Silicon Valley to Crypto Valley: Institutional Investors in Crypto & Blockchain

Transcript

here is Martin from Switzerland from Krypto Valley Association I'm very happy that you joined to our webinar from Silicon Valley to crypto Valley to bring these two places together I as I told I'm the chairman of the best group from scripto Valley Association crypto belly Association is the most prominent organization in Switzerland promoting blockchain technology with a long-standing track record with very interesting the members from all over the world we are strongly based here in Switzerland but we don't have too much

of our own buyers it's very important for us to welcome everyone and to bring the brightest minds together too far to for important and interesting projects I think it's important that our two places crypto valiantly and Silicon Valley work closer together Switzerland has a very mature ecosystem in the chain field it's strong financial center multicultural and the open place with natural grass also where people from and companies from all over the world can meet and can

be sure that their interests will be protected and Silicon Valley everyone knows Silicon very very experienced investors and the cluster with long-standing tradition in tech and investment field so I think it's I'm very happy to have so prominent speakers on the panel today I'm very happy that Shantanu organized this event together with us and I'll hand over the mic to him please do not forget to come and join CVA if we can be of help for you

if you have any question please don't hesitate and come back yes good Thank You Martin good morning everybody this is Shantanu here sir pray I'm a corporate lawyer based in Silicon Valley and a member of CBA we decided to host this event really to build partly to build the links between Silicon Valley and crypto Valley we think there is increasing conversions these are two very dynamic ecosystems and there should be more interaction between them of course the Silicon Valley we have a very large base of venture funds and private equity funds and course many successful startups Switzerland has a thriving ecosystem with really with the etherium

foundation and a very progressive I think regulatory environment as well so it makes a lot of sense to to have these two groups of ecosystems interact and so as part of that we thought we would talk honi on a specific topic which is institutional investors investing in this space and there is increasing interest here I'm just gonna quickly just scan out some certificates some statistics from a fidelity survey that actually came out this month earlier this month so as many as 36 percent of institutional investors in the US and Europe own crypto assets according to the fidelity study bitcoin is the most popular one and the the court from fidelity Tom Jessup is that these

results confirm a trend we are seeing in the market towards greater entrance interest in an acceptance of digital assets as a new investable asset class so that's from the fidelity report that has to be of course counteracted with the goldman sachs report which came out from The Wealth Management Group saying they didn't think bitcoin was a suitable investment for their clients so there is there is some contradiction in the market but often you see that that banks are such institutions it ends up being they say one thing and do the other clearly JP Morgan is a good example of that where the chairman said one thing and now they're much more in in this space anyway I wanted to talk more about the panel also we have an amazing panel of folks here

from from Silicon Valley and from and I'm including San Francisco and Silicon Valley and also from zhuge so we have Matthew Lamar who is with fifth era which is a family office and he's also watching two investors as well as keiretsu capital so doing a number of things in this space and outside the space in the general tech space so I'll let each of you get give your own introduction but just at a high level we have hunter Horsley who is CEO and co-founder of bitwise which is a leading asset management fund based in San Francisco and they're doing some interesting projects also we have gelato when put through who is venture capital this and founder of 20 future perfect

ventures and then we also have Martin who you heard and sorry we also bataya whose are from Switzerland and zhuge and is the founder of CBBC so with that I think we can start with with each one of you and the questions really the first question I want to ask to the panel is you know please describe your your business your venture capital fund whatever it is that you're doing each of whatever you are doing different things and then also you know how do these you know more details about your background that's relevant for this topic so I think jhalak if you could go first and then we'll kind of just move around sure it's great to be here Sean's new thanks

for having me I'm John Shope and Putra founder of future perfect ventures I'm gonna give a shout out to New York which is where I'm I'm based and there's certainly a lot of crypto innovation happening in New York here as well as corners around the world so we launched the fund in 2014 to focus on decentralized technologies and and blockchain tackles and a core part of our investment thesis along with artificial intelligence and Internet of Things and we have over 40 portfolio companies primarily in equity and our thesis is really that crypto assets are going to be a

significant part of this next wave of technology on a 10x scale of what the internet was okay fantastic who wants to go next Matthew are you activating the video or how do we are the host from CD a to do that rally or there we go well hello everyone hello jhalak hello hunter and Mathias and Shantanu so I'm based in San Francisco my name is matthew lamar my wife and i have our own family office as you mentioned but more importantly we operate the world's leading blockchain

venture fund of funds and so we are investors in future perfect and in in another 15 or so of the leading blockchain venture firms now funds and we also operate a co-investment program so we're investors in 10 of the 16 blockchain unicorns circle coinbase Ripple and so on and and so this is an area that we are very actively involved in we're also investors and advisors at bitwise and I'm sure looking forward to hearing hunter speak and then because of the questions that you circulated before this panel I thought I'd also mentioned that in a prior life I was a senior partner of one of the world's largest

consulting firms and specializing in regional and economic development and strategy and so advised Silicon Valley for the last 20 years and also advised other innovation clusters around the world including Shanghai and Shenzhen and London about how to build premier innovation clusters and I think a number of the questions Shantanu that you've circulated really speak to that issue of how do you succeed on a global scale as an innovation cluster so happens to talk about that too fantastic appreciated who wants to go next let's go back let's go to Switzerland Mattias yes Thank You shant Oh No hello everybody really happy to be on this

panel in my home turf basically so I'm based out of Zurich talking to you based out of Zurich we have our company based at the heart of the crypto Valley in Zook right close to the station may you know the place it's called CV labs it's a company that we are operate as well so I'm a founder and CEO of CVV C stands for crypto Valley venture capital I mean basically what we invest in is in companies in startups early-stage that build products or services based on the technology so not really based layer protocol with rather applications decentralized applications we strongly believe that you know technology is like

watching our catalyst technology is that you know they they resonate with this newfound regeneration that can bring the next wave of tech companies and and we are in the lucky situation that we attract a lot of these young and aspiring founders in the crypto valley we have two differentiation x' as i said one is we only invest in blockchain companies that's that's an exclusive thing that we do and we run our own operational business which makes us a bit a bit special out there as a VC so we operate co-working hubs we organize events we have an advisory unit maybe you know the top-50 report the crypto

valley top 50 report is something we do we have Co working out in Zhu kinfe toots and we're opening one in Dubai in October it had to be postponed due to a talk of it so you could say we're highly specialised tech investor the investors that back us they can invest either in equity or in our to be soon to be launched fund structure we've done 27 investments the past year 22 out of these 27 come from our incubation program so we an incubation program especially tailored towards the needs of the of the blockchain space and then we did some direct investments as well we have a

global deal flow only 10% of the startups we stream is doing roughly two to two-and-a-half thousand startups per year only 10% are actually Swiss what we're looking into right now or we are about to launch that might be of interest to you is also a bit driven by the you know the current social and environmental challenges that we face we're launching our fund under the Model T 40 tech for tomorrow we've defined six verticals and that's where we are looking into into the that's the startups that we're looking into have to be in one of these portals I'm happy to tell you more about these verticals okay

that's fantastic thank you and it's interesting because the first three that we just spoke to our investors themselves so now we have a hunter who is actually on the other side who was an asset management company as opposed to an investor himself although his fund is an investor in assets so Patrick please please come on hello hey everyone hello Matthew see you great to see everyone so shall I introduce myself yeah please do great fantastic I'm the CEO at bitwise asset management we're based out of San Francisco we have people in Chicago

Connecticut in New York but a us-based firm 15 people generally with backgrounds in either tech or or ETS asset management my background is on the tech side prior was was a product manager in Facebook before that Instagram so that that's a bit about the firm our products as you mentioned or we manage investment the products that help other people put crypto exposures into their portfolios so we're best known for launching what I believe is the largest index fund in the world back in 2017 we also work with yes ECE on a Bitcoin ETF we've been working on that for a

year and a half it's a never-ending project and and then most recently we shared that we had begun work to make it possible to buy shares of our index fund through a traditional brokerage account like Schwab or TD Ameritrade or fidelity or etrade and so we've begun work on that and that the product will at that point function more similarly to gbtc and we expect that to start trading in the second half of the year so those are products that's all about the firm 15 people in San Francisco and a little about me I'm really excited to be chatting with all you and it's so fun to see familiar faces okay that's fantastic Thank You hunter

so I think we're all you know you here because we think what will make this market to the next level and a Bitcoin has been around for like 11 years now Bitcoin and the whole block chain ecosystem but what will catalyze us to the next level is really institutional investors which will drive this to the next level and I think that is what all of us are anticipating and it hasn't been in a straight line certainly it's been it's been in in you know in different fits and starts but one thing that what I have seen and I use a quote from my favorite book which is the Sun Also Rises by Ernest Hemingway and in that book if any of you read the book in high school or whatever one of the characters is going bankrupt and the main character asked the other character

how did you go bankrupt and he said well it was gradually and then very suddenly and so that's that's how I think a lot of these things happen it's been gradual and then suddenly something will happen and then there will be a big boost to this this the institutional investor base and we're all waiting for that suddenly moment but but it will come and it will come and maybe may not even know we'll be there but let's go back go through some of the other questions that we can get in more to the topic and maybe you can just maybe continue the same order and I'll let each panelist talk about what their views are and I sense some around some of these questions which I'll go through here so you know one of the questions is you know how do we define institutional

investor to be anyway and there's so many different types of institutional investors you have head vcp fonts you have university endowments you have family offices large family offices mutual funds banks etc which ones are relevant for your business and also I think some of you are also institutional investors yourself so you may be an institutional investor but you have institutional investors investing in you so I'd like each panelist to talk about how they interact with institutional investors and how they're relevant for your business so jalan Kathy could please go first sure so when I launched the fund seven years ago we say Bitcoin wasn't really that well known and I was looking and kind of pitching it at in context of this wider

movement you know we had the the PC in terms of technology creation that gave rise to companies like Intel and Sun Microsystems and and Microsoft some some which are around some of which aren't and then we move to the Internet in the late 90s early 2000s which operated on less of a centralized model of more global and then we're moving towards this next wave of decentralization so I think we were very early and thinking of how a blockchain technology and and and Bitcoin would into the this this next wave of technology development and so

our early investors were really a lot of individuals and family offices and folks that knew that there was something next on the horizon and I was involved in investing in the early internet it had been it was a TMT banker when the Netscape IPO happened so it was very much kind of a bet on what's going to happen ten years out now it's a very different story I think more and more folks have seen that if you just look at Bitcoin its resilience has really proven out and and we've seen it in koban we've seen in emerging markets for many years and in places like India during d monetization Cola and Argentina last year in 2019 and and so we're really

starting to see this wave of and at least Bitcoin and and then I I think as people start to dig into what's next in terms of Technology and and what needs to underpin this tech adoption we've seen in coke pit so you know all the telemedicine the data privacy needs a lot that's bubbling to the surface we're seeing a lot more interest for more traditional tech investors that understand that blockchain tech is part of this next wave so we're seeing more pension funds or you know larger institutional non-family offices start to come into the asset class fantastic Matthew Welsh on to know I

think I'd like to sort of frame this question a little bit I thought jhalak began a very good answer there but for me I differentiate between blockchain enabling technology the crypto money is that it's enabling both crypto monies and central bank just redistribute occurrences and then digital assets and across those three segments I also think that we need to be clear that there's long term investors and there's traders and speculators and so the question of institutional importance varies across that matrix in in in blockchain technology and early stage investing it's driven by angels family offices and VCS like jhalak and we don't really need

large institutions to participate they they don't really get involved until the you know the the mid to late stage of venture and right now we're still at the early stages scaling companies into the mid mid stage when I think about crypto currencies from a trading and liquidity point of view we really do need institutional investors and they're beginning to put a toe in the water long term investors Hodler zip you will of Bitcoin there are institutions beginning to reach into this face as well now digital assets which is where Zurich is one of the global leaders digital assets again we need institutional presence and

there you know in Switzerland six and SDX Sabre you're beginning to ramp up the infrastructure and once the infrastructures in place the institutional investors can play but I wanted to lay that framework because that matrix and I think that in early-stage venture investing it's not particularly relevant right now and if your audience I'm not sure who the crypto Valley audience is today if it's primarily entrepreneurs you can get all the funding you need without talking to a big institutional investor conversely if the audience here are investors then it's a whole different conversation

thank you I would ask you Matthew just about that a 16z you know Anderson Lawrence has set up a 500 million dollar crypto focus venture funds so I think some of them you can comment on this are dipping their toe in the water it remains to be seen whether some of the traditional value VC funds will spin out a very focused fun to focus on this space but that's sort of a point question but I would say we have a database of about 600 funds that are focused on blockchain and the technologies that surround blockchain of those 600 about 450 or crypto hedge funds which means that they are permuting and combining and trading crypto currencies they're not venture

investors only about a hundred funds of venture investors jhalak is a great example of that and needs one of the better ones in that space and of those hundred most of them are pure-play blockchain venture firms the general-purpose firms and you mentioned one Andreessen but we could also talk about Sequoia Union Square Ventures Draper and rre ventures as being five of the leading general-purpose funds they are leaning into blockchain but it's a tiny allocation in their general-purpose fund probably less than 5% and the exception is Andreessen and Driessen has created a dedicated vehicle 500 million in the most recent closing and that

speaks to Marc Andreessen you know Marc was part of the mosaic team launched Netscape and he really opened the internet that we use today and Marc Andreessen says if I had understood the blockchain concept and protocol at the time that I'd written net that I had written them and worked on Netscape I would have embedded an internet scape but I didn't I didn't appreciate that something like this could be possible and so here we are with an internet that has no identity and no security embedded in it and we're having to you know re-engineer the Internet with identity security and distributed computing and capability and that's really why

blockchain matters okay great that's very helpful thank you Mathias well I think that was a very important and very precise distinction between the two between the two universes that actually exist here right and as we are focusing on the venture the really early-stage venture universe it is way too early than the big the big institutional investors would would come in this early it just from from our perspective and how we currently see it maybe for the audience and I'm sure there's everybody's an investor in the audience

because your question was was also towards what is an institutional investor you could say it is a company that invests money on behalf of other people right but but what you actually mean is those really large organizations that that have cash that needs to be invested from you know from a business perspective they need to allocate the money right so there is there is this these are large corporations large organizations banks trusts funds pension funds this is probably the typical institutional investor that everybody has in mind and well at least what we see here in Europe and Switzerland there

is no pension fund that will go into a blockchain tech right now well at least I would know of them right and if you if you interestingly enough when we when we started early days back in the only day so we've we've started CVV see in 2016 already we're the early adopters or those that wanted to understand what's happening in crypto valley came mostly from asia large asian insurance companies wanted to back almost everything that there was around at the beginning so you had large

institutions in the very beginning and after crypto winter of almost all of them you know banished from from weren't there anymore and if you look at the investors that invest in us or with us currently these are mostly private individuals high-net-worth swiss-based also a non Swiss based we we do have some early adopting family offices we do have some early adopting asset managers even VCS you know if you look at their motivation that would be - how can I tap

into one of those leading ecosystems that or not that is not my echo system right so how can I tap into the crypto value ecosystem which is a global ecosystem but might have something that I don't have where I am or they have access to infrastructure that is not currently where it should be in my location matthew was talking about the the regulatory environment in Switzerland which which indeed will be even more advanced by the beginning of next years when the new legislation will be in place and these are factors that bring I would say these are early adopting organizations or people to Switzerland or to the crypto value

ecosystem and eventually with the digitization of the asset space also the institutional issues that's why it's so important that that we get this infrastructure done that we get this in a sufficient level done that is that is very important you know Switzerland and Swiss people are not really born to think big and here you have to absolutely think being right and that's probably also a challenge in mentality in Switzerland maybe what I can add what is interesting in in Switzerland there is probably we were we were hoping or we were anticipating that more corporate investors would would join the space early because of the tech and because of

the I would say potential innovation that you could get very early on that you could take a sneak peek if you if you informed that would that would join early on that that wasn't the case in in in in our case at least at all okay that's very helpful Mattias I wouldn't note one one data point as I was researching for this topic I did find one instance of an institutional or a pension fund investing in this space and that was in Virginia the Fairfax County I don't know the exact entity but question sorry so it's it is because the police pension in Fairfax County please yes so forward-thinking police pension a

Fairfax County good invest in in in this pace and literally they're much bigger is pension type funds in the US and elsewhere but let's see if it does start a trend the other point Mathias is that I did see that UBS has all started also started a fin tech focused venture fund I don't know if that specifically includes Bitcoin blockchain etc but there is some corporate BCE element that's starting to develop it's what's known itself no of course but I mean I mean FinTech is is a different area then you know that that's been around for a couple of years and then there's been a very active in tech senior in Switzerland also and they you have lots of accelerators you have corporate stuff

that have been to the space you have money that goes into the space of course but if you're talking specific blockchain you know these really very new technologies that haven't been around for a couple of years or the use cases that you can really come up with new products such as digital assets that's not yet there in my opinion I'm just gonna jump in there in the u.s. we actually saw corporates start to invest in the sector in inventor rounds and I'd say you know Series A and later not necessarily at the seat

we saw them come in before a lot of other B C's did so companies like American Express these JP Morgan we're investing in in rounds you know before a lot of the brand name Silicon Valley BC funds so we did see early on a lot of corporate interest specially and and some of the underlying technology so I do think the u.s. is a little bit different on that angle and you certainly see companies like visa that where it was you know they weren't sure how competitive this was going to be they wanted to invest just to learn about the technology and they're actually getting more and more active in

this sector so I do I do think that corporates are getting even more engaged and happen at least in the US for for a number of years great if I could if I could build on that jhalak own I would also say that gain a bit of a framework if we think about foundational technology transactional technology and then applications we think of it as a stack blockchain is a horizontal technology at the foundational layer but the people that are most engaged down at that level tend to be tech companies and so whether it be IBM or Microsoft or Amazon they're very involved in exploring this new tech area of technology now the transactional layer

you know the world operates and a global economy and the people that make all of the payments and transactions and investments occur of financial institutions and every financial institution in the world including Credit Suisse and Union Bank of you know UBS and you know as I say success e^x all of them are very actively looking into this space and the applications of digital monies and digital assets what the issue is that the the top layer the application layer for blockchain has lagged there were a lot of promises made about how we'd roll out blockchain based technologies at the

application layer and in fact it's moving pretty slowly and so will the other industries of the world are sort of watching some of the ring some of them are engaging but it's still more at the prototype level what's interesting to me about Switzerland is there's three industries where the Swiss or global leaders right one of them is in finance investing and asset management and so you are right in the middle of the leading edge of digital asset allocations in in Zurich and Geneva the second is healthcare and that's more of a Basel conversation but you know absolutely the AstraZeneca x' and the

Novartis is and LaRoche's and so on are looking very closely at the application of distributed ledger to the global health industry and then the third which tends to be overlooked is that you are also a center for global organizations including in the sports industry and so you have you know the Olympic movements the soccer movement you have many of the world's most important sporting organizations based in your cities and I do think that that is a very interesting thing because we're beginning to think about how do we secure ties and turn into assets the contracts and the

revenue streams of the world's leading personalities sports people musicians actors and actresses and I think that that's a possibility for you too I think that in Switzerland you could certainly leave lead a global movement to securitize the revenue streams of the sports people and you have the organizations in your sitters to really take a lead in that regard so I think that's a third very interesting one we the next question is on ecosystems if we can touch more of that in the next question but hunter on the institutional investor side because you're you're clearly and you're becoming an institution yourself and you also have

institution as your LP hmm yes I mean I think I think all of the the views that that Jacque and Matthew Matthias shared are right on I think that I think that they're depending on the type of institution there's a different stage of coming into this space so the ones that are here in a pretty meaningful way in the u.s. at least our family offices and endowments and certainly self-directed high net worth individuals which I wouldn't think of as an institution I think that the the the ones that are coming in now so we're not here before but are coming in now and will be the next sort of institutional constituent that you see infrastructure bill arounds

that you see people start to write about and so on and so forth our hedge funds and independent financial advisors or Ras and those are starting to come in and meaningful volume and you know there was a very public example which is Paul Tudor Jones in May last year Rick kettlemans speaking about crypto and we primarily serve Ras financial advisors so we do about 2,000 phone calls a month with financial advisors and can tell you that they weren't in before and they're coming in now so so so so families endowments are firmly here I would say that that the majority the better half of the top 20 diamonds already have exposure through a venture fund hedge funds coming in through futures trading desks in some cases

products like ours and gbtc arrays and then I think later what we'll see is in you know I think this is similar to what what up what what everyone has said we've seen the first pension that was the the fairfax county police pension investing in Morgan Creek digital's fund you've seen Temasek get involved with Libra you've seen certain foundations come in but very you know one or two I think so I think the institutions that are will come later our foundations pensions sovereign wealth funds and meaningful sized banks mutual funds so depending on the institution if you dis a grenade and pull it apart there in you know different stages of coming in I

think the most you know in a way the most interesting is who's coming in now that was named before so we know pensions aren't aren't here for this moment and we know you know I think all of us on this video know that endowments and families have pretty much arrived I think that the the the new people stepping into the market are those hedge funds and financial advisors and so I think that's very interesting meat we write a letter every month to to to clients and investors they're a few thousand readers it's available on our website it was investments con but I believe two months ago we wrote about what we called the four eras of of crypto and maybe that was a subtle influence that that

Matthew and the fifth era family office had had on our thinking to call it the four eras but we talk about the four eras and how you know 2010 to 12 was one era where the constituents were mostly programmers and hackers and people toying around with things and then 12 to 15 you saw retail come in and high-net-worth individuals and you had a certain set of infrastructure to support them and we would argue 15 to 18 or so was was families you know which can be pseudo institutions in some cases venture funds springing up to pull in an endowment money and and and and that crop of infrastructure coinbase square Robin Hood CME and and then I think the

period that we have today which we call the next era where the fourth era is is these hedge funds and Ras coming in infrastructure coming coming from a new set of people like fidelity and others so I think there have been different stages each of those stages generally comes with a with a little bubble in price action where you set a new all-time high and you have you have a I are low at the end of it in that drag saying some new infrastructure and then some new some new investors and so that's some thoughts on how we view it not necessarily different from from what's already been said but that's my vantage point and again for Trump it wise we're we create investment products that help investors put digital asset

exposures in the portfolio which is a bit different than then of course a venture investing so we're we spend a lot of time on client service and and in sales conversations and research conversations with investment committees etc so that's our vantage point okay thank you I guess is part of that it was still a gradually then suddenly time moment we're still in the gradually period and again there'll be a time when it's suddenly just one quick housekeeping item you know I know some of the panel's actually have to leave because they have another event to attend if people do have questions please post them on the Q&A section in the chat and then we will go through them and perhaps if we have time some of them can ask the questions live as well

but I want to make sure that people know that we intend to have an audience Q&A session but in order for that to happen you know people should should write in the Q&A section and in section of the webinar so you'll be the bottom of the screen and then we'll monitor those and then ask the audience that's the panelists the questions but getting back to the discussion and a list of questions I had one of the things we did touch upon is the ecosystem that and how that drives institutional ambassadors and I want to and and we Matthew did talk a bit about that and others have spoken about it but we can talk about we can talk about how the the ecosystem that you're located in helps helps or hurts in some way the the drive towards

institutional investors and I can just speak about the the us a vantage point you know certainly I think you know the the US has not been all in on this space for sure I mean there was a most recently a case on telomere number base to telegram essentially a refund all their money to US investors that there was an injunction from a New York federal court on telegram and so there have been there have been many court court challenge in this space the SEC Commissioner from the news reports is apparently leaving and so it remains to be seen who the what the new Commissioner be asked to see what will happen is I saw yesterday chairman will have on this space there is one sec a senior person whose Hester

her Stu who's very has taken a very I think accommodating view towards crypto it remains to be seen if she retires which i think is imminent who the next person will be and so there is some movement in this face and and the the ecosystem generally around that and there are also regional differences in a Silicon Valley is not necessarily a money center in the same way that New York London Reserve are and so their regional differences as well I know we titled this this the title of this webinar Silicon Valley - crypto Valley inadvertently sorry jhalak we made New York flyover country I don't think it's which I don't think most people attribute New York to but just in the Silicon Valley - crypto valley conversation but clearly New York is a major global financial designer frankly

probably much more so than San Francisco but so how does the ecosystem you're in you know drive institutional investors and and just generally around the u.s. New York and each of you are in your own ecosystem so July can you please comment thank you sure sure and I won't hold it against you so I think I mentioned I start investing in the space in 2013 and 14 and and frankly a lot of activity was happening in New York and certainly if area was founded in Switzerland and what was exciting about about the sector was I was really truly global in nature and open source and it kind of spoke to not

one geography but but truly you know being decentralized and and since then we've certainly seen different centers and I'd say San Francisco it's really you know emerged strongly in a way that in the early days I would say it was less so and New York has had its unique challenges with a bit license some more stringent regulation they're really one of the first to regulate this jerry bitlicense but if you look at recent Department of Financial Services action and they've brought in a lot of innovative folks who come from the tech sector they realize that they then they they do have a desire to foster

innovation but also protect consumer interests I mean what we saw in 2017 was really a completely not paying attention to what regulations existed right with the IC opposed and and we're seeing we saw a hangover from that and we're still seeing actions like the telegram action that you just mentioned there have been a number of other class action lawsuits that have been settled that really made institutional investors very wary of the sector now there are a lot of speculators that want a big yield and the return and in a very low yield environment in other asset classes but but we're now seeing I think the more

clarity is going to lead to more institutional investment coming in and we've seen movements towards that and it may you know drive out some of the arbitrage opportunities and the speculators but it will bring in I think larger amounts of capital and create a more stable capital base than in the sector thank you Matthew Welsh I would take I feel like I should take exception to the notion that Silicon Valley isn't the global leader in large portions of the financial industry we have digitized the world and that means the most valuable companies in the world are all West Coast based companies Apple

Amazon no no no but this is important because the payment systems and the transaction systems that support global Internet activity are here and as a result PayPal is here it's not just PayPal its coinbase its ripple its Facebook its uphold it's all of these technology enabled payment players are in Silicon Valley now New York is without question a global financial hub but it's very different and so you have more corporate finance you have the exchanges you have the corporate fundraising activities and the investment bankers and some of those

need to be technology enabled and you obviously have the trading ecosystem around that I'm also vice chairman of s Fox which is the leading crypto prime dealer and without question when we think about liquidity and trading in public equities and fixed income that's where New York London Tokyo really play when it comes to Zurich Zurich is one of the three global leaders in asset and wealth management and as a result it has this unique place in the global ecosystem and a huge opportunity and I've already said this but I'll repeat it again as the ecosystem in the ecosystems in Zurich and in Geneva and

in Switzerland where blockchain is going to be important first its global wealth management and the opportunity to embrace digital assets and the digitization of every financial instrument is going to happen in your backyard it's going to happen in Zurich and so if I was an entrepreneur right now and I understood blockchain and distributed ledger and I lived in Zhu zhuge Zurich or Geneva I would be thinking about how to interact with the leaders in the space Julius bär saber Signum murky Bauman these are the people that you should be getting close to and Mathias and his incubator can help I'm sure and then the other one of course is

healthcare so the reason I'm emphasizing this point is that if you're an entrepreneur and you have deep technology skills if you live in an ecosystem which is a world leader that is your easiest path to getting launched and it doesn't mean you can't pick something else you know you can say I'm living in Zurich but I'm going to focus on you know blockchain enabling the global transistor and capacitor industry where the problem is you're not in Shenzhen and if that's what you want to focus on you need to get on a plane and go to Shenzhen because Shenzhen monopolizes electronic components

globally so it's very hard to succeed in zhuge if that's going to be your use case but the great news about Switzerland is you have two or three of the global leading industries based within a handful of miles and that's where you should be looking for your use cases in my opinion the first time someone else took over my job and when it comes to an uncritical Valley in Switzerland so thank you for that Matthew at least it shows that I think that you know the the PR and marketing department of Switzerland does a good job so that is really thanks for that so where do I take it from here I mean if

you look what happened and I would agree with Sherlock when it comes to that ICO craze thing which is some sort of variable that doesn't really fit in what's happening now when it comes to professionalizing this space is you first had the exceptional talent and exceptional projects that came with these people started with aetherium and started with the people around e3 I mean switch Bitcoin Swiss was super early when it comes to Fiat in crypto out the brokering the trading aspects one of the leading companies nowadays as well others came and and you know what happens if you have talent and if you

have the project normally capital follows right and this this happened big-time through the IC owes a bit less through traditional fundraising I have to say I mean it took it took let's let's call it the Swiss venture ecosystem at some time until they realize what's really actually happening there which was cores of an opportunity for us but I would like a lot more players and more money in the in the system I can tell you that what you then need is is an infrastructure that is that is able to cater to the needs of these projects right I mean what you get when you come here to Switzerland is you get nowadays is you get instant access to hundreds of people that are

developing towards the exact same vision that you might have in your very specific sector that you are active right and they face the same challenges they they have the same needs they they they they probably know how to tackle the legal or regulatory side of things and and they can direct you to people who can help you this is the big advantage of crypto valley today you have three even four years of experience and expertise and you probably don't get anywhere anywhere else on the planet in this in this you know really small location in switzerland you can you can go anywhere by training and I would say two hours right and and so we get both

the access to the specialist to the service providers and you have the access to the industry sectors that that Matthew just mentioned you can you can go to the bags you can go to the the to the health sector companies and you can talk to the regulators in Zook if you want to talk to someone who is dealing with you know the tax level dat and you have a token model you can call them and you they will sit down with you and you can figure things out sort of things out I think that is that is the true value of an ecosystem like like the crypto values now what's happening here is people are anticipating the the I would

say the regulatory leapfrog that is going to come through the new legislation right so sniffing is going to to make changes to the current law in three areas it's the private law where they're going to introduce the token without mentioning the word token it's a very interesting Swiss word called Ricky Steve a Trish I'm not going to translate that to English but it's but it's working because you can then just rely on the existing civil code and all the different legislation that you have the second part is the bankruptcy law very very important to to be able to segregate the assets when it comes to bankruptcy a big issue for for

custodians and for life and the third aspect is they are going to introduce a new license for exchanges especially for decentralized exchanges peer to peer exchanges so that's gonna bring the whole ecosystem to a next level and people are building towards that people are building towards that revolution that is being anticipated and expected when it comes to digital assets and marketplaces for these digital assets which is a huge opportunity for Switzerland and it is an opportunity for entrepreneurs that that won't embrace that that these these opportunities and that wanna you know that come here and and take advantage of the existing ecosystem that's fantastic sounds very exciting I mean we won't have time to get into some

of the questions but some of the other things we that I had highlighted to talk about it what are the challenges in developing growing institutional investors in this space and some of them are what Mattias talked about it's it's it's this did the ecosystem needs to be there there needs to be regular regulatory environment there are issues around custody and issues around insurance perception and reputation of this space so these are all you know separate but also part of what become an ecosystem and I think you know hunter you also you know have a product so some of these things around custody and insurance probably directly impact you so we can talk about the ecosystem and all so kind of a bit about these challenges also sugar yeah so so so you asked how does it how does a very city-to-city I

think it varies quite a lot so our vantage point is mostly in the US but I would say you know any institution allocator in New York just to give you a microcosm an example is more excited if your if your custody with fidelity digital assets an institution allocator in San Francisco is more excited if your cusping with point-based custody Trust Company that's because in San Francisco they find trust in technologists and software and don't require hundred year track records to believe in the the strength and the merits of an institution and you know that that's been proven out and the startup ecosystem there and obviously in a place like Boston in New England and in New York there's a lot of trust that's place

from having very large balance sheets on having a hundred years of operating records so even just in the small microcosm of you know we work with fidelity as the custodian holds the digital assets for more funds corn-based custody trust company holds the assets for the others they both have great solutions they both of insurance policies they both are professional teams but but you see different preferences and so I think you know when I think about San Francisco in the Bay Area and Silicon Valley versus New York I see different audiences different people that are thought leaders and then different preferences around infrastructure so so it I think it's quite a bit different between between the two cities and I think Matthew also

mentioned you know these dry tech companies that are sort of the leaders in San Francisco and they've been very forthcoming and embracing embracing the asset class and I think that's created a lot of enthusiasm in San Francisco so you PayPal you host square you have Facebook obviously you have Robin Hood you join base itself has become an you know an eight billion dollar company to be reckoned with and so you have these technology companies and Microsoft in different ways taking it very seriously in San Francisco and correspondingly you have the venture community taking it very seriously in San Francisco and I think I think that's sort of the locus in San

Francisco I think in in in New York people are more trained on CME and fidelity and JP Morgan's recent change in its tune and what Oldman is is writing and you know are looking more at the hedge funds and we're you know we're really influenced by seeing the news of Paul Tudor Jones I think on the East Coast we see a lot more attention placed on regulation Chinon - you mentioned the SEC Commission and changes there so I think that that is definitely something that comes up more in conversations in the East Coast so I guess to summarize you know III do think that institutions in general are not a homogeneous set we talked earlier about family offices versus endowments pensions versus our

days versus hedge funds very different audience needs to care about very different things and use different infrastructure I think it also pulls apart depending on on where you are and even within the US I think New York versus versus San Francisco there there are different points of reference and different communities so that at least that's what we experienced in in conversations with with with these types of firms okay that's fantastic see yeah if I can ask how are we doing on time and we're running into close to the end of the hour do we have any any time for audience QA or should I just read out what adieu question maybe that's the best way Jerome I know I I'm so I don't have to rush I actually thought this was 90 minutes but yeah I

think some of the other folks in the class telling you you needed to leave and I know Joe lock and under have some things so if you guys can stick around this that's per video pod I understand if you need to to leave but we can continue let me ask one of the audience Q&A questions actually so let's just flip to that and then we'll continue the discussions and the questions I had one other question and I think there were some questions and I think people left so those questions that fade it out but one of the questions I thought was interesting from Angelica here if you're able to answer ask live CBA are you able to jazz Shantanu I think I answered the

questions the seven so that's why they moved over to the answers Mikey okay it but you can still ask them again well there was one yeah Angelica so you were talking about the next level of Bitcoin and I wonder how would that show up and what would it be exactly to be a bit more specific what would be next level because it was Matthew after what what exactly that's about maybe the panel's could well I

think the question is what does she mean by level because you need to dimension so at one level the next level of Bitcoin has to be central bank distributed currencies which is taking fiat currencies and turning them into digitally native monies and that is upon us now you know China launches any any day at least some version of a digital yuan we know that the US Treasury the Bank of England the EU monetary authorities everyone is working on their own central bank distributed currency so that's one way of answering the question another way is you know what's the next level of a sovereign las' distributed

independent way of transacting value and I'm not sure there needs to be a next level beyond Bitcoin Bitcoin needs to evolve and get better would be my view I'm not a Bitcoin maxilla maximalist but I think bitcoins pretty good and it just needs to get better as faster more throughput lower transactional costs and they're working on these things but you know I'll leave it at that I mean we need to define the dimension of the next level would be the point but jhalak hunter Mathiason you know over to you anyone else for the panel you want to answer that question

oh yeah my perspective you know as Matthew said you you could you get interpret next level in multiple ways I think that one great common viewpoint is just new all-time highs in price for digital assets and Bitcoin and we even realized 10 crypto index of the top 10 and you know we will we will we see new highs I think is it you know as I mentioned we wrote this piece about the different areas I think we're the beginning of a of a new era that will will set a new all-time high and I think it'll come on the backs of we all understand Bitcoin digital assets have a

scarce supply and so the price fluctuates with demand and then you have things the question where will demand come from and demand can come from utilization using it for a for a use case to remit money just for money offshore to etc and domaine you can also comment from investment and and using digital assets and portfolios I think historically investment speculation using digital assets and portfolios has been the source of the the largest amount of flows and I think that the the new flows that will open up and push crypto to to new all-time highs will be coming from the financial visor and hedge audience and I think that the the doors that need to be opened or that the barriers that need to be surmounted are happy now but they're

things like public you know well-respected first movers the relevant pieces of infrastructure and any futures needed to exist and have reasonable volume and people need to have open accounts for a lot of hedge funds to participate in the space and so that piece of infrastructure had either I think for advisors they need any funds like ours and they need sales support like like our organization provides and so I think I think those two audiences will provide the main source of new inflows that can that can create the demand that will move prices higher I think that's so that's sort of a foot and I think those are the catalysts that will drive it

okay Martin you want to say something yeah I just want to say I think we are probably soon closing our webinar I am very happy that you all made it today I think it's it's a great thing to do such a baby in our because it's quite easy for all of us and we are like a worldwide community sitting all over the planet we have participants for more than 40 countries now taking part in this in this thing this webinar and that's just racing and I think people really work also in this format in the future because it's so great to have so fabulous panelists as you are I think

it's not really decentralized it's a global movement and we had lots of learning today I liked it a lot I think we all especially you we got lots of true and honest inside you know you explained us what you really think and it was not just like some sales pitch but it was an interesting analyzes that's why I thank you very much Matthew I'm Tirta like and Matias to be part here I hope that we can do something similar very soon because I have learned a lot that I think all the audience has learned what I was but my first our most important during here from that is Laban

are walls that from from that from the experience from our us-based friends I think you see there is an author mentality there is maybe more openness more readiness to invest in this space I think that's the strength of your country and that's probably also by Silicon Valley and the u.s. became so we formed the last few take decades and now he's built this huge company base if you dominate the world on the other hand I think we're in Switzerland with the experience we had we have a great lead frayberg very open very welcoming people

from all over the world and it's not for nothing that most of the big companies matthew you just mentioned them before we have an ace slit we have a wash we have a a BB and said very often it was foreigners choosing Switzerland for their company and conquering the world with that and I mean I don't want to do now you know it's not about country dropping now but I think we we should really work together to bring our projects forward and I hope that we can meet very soon and also not just talk but really to interesting business together

thank you very much again for being here with us and sharing your insights okay thank you thank you