessary that people aren't Progressive it's more that the settlements um you know settlements infrastructure the the back end Ops all of their individual um services and uh that you have to integrate with are so old it's like what at what point do you stop you know repairing the Vintage Volvo or go out and buy a Tesla like if it's all of these systems and setups it'll also make it difficult no absolutely it's not

everyone is at a different stage so for instance even reconciliation you can do it via XML file like CMS or like an Excel file it could be manual I consideration it can be done also just via their usual API more automated so everyone every Bank every player is that is having its own basically custom basic infrastructure and so no there's no standard for for there is no everyone has the its own setup and I think it's our job to adapt to the existing setup and make it easy so basically it's impossible thinking that we are gonna build something brand new and everything for basically doing tabulary or forgetting everything from the past yeah

is a bit an ideal that is not realistic today and actually if you want to really drive this institutional adoption you have to adapt as a player and mention so help them and guide them bring it to the all the infrastructure to the next level so make sure that you have pattern match of what they expect what they want and put it together now there's one big elephant in the room sorry we have to talk about it regulation it is a barrier let's let's just put that out there right um without putting anybody on the spot um how how is it developing how are you seeing

it and how how um you know and let's talk Switzerland because we're here in Switzerland and uh Victor mentioned that as well how good is Switzerland and in that regard Maybe ambra I'm happy to give a data Centric answer on the topic of Regulation I not an expert in the Swiss regulation but uh generally I think there's been a over the past six nine months strong strong regulatory Focus obviously maybe catalyzed and triggered a little bit by um the shenanigans of last year but um but we from a data standpoint have seen a lot of rfps being issued by Regulators proud and happy to say we've won all of them but that includes the SEC the cftc

FDIC EBA asthma every kind of Europe major European and American regulator have issued rfps for data for a couple of purposes one is research Market supervision uh one is kind of law enforcement understanding you know flows doing Market surveillance getting a better grasp at the asset class from uh from a data standpoint and what they mean from a data standpoint in our context is financial data which is volume prices looking at order books looking at stuff like Market manipulation market reviews Etc so that is something that they've focused significantly on over the past six months and and data in crypto it's very fragmented It Go all the ways from

network data for retail on a dashboard to you know public websites like coin market cap that are great for retail all the way on the other side of the spectrum to us that are more bringing a capital Market style data service to crypto but Regulators have really started I think taking seriously the importance of accurate Market data in order to monitor markets and also it's a narrative I'm pushing a lot especially when I talk to crypto corporates such as exchanges and custodians and protocols importance of Market data hygiene and I'll give a very specific example of what that means today in crypto there is no regulation around where you Source

your data for any kind of report use cases regulatory use cases disclosure use cases and so a company can take whatever lowest price of Bitcoin that is you know suitable on a given time period to report taxes but then they can take the highest price of Bitcoin every day to report their nav and then they can report to different price if they're a custodian to calculate asset under custody and it creates a lot of confusion when you're an institution let's say you're an asset manager you're you're fund admin cannot have a different price than you're a custodian because we're talking about literally giving a dollar counter value to a certain number of crypto tokens in absolute numbers and so that kind of data harmonization setting standards

bringing in Trad Phi standards when it comes to Market data hygiene into crypto obviously I'm super data Centric but it I think it's a very important step in institutional adoption unless we start having Clarity and standards and visibility it's not just about the infrastructure it's about the quality of the data right so for me there's as far as kaiko's concerned this regulatory move towards a more institutional use case used for data is a very strong signal that they're taking it seriously and that they will hopefully you know obviously goes in our Direction hopefully start if not imposing at least recommending proper uses of Market data

in the operational systems of crypto companies and crypto investors so that's the pure data lens yeah that's that's interesting when it comes to regulation and and the attitudes of regulators towards staking activity but I can talk about regulation in general because it's not something that currently falls under any regulatory regime but I think what we have when it comes to regulation in crypto is we have this view um as an industry as a collective sometimes that we are so different we're we're really different we're really special we're we're unique um and so uh we need to be treated as

such and there are some instances where that where that's true there are some instances where you can't kind of shove us into a Commodities framework or Securities framework for example if you're looking at disclosure who makes certain disclosures where does the responsibility lie if that's applicable to crypto assets well how does that apply and we need Frameworks to cover um instances like that maybe as well if you look at um you know settlement ownership if you have a dow what who is considered you know an owner a person of um a significant function for that entity so

there are gaps in the in the regulation that we are hopefully hopefully moving towards with with Mika um but I think there are also areas where we have existing Frameworks that as an industry we should be utilizing so for example you know it's it's very clear from Financial regulation you should not be co-mingling customer assets crypto and crypto assets should not be any different from that in the same way you know you shouldn't necessarily be the uh have an exchange and you know have a fund that's trading on that exchange FTS there are certain certain rules and regulations around fraud misuse of customer assets misuse of information

that are not crypto specific and I think what we need to do to fit in is exactly it push for regulation and hopefully we have at least a step towards that here in Europe um but then also show that we are embracing and understanding existing regulation that is non-crypto specific that is about good Market structure that is about uh consumer client protection and and uh exactly yes I come back to a point ambermaid and now coming to Guillaume like Market surveillance and and and Market Integrity is that something that coinbase has in place to to say to

certain Regulators that nobody's watch trading on coinbase and things like that or that's something we're taking very seriously yes um most of the people that are at conveys are coming from traditional Finance um so it's the same the same old issues dealing with compliance departments having training every we week or so like just like keeps accumulating in my mailbox so we're doing exactly the same thing as in traditional Finance there's like trade surveillance and we have a list of restricted tokens that we cannot trade on stuff like that um grouping not very close attention to that under regulatory front like and if you're here in Switzerland so you must

love Switzerland and the regulatory framework here right um I think it's very very Progressive and yeah like I really like Switzerland for that I think it's real Tale of Two Cities at the moment it's really the US versus the rest of the world we have very bright patches everywhere else apart from the US and the US is really the SEC even the cftc and the SEC disagree even within the SEC there are some disagreements on on how to for sure yeah Mr Price yeah um the rest of the world like very positive Mika in Europe I think is putting a framework where there is harmonization within Europe where there is Clarity and a Level Playing Field for all the the crypto players rest of the world the UAE is super

Progressive and there's going to be a lot of people opening shop over there um in APAC Singapore was quite restrictive at some point not their opening and distributing licenses Hong Kong I think as of today yeah clients can can trade crypto uh Australia is also like quite quite positive so everything everywhere is I think very positive except in the US you were saying Amber that you you're looking at Hong Kong so we've been in Singapore we opened our office in Singapore kind of post covet at a point where Hong Kong was really not a friendly place because of a million things not just crypto and earlier this year uh the hkma and FDA opened the consultation paper on

regulation and Market data to which we replied to on the data side aligned with what I said just before and the new regime kicked in yesterday and it is in my opinion going to attract uh you know it's it's enable it's enabling better retail protection but allowing them to trade crypto so obviously it attracts institutional you know institutions to offer services there hopefully it's going to attract a lot of kind of also APAC money Chinese money um so we're seeing we relocated our head of APAC to Hong Kong back in March to kind of be here be on on site have boots on the ground and be ready to work with them there's a bunch of regulated entities you know you have

oh whatever you have already some regulated services on the exchange and custody side but we think it's gonna clearly uh increase uh and drive growth in the region so last last question on the regulation side to to Frank and to to Victor um tokenized assets and Taurus has a Marketplace and is looking to promote this and do this and does this fit into what Talos also sees in the future so from a regulatory point of view let's say that us we love regulations we work even the only Tech that is kind of regulated so we have a security firm license regulated by the filma okay the security some license is one level below

Bank the banking license with this license basically we operate what we call a no TF an organized training facility which is in the U.S equivalent of an ATS and alternative trading system the full point is really to to look to create equity for those tokenized Securities because today again turkana Securities are not cryptocurrencies so you need a specific set of license um now regarding pure license or finma did a fantastic job so I'm really talking on behalf of Switzerland because this is where we are based how we are so much on this topic is thanks to the FEMA honestly the framework that they provide already for cryptocurrency back in 2018 then recognizing australia-based

Securities in 2021 so it's leading the way then you had EU actually which is a bit behind uh like I would say 18 months behind but basically it's catching up so you have the EU the ultimate that was voted back in March and now it needs to be translated by local jurisdiction to be to become effective and then you will have Mika us is again more behind like in behind everyone knows that one knows if it so so the regulation is there now now how are you going to utilize it and how are you going to push it and how stylus perhaps also and also focused on this so on our end uh the way so again you have the infrastructure activity you have a

global reach then TDX which is exchange for instance will be more specific it's a financial service activity so basically we are facing also some cross-border so we are very cautious because it's important not to uh for every country you will get in you will need basically to comply with local requirements so strategically right now focus is this email Swiss the land and swiss entities we don't know what the future holds um but basically on our hand we need we we need a full clarity and implication from the regulatory framework in EU that will be the next step probably um that would be how we see it and the

style is ready for for this for tokenized Securities activity Securities I think eventually a lot of asset classes will be on the digital asset rails as a whole and tokenization is a big part of that to what extent and in what time frame will be quite interesting to see there was actually a panel last week on another conference where they say the adoption can be anywhere between three to ten years and to what extent and let's say what will be tokenized and how there will be let's say distributed throughout the the market but it will it will happen and coming back to the regulation I think even as a tech provider where we're not have to be regulated ourselves till date we still welcome clear uh regulation and what you see now in emea and as well in

Apec from the team our team our sales team there Hong Kong Singapore and why wider area around there you see a lot of interaction with institution because it's becoming more clear how they can interact with this Market what they need what they expect and how they want to be involved so I think you see it here in emea you see it in Apec and I think us is unfortunately a bit on hold and waiting for some clear guidance there as an American I will have no more comment on that but I promised one question about AI so to finish up in the last minutes looking towards the future power in the next wave what will be or in your opinion could be the next chat GPT moment

for institutional adoption of blockchain and cryptocurrencies I throw it out there okay I start because after it will be very complicated to those new ideas so I would say cbdc's uh you think cpdc is going to be the chat GPT moment why because the events have to connect it will create instant settlement crypto to crypto instead of doing crypto flat because at least you need a regulated stable coin with a legal tender being probably a government so that basically people start actually embracing and settled transaction and live right actually the benefit of the blockchain because people are not yet doing it at least in EU yes with the land um yeah there is no regulated stable

coin so once you have this do you think this is the key it will accelerate cbdc combined with it's a bit of distort temperature that is with digital identity so basically you have this you have the tools to really have full acceleration of in the space what do you think I'm not a big fan of the concept of cbdcs for civilians purpose read another fan and I think the the concept of AI um like can be applied to to regulations um I'm not a big fan of the way like regulations are being enforced at this point in time like all these AML kyc uh

what happened with Europe where they wanted to at some point there was discussions around like every Wallet transaction needs to be like uh kyc'd I think AI is going to help like there's something that is happening on chain like you see what is happening on chain all the time it's immutable and and we should be using this technology together with AI to make sure that like we can check if the transaction is legit if it's coming from a proper wallet if these wallet has been tainted by like activity with like like Bad actors and you can use AI to check all these um so it would be much much faster much better and I think regulator should embrace that instead of trying to to backtrack okay any other opinions not

related to AI but one of the chat GPT moments in uh crypto could also be if a black Croc decides to tokenize a large part of whatever they offer and say okay this is how you trade it now so it happens on chain and sometimes I wonder I I I'm post electronic trading transition so I don't know the whole history but I'm like what triggered the fact that we moved to electronic trading I think it was more about the venues that imposed that so I wonder what's going to be the okay you know what now we're going to start settling using blockchains because it's so much better and I just I'm trying to think what is going to be the trigger for that to happen because the bottleneck is pretty long right as you you know the the current infrastructure works it's slow

it's expensive it's painful prone to errors but it works and so what is going to be the trigger to make sure that now institutions and issuers and exchanges and everything agrees to say okay you know what let's just do that on chain and for me that's going to be the blockchain crypto chat DPT moments but yeah so BlackRock tokenizing stuff could be uh one of them that would be that would be quite big any other opinions last ever I think I think it depends if we're thinking of the chat gbt moment as like the next big thing um in that case I think it would be something like eigenlayer looking at how you can have restaking via other protocols on top of ethereum to utilize the security of the ethereum staking

Network um or is it something that results in large both retail and institutional adoption like we've seen with chat gbt where you've got you know companies looking at how they're going to utilize it and individuals playing around and being excited by it and I think for that piece it would be looking at what the moment when we have more Structured Products for example etps available for institutions to purchase through their eyes are their investment funds you know lots of funds talking about Securities no singing more crypto here just like a the ATP product and when that becomes something that I can you know look at

buying a an ETP via my ISO where is is the underlying whether I can look at a staking ETP and receive eth rewards as part of my icer and that becomes something that institutions offer so I can just invest in as part of my other investment strategies final word Frank I think it's also expanding Beyond crypto and just go back more to the traditional Finance instruments like FX derivatives options and that kind of stuff and just blend it in with the digital ecosystem I think that will be the next next from a technology perspective the next jet GPT moment super thank you all very much I think we've wrapped it up just about on time thank you for listening uh thanks

to our panelists and uh how much did you like this panel discussion thank you thank you