Swiss Crypto Valley: An Attractive Haven after Global Banking Failures

Transcript

good evening everyone I welcome all of you tonight that we went uh Swiss crypto Valley an attractive heaven after global banking failures the event is organized by crypto Valley Association my name is Olga I'm the co-chair of Western chapter of the CVA and I'm really excited moderating this panel tonight we have 60 Minutes panel for everyone who joined us you can put your questions on in the chat box so we can address them later to our fantastic experts

and before diving into the topic please welcome our reform amazing panelists today we have Alexander from ducoscopy we have bian from theater24 we have Cedric from Ernst and Young and Pavel from PLL legal so I suggest we start with the Alexander our first panelist is Alexander he is head of the fintech at Duke's copy bank so Alexander the floor is yours uh yes hello everyone thanks for having me it's a true pleasure to participate at the CVA events

uh yeah I'll start with a short intro and then uh I'll just share a couple of slides to demonstrate on uh well basically two projects two Swiss projects uh uh crypto related bank is is involved as a partner but uh the introduction first so we are a Swiss bank based in Geneva active in uh the digital Banking and digital brokerage so the digital banking is my responsibility and we offer our services uh to retail customers so we have a large retail customer base corporate and

institutional clients we call ourselves crypto friendly Bank we have several projects in uh in the crypto domain uh to to mention one of them we became the first bank I believe globally that issued uh tokens uh that basically tokens by the bank so this project uh started I think back in 2019 and uh we also offering uh services to uh to startups uh in Switzerland and also crypto startups and uh yeah I'll just share a couple of slides to tell

about two of such projects or as as a demonstration yep do you see my screen yep yeah so I'll try to be short uh so the first project is uh uh basically a stablecoin project it goes beyond the stablecoin concept uh it's effectively a Marketplace a Swiss Marketplace for e-commerce where the company which is called chenti uh invites uh uh the service providers in Switzerland and also consumers to become part of the ecosystem that they develop and uh uh well basically for consumers to use

the e-commerce services from companies and this ecosystem is powered by a stablecoin a CHF stablecoin the tukoscopy bank helped to issue uh as a guarantor uh baking up this uh this instrument uh it's uh basically at the first uh so we have a Bitcoin Swiss stablecoin that was the first uh privately issued uh token in in Switzerland but that is more like an investment uh instrument well it's it's it's a larger it's an instrument for a larger players uh this uh the idea of Senti is to create a purely consumer uh

type of a token uh which they can use in uh you know to buy just regular stuff from you know the newspapers to some online services inside Switzerland and we believe that uh this is uh an interesting project and jumped into that as uh as a supporter but also as a backer of uh of this company you can you can Google them to read more uh about uh about the idea uh here it's uh you know a short short plan where you can see that we basically issued our role is to issue a guarantee against the client funds uh so that are deposited with the bank and uh based on this guarantee uh

chenti means tokens uh that can be used by consumers to you know buy uh buy goods and services inside the ecosystem uh the project is truly interesting and uh for those who you know love crypto and wants to to learn about real uh real project in this space I strongly advise to take a look uh it's run through an app so you can download the app and try for yourself uh I'm not sure how many so they started recently I'm not sure how many uh companies they already have and uh India Marketplace but I believe it's already growing uh yeah the second uh project that we

are baking uh is uh a partnership with a crypto exchange that is called smart wall or it's uh Swiss it's a crypto exchange that is based in Switzerland and Liechtenstein and it's also the first one uh to have at stocks uh traded on at an exchange they have listed their stocks at NASDAQ and the way we collaborate with uh smart follower is uh that uh well yeah the scheme may be a bit sophisticated but the idea behind it is that we basically share clients so the clients who are on boarded with lucascopy bank they can also open their account at smartwall or

exchange link the accounts together and then use their uh bank account effectively as an escrow to buy and sell uh crypto with smart velor so their funds will always be protected uh obviously the uh Insurance the deposit insurance is covering uh the funds on at the account but at the same time they can fully instantly Buy and Sell or Trade trade crypto with the exchange likewise the customers all the exchange can do the same they can open an account at the bank and also trade trade crypto using the funds at uh at the Swiss bank uh yeah so uh this is also a fully uh

real project it's been ongoing for uh I think a year or so already so you can try for yourself yeah that's it uh for for the intro for me okay thank you thank you for your presentation so we can continue with the with Jan Jan is co-founder of fiat24 yeah please feel free to introduce yourself hello everyone good evening it's a real pleasure to be invited to present uh tonight my name is Yang I'm the co-founder of fia24 uh fear24 in a nutshell

uh what we are doing is that um you know 90 of Swiss banking Swiss banks are using either quinoa or avalog as core banking system and for smaller Banks like us or financial institution we cannot afford uh such big software and we have built a in-house core banking system but unlike two traditional software um 95 information are stored on Chen because we are focusing on the payment module and you know the blockchain or distribute its open Ledger technology by

natural is very suitable for client bookings that's why we moved all client booking from the server to blockchain and the advantage for of using blockchain as the medium to book client letter is that um you know we can ensure uh um Atomic exchange meaning that the double spending uh problematic can be 100 avoid so it's increased our efficiency and reduce massively our running costs yeah and since we are booked on public blockchain specifically on ethereum and

Layer Two um we can theoretically run by 24 7 and without any human intervention so it's kind of Health uh set of smart contract ensuring the whole banking logic running properly so the team has uh eight people in Zurich and we have uh last week we have launched our credit card so it's a Visa card um when you swipe the card by uh buying anything and this transaction will be um stored on blockchain so on etherscan

you can check this transaction and uh you don't have to worry about uh the the server or double spending for example two people are swiping the card simultaneously this kind of situation are very difficult very challenging challenging for traditional core banking system but we solve this with blockchain Solutions um since we are built on blockchain so we are a crypto native and you can also convert your crypto into Fiat money uh the liquidity is given by uni swap

rather than for example centralized liquidity providers like a coinbase or quarkan I assume a Credit Suisse are using multiple liquidity providers like bitstamp and quarkan or those centralized exchanges for you know converting a token to B token but we don't have that we don't have even API to any centralized liquidity providers everything are built on top of uni swap the The decentralized Exchange so whenever there is a transaction

initially it's by client it will be wrapped in a smart contract and you know searching the perfect route on uni Swap and sold to the B token so um by doing so again we have reduced dramatically our running costs um going forward uh we will be offering um Swiss iban International Bank account number like the you know the bank account number you and I have with uh Credit Suisse or UBS or Duke has copy so this I band number will be forged into an ft so the nft will be your iban

number so this is an FP since it's a it's a erc7 721 token this nft is automatically on blockchain so meaning that we try to create the link between blockchain information and a Swiss icon so that the Fiat money and crypto asset can be bridged in this way so this is what pr24 does more or less yeah thank you very very interesting thank you thank you yeah well um we do hold the Swiss fintech license

is also governed by bank law they call us 1B bank because it's uh one so one a is the normal bank and one B uh are the fintech banks and but uh we we consider us rather as a technology firm okay okay interesting combination yeah so we can continue with Cedric Cedric is senior consultant in legal Regulatory and compliance in Alison young to drink please thank you Olga um and also thank you to my fellow panelists who have taken the time out of

their their busy schedule and obviously their dinner as well um yeah I'll just quickly introduce myself so I as always said I'm working at UI in in Zurich and uh yeah my I have a business and legal background uh I really try to focus on on helping clients in the traditional space but also in the crypto space so I say probably I do about 50 50 traditional uh to crypto and um so we we at ey really tried to advise businesses from a to z um so we start off with really just getting to know businesses um from the smallest businesses like

let's say even like Yang was was a 1B license to like the biggest uh Banks you know like the UPS which we are UBS which we audit as a as the auditing company of UDS right um and within within ey I'm oh somebody seems to have basically disappeared hopefully he'll come back Yang um uh but anyway uh let me get let me get back on to a schedule here um yeah so we so we advise a lot of different companies and um we really try to take a holistic view I don't have any fancy schmancy slides like like some of my colleagues here at this time I'll

leave it because usually all I'm doing is Powerpoint so um but you know people know ey and um we're here to basically advise but also enable trust and it's it's a it's a very tricky and adult situation because you know um there's no you know right or wrong you know there's nobody that's you know in in the entire industry that's like fully compliant or doing everything perfect so you know we're my company is doing is working you know as a gatekeeper to establish trust um and also making sure that you know we're constantly improving and then again there's no right or wrong or nobody doing it every doing everything 100 perfect

um so mistakes will happen and I think with the backdrop of you know like the financial crisis um and then I mean the the crisis within the last year especially the banking but also in the crypto World um you know things will will continue to happen and uh you know you know different different players from the the people that are from the consumers to the the financial intermediaries like Yang and other Banks um like Alex's and and also the people that are Consulting you know you we need to we need to um focus on you know having a good quality uh product and a good quality of service that we're offering to our customers because I think that's the

that's the most important sing at the end of the day you know we need to we need to have trust and people need to be able to trust that what we what we offer especially in Switzerland here where we we're very Advanced jurisdiction um we need to be we need to make sure that there's there's a high quality at all times um so yeah so we from from my end um I really do a lot of different things I won't get into all the details I some of my specialties are you know an email law and Professor protection I do a lot of audits uh in in that area um and that's I also help businesses uh really develop from from start to finish

um and we we help you know developing the business model but also you know doing the licensing and all this so like the traditional legal stuff and we also do like the tax on top of that um cyber security Etc so I hope that's I have avoid anyone um just with this quick intro but I guess I'll pass on to Pavel um it can yes thank you very much first of all guys I first I didn't want to prepare any presentations but then I decided to do that especially for surgery because I used to know that he's not going to do his homework so I have some slides this is these are good news um and I'll share this maybe you'll just give me a second please yes here we go so Bill illegal effectively

is a law firm as you see um international law firm in based in Switzerland we have a number of associate offices Abu Dhabi in Dubai in uh in Milano in in London in New York uh and a number of other locations in the world so we're trying to to be one stop um advisory advising on compliance uh on regulatory on licensing not only in Switzerland but also in Luxembourg for example or in Hong Kong um the topic of of our webinar um just to emphasize that here in

Switzerland we could do a little bit more in the Switzerland actually could continue to be an attractive uh safe haven for not only for the crypto businesses but also for your assets um I would like to get to another slide just to show you some basic information about the bank the failure is in brief so here we can see the summary from the U.S Federal Deposit Insurance Corporation uh illustrating the amount of Banks and bank failures from 2001 through this current year so you can see uh here on the screen I'm not sure if it's it's

good enough but oh what's going on so it's the maximum amount of those failed players was registered in 2008 it's a global financial crisis that we also see uh quite substantial amount of bank failures in 2009 uh still there is a positive trend going to zero reduction of bank failures in 2017-18 and here is it's it's it's a markup um done by uh one of my friends and colleagues on social media showing that in 2023 we have three three bank failures and here

in in the chart we can see the total assets and millions and also the amount of total Banks collapsed it's currently updated So currently we have free Banks collapsed and um why why it's why it's challenging us and why it's um sometimes difficult to digest in terms of understanding the implications of what's happening for the International Financial Market is that first of all from my standpoint the amount of Crisis is not understood well enough so it's more much more uh in a number of those uh crisis situations that we are currently in the midst of and going through it's not only one crisis it's not only a crisis in America and

possibly the most pessimistic scenario being that that this would trigger a much larger um Domino chain affect due to the high interest rates not only in America but also consequently all over the globe and why it's not only one crisis um as we all know the the one of the main reasons behind this free all of all of the free Bank collapses was named the poor risk management practices so it doesn't mean that this or another bank was not regulated at all uh they all had their licenses and they're still active in some some of the banks were back with them

the the some of the banks were bought but the last player was bought by Morgan Stanley so the license is still active but it it means that uh they didn't uh pay they didn't pay enough attention to their risk management practices and their effective implementation but on paper they were following all the requirements uh I believe the uh accounting uh statements uh but also not that bad at the same time um this happened and um it triggered some a negative uh consequences for the end of customers and investors in not only in America but also abroad so

um why it's not only one crisis we have the same problems in crypto we advise a lot of traditional businesses we advise appeal illegal to advise startups we advise Fortune 500 companies but why is the entrepreneurs but worst crypto exchanges crypto businesses intermedabies Financial investment funds Etc so um it's not me to emphasize that we are sort of you know criticizing crypto here on the background of the global possibly the global financial crisis or at least American domestic Global the American domestic crisis but we have the same the same questions which have the

same issues here I think all the panelists would agree so it's the problems of Market Integrity violations of uh IMR CTF Rules by the crypto players we have the issues of Market stability we have the issues of to to connect it to fail uh issues such as with the Alameda and the FTX we have the customer and investor protection issues again with ftax with investment funds equipped investment funds with numerous other crypto players who get bankrupt so it's not only one crisis but from my standpoint at least here speaking at least about four different crises so the first being the uh The American or let's say International uh National but in

numerous countries uh banking crisis the second one would be the crypto winter crisis which is currently we're still it's a high uh volatility on the crypto markets in 2022 2023 that we are still currently experiencing so this might be well be the second crisis and the third one would be the lack of Market Integrity in financial stability and the last one would be the issues of the two most important issues for any Financial Market which are also applicable here for the crypto ecosystem which is the customer and investor protection so um it's a much more complex uh problem that we are dealing with

um and here uh we need to see um what exactly we mean by crypto ecosystem what exactly uh Swiss crypto Walla is offering to ABC ABCD framework of Technologies so um that that classification is not that precise it's a right specification I really like it ABCD but it doesn't include machine learning and Biometrics so uh please take a note on on it um so ABCD Technologies artificial intelligence blockchain Cloud Big Data National learning and Biometrics are behind finte tactic Fin and Rec Tech

business models so these are the main three business models known to any uh professional who advises and works on uh and equipped business a particularly in crypto Wireless with crypto Valley advising these companies um fintech I think everybody knows what we're talking about as far as it's it's it's all over the the the the press and basically most of the people would call any uh company involved with one of those Technologies as a fintech it's not exactly correct because we also here can speak about tech fin companies technology firms expanding to

offer Financial Services to the right area of clients we all seen uh the the recent offers of credit cards by Apple uh online so now you can also order a credit card by Apple young been providing our Swiss alternative to to Apple so it's a it's a credit card by buyer24 um and big companies uh including Facebook and uh and other companies that also try to to enter in the the this this field of uh expanding offering Financial Services Us in addition to being a Social Services Network we all know

about these examples as far as Libra was initially established in Switzerland planning to expand globally so it was also one of the interesting moments as far as Facebook is a very big company and they decided to come to Switzerland and not to Singapore not to Hong Kong to start to embark on the Journey of offering the decking solutions to the respective clients uh at the end these plans were effectively curtailed but this was not because of Switzerland as we all remember it was because of the regulatory scrutinity in in the US first of all secondly I think it was not that

clear for the American Regulators what are those traditional um traditional forms of transferring expensive forms of transferring money into Africa would be would they would they cease to exist or would they continue to to to be on the market and also it's absolutely unclear how how you can regulate the farm or bad business uh with Apple pay well within Apple credit cards it was uh it was a long journey but still it's happening now at the same time with Facebook it never happened so I think that it was a regulatory experience here first of all in American states and Switzerland been always proposing the

best and the most uh clear regulatory terms for for Libra to come and work not only in Switzerland but also abroad so generally uh being a Swiss Law Firm we of course would like to welcome foreign companies and foreign virtual asset service providers to read the missile in in Switzerland or to set up a startup or any other Branch or financial services company Financial intermediary in Switzerland we would be pleased to be a persistent to this um say Amen to that yeah um yeah but there's just just a quick note I'm not sure how much time I have

so I just I'm just wrapping up the introductionary part I would like to emphasize that it's very important that I again every slide is so important Cedric so that you're mentioning it you see I told you it would be interesting so uh the fourth Industrial Revolution currently ongoing and happening it it's the the first Industrial Revolution in the world affecting the field of financial services so this is very important so never ever in the world including the first you see on the screen the second the third industrial revolutions they never affected the financial services sector so this one is really uh key point it's a turning point Sorry in uh in the history of Industrial Development and development the

financial financial markets initially uh designed as a linear system that ultimately being spontaneous orders as a spontaneous Market um so briefly on key conclusions from uh all the previous crises and all the previous uh difficult Finance Financial financial crisis and difficult situations and finance from my standpoint here we could conclude that for the crypto wallet and for Swiss companies for foreign companies who would like to open an office or a representation in

Switzerland uh it's very important to see and to pay attention to how well technologically wise Your solution is structured because uh it should provide at least some possibility for Auditors or for experts to assess and to see how your technology Works uh second important issue is that the privacy and compliance uh framework how this would be structure they would be structured as privacy by Design or privacy by default and of course we would recommend to structure it as privacy by design it does when initially you incorporate some particular issue some particular elements and new

technological solution allowing you to uh follow the Privacy guidelines allowing you not to violate the the current the current legislative Provisions worldwide secondly again in Switzerland as has been emphasized on the Libra example before tackling Regulatory and tax and setting this uh um would not be that issue of a Paramount importance as for states or many other countries at the same time we think that we might need to get some additional Clarity on particular Provisions or their applications regarding uh regulatory framework or tax framework

especially for distributed Ledger Technologies uh in in Switzerland and abroad um this might be and most likely it will be conducted in conjunction with Liberation in the general elaboration of risk management practices and risk management agenda in in Switzerland and in Europe as well as worldwide um and the the last remarks are more of a general nature um is is that we need to classify the risks if we want to address them in the right way if we want to see the the Swiss companies with uh startups uh

Swiss big companies developing on a good scale we need to see and to address the risks and how we address these risks this would affect effect effectively the the remedies available and the the action plan so uh from my standpoint the they should be and in most cases uh assessed as micro level risks with within the category of operational risks and the there are new categories of course they're also available so uh when this is completely new these are internationally related uh risks um and the last one is [Music] um

that's that's that's that's the I think we could we could we could add it as a motto to see script developer Association worker we need to stimulate a lot of new business models and Technology centered centered economy uh as as as a new rationale behind the most of the regulatory initiatives why I'm mentioning this because I'm a stronger proponent of um uh regulation uh being able to shape and being able to uh Drive uh forward the Innovation and not not stifling it but driving it forward and it's it goes in contrast with some other standpoints especially my colleagues uh in America or even in Europe in most

cases would disagree saying that regulation or extensive regulation or relation in general what's default Innovation but the regulation not but over over regulation or absence of clarity with regulation yes it would it would not be it would not be having a positive impact on developing the the the Innovations um thank you Pavel I'm sorry to interrupt you uh let's maybe um thank you for your intense uh introduction that gives us the full picture of what's uh what's going on now and maybe now let's be a bit more

focused on the topic of our discussion today of course still a certain extent it has been inspired by these recent events in banking sector the one you mentioned also in the U.S collapse of few U.S banks and of course it resulted some significant uncertainty within business environment and investors and crypto companies they're confused and they don't know what to do and because in the publication from CNBC all of these U.S companies turned to crypto friendly Swiss banks and basically the topic and the goal of

our panel today is to discuss what Switzerland can offer and what the main advantages of Switzerland as crypto friendly jurisdiction and Pavel correctly mentioned that of course the clarity and the transparency from regulatory perspective it's a strong strong advantage but still maybe like without going into details about the reasons of these um Banks failure of silvergate signal as we beam why do you think there is a minimal risk or maybe even no risk that of the same similar scenario in Switzerland why what would you advise to your client

um I don't know maybe maybe Alexander let's say the practitioner like let's let's maybe start with you uh yeah thanks thanks a lot uh well I believe that largely uh the reason for it of course uh you know no one is insured against uh uh have scenarios where there will be you know Global crisis if uh The Regulators won't be able to to tackle it fully well now we see how uh yet another case and well yet another case uh a large Bank was sold to even larger Bank to JPMorgan but well spillover effects uh I can definitely can definitely be

there however I think the main protection of Switzerland in this case is that uh Swiss banks will devast majority of Swiss banks they are uh involved in uh in a different business right so they are mostly into the you know private banking and uh therefore uh for them it's uh a bit you know less chill I mean the the the exact risks that popped up popped up in front of the U.S banks currently uh they uh are not uh um common uh uh for for the vast majority of uh Swiss banks and uh the Swiss banks that actually do this commercial business issuing loans and you know taking deposits they are

government owned for the most part so stay tuned uh that's why uh a divorced that could happen to Switzerland I suppose did happen with uh one uh of uh the two Giants Well actually was fused into another now we have uh uh basically a monopolist uh in in the banking Market which I believe is not the best scenario that uh that that could happen because uh all smaller Banks including uh Lucas copy Bank you know we are dependent on we used to be dependent on uh two largest banks oh I mean all the bank

infrastructure in Switzerland is dependent uh on what used to be dependent on two now it's only one and obviously it didn't get any simpler right to manage this these relationships uh I I'd say this is uh this is a large Village so you know there is a bit different uh the spillover effects can can can still be there because what we see in the US that businesses and then the population they just you know they do not understand the reasoning uh The Regulators try to explain something no one really wants to learn once you understand it so whenever there is a signal uh you know people just rush and take they take their money out that's

also a very sensitive and uh quite bad situation for it for you know global banking uh in the banking industry uh when the banking Universe uh you do not uh you know make fun or you don't uh upload when uh your competitor goes down it's uh it's always it's always bad when when competitors you know go down this way because uh the the spillover effects are quite strong in in the industry okay okay thank you uh Jan do you have something to add yeah sure I mean um I I I I I agree with uh Alex and I I think

um the Swiss banks has totally uh different business model compared to the American colleagues and they are more investment than concentric and securitization plays a big role in the American market and if you don't manage the risk properly and uh you will end up with um you know over leveraged and different to American Bank I think most of Swiss banks are either cantonal Bank you know serving the local people and it's very very simple uh Bank services like accounts uh money transfer this low risk and and uh and mortgage

those low risk products and there are uh um another good percentage of banks that they are doing private Banks so even though they are managing a huge amount of money but uh most of our money are off balance sheets they are managing it on behalf of their client yeah according to the different risk profile of their clients and they have uh kind of a string to manage their risk again the two giant International Banks and and in Switzerland um merged to one it does create certain risks for even for financial

institutions because um I think um almost all Swiss banks are either using Credit Suisse or or UBS for their corresponding Banks and ensuring the foreign currency payments now there is only one choice and it creates a little bit uh operational risks and on top of that um the action taken by the Swiss government created a little bit uncertainty of the um came rule yeah so we get used to um and play the game you know according to certain uh rule since at least few

decades and all of a sudden and uh for whatever reason and we change a certain Rule and it's created a little bit uncertainty to the market um but uh for me I can understand the point of Swiss governments to protect the Swiss dramatic um Financial stability but for international and audience there are some negative feedbacks yeah but the talking more about crypto or any blockchain technology or crypto space

in crypto business because we are in the in the business so we appreciate that Switzerland has a very clear crypto regulation since very beginning um I believe the first guideline was issued back to 2015 the Ico guideline and followed by you know stablecoin guideline and then in 2018 there were a DLT law uh irrespective of the of the content of uh the respective regulations whether it's friendly or unfriendly right or

wrong but the fact that there is a clear regulation um is still a very positive thing it attracts a lot of company doing business in Switzerland yeah and then the second point is that um well I believe that the crypto regulation in Switzerland make sense yeah and very reasonable but still there are some minor points when you implement it there are some things that we still can improve for example um right now

especially the Young Generation I get used to the new Banks or or or kind of um mobile banking apps and for this kind of Bank um the onboarding in Switzerland or you you know European white are still very um old school style so it's designed for the traditional private banking industry you clients need to sign a lot of forms and to verify themselves even though there are better technology which can ensure better data quality and this kind of thing uh I think we can Implement uh

as long as the methods are reasonable yeah because uh without the mobile banking or or crypto technology we take it for granted that bank need to be a building around the corner yeah but even the development of recent technology I think why should we have a bank just in Switzerland why don't we have a bank you know in some other countries so uh this is something that uh maybe in the future we will get used to either we will we like it or not

because the technology is there so it opens the new possibility to let's say a serve client abroad let's say you know Swiss has been Offshore Banking Central you know since many uh decades or or even century and why don't why can't we serve more um retail clients out of Switzerland rather than you know Private Bank style uh client so those are my thoughts okay okay thank you thank you Jan and thank you to for for this point um in to to try to see on this question

in conversion with the with other jurisdictions and other countries in this context we have a question from q a session uh section uh by the way I remind everyone if you have any questions feel free to to post them uh we have just 12 minutes left so we'll try to uh to discuss and to cover everything so the question is um the company going to build 3D generation first generation smart cities so South Europe and Asia and the company is going to operate in

hybrid mode Fiat and crypto um and the question is how can ecosystem in Switzerland help residents to secure their assets and operate in Friendly mode in comparison with other jurisdiction like Estonia or Singapore well I have an answer of course I have um well thanks a lot for the question first of all it's a very interesting question and I um yeah Middle East and in Asia that the topic is booming there now that the smart cities and genuine development from my standpoint Switzerland is also very good as as young been noticing and

the the clarity of Regulation and the other perks and benefits but if you want I I um I would like to put forward an idea that some new forms of uh dominant product design are being developed and are being brought forward these things might be challenging initially there might be something new but like a qwerty keyboard if you remember before many years ago or Intel uh cheap or Microsoft DOS system uh they were not that dominant at the moment uh when when they were created at that particular moment currently there is a dominant product design in keyboards so most of them it's qertio converts like

in in Turi in Germany the German version and some other variations I will show you just a second I just remind that we have just 10 minutes left yeah so this is the dominant product design so uh it and it shifts uh competition in any industry it's a universal rule and it's a it's a crafty keyboard it's an Intel chip it was very it was a landmark decision for the automotive industry so first um when the the product the product features are designed well so there is one dominant product design then it goes and it triggers complementary economics and I think that the role of Switzerland

back to the question could be just developing a new particular standard of crypto and payout conversions and calculations if you want or um settlements that would be a golden standard for the other Industries or the other the other countries to come also um Alex been been possibly I'm mentioning some very interesting cases of nearly dominant product design in terms of I I had the pleasure to know uh that the company's Alex been presenting and and talking about and then smart power and Bitcoin series I

know them for more than six years maybe seven years and they are also quite uh quite quite revolutionary in terms of providing that step towards a dominant product design being a typical Swiss product so to emphasize I believe that the role of Switzerland would be promoting and establishing a particular set of a golden set of Standards but it's called dominant product design generally so and as emphasized on the slide it means that terms of competition would be affected globally by what is created and yeah and then and then and done here at the crypto Valley but going back to the existing solution yeah

well but here this of course this is the question of uh how is these risks are preset by the by the general public because we're speaking about the the cities and with before speaking about the smart cities in Asia especially or in in in in in other parts of the world would it be Europe or America it depends on how a particular citizen living in that City thinks and percepts that particular risk so if we have a smart City built in China then uh citizens being obliged to receive the salary in Central Bank digital currency would be

would be having another approach to determining that risk so be thinking well if something would go wrong how is regulated we want to see a very clear regulation and law regarding these statements or if if I'm using a Smart House technology at home and if it was built in in and developed I'm using crypto failed services for paying for my utilities and etc etc etc as soon as it's mandatory it's becoming mandatory guys then that it changes everything and if we're speaking about the smart city it's not just the going skiing in in the mountains it's not that voluntary activity because we should understand that these are people who that is a safety conditions a lot of

restrictions etc etc etc so here if you speak about the smart cities we need to use this Theory perception of risk Theory to understand as Professor Star notes in uh noted in 1969 to what extent actually we could use Technologies and what that that balance of technological risks and and uh and uh and benefits actually because uh the balance might absolutely different I would emphasize it very briefly guys on this slide you see the all risks including those risks in the Smart City those risk with settlement like t0 settlement procedures risks of issuing a credit card by Apple risks of issuing a liberal issuing um payment system that could be classified

in accordance to this schedule accordance to this uh graph so uh if you see this for example this Factor one is a dread risk and Factor two is whether it known or unknown risk so for example take coffin it's here so it's not that dread risk and it's an it's it's relatively known so it's not that unknown as uh microwave ovens or uh water uh fluoridation or chlorination or something else but taking account that that's it that was drawn in 1980 I made some modifications to this concept of Professor slovich and I put blockchain somewhere here I think

now and I have I'm publishing and actively on that but smart smart cities they didn't that that topic didn't exist in 1980. smart cities should be somewhere here on this graph should be somewhere as the max unknown risk and it might be very dread the max dread risk we see here nuclear reactor accidents nuclear weapons Fallout right so but if if you have a smart city and all the elevators stopped working there is no lights Etc you couldn't pay anything but if your cryptocurrencies Etc so I think we we are able to identify that smart cities International Development risk somewhere here right maybe somewhere here next to the pesticides and Mercury

so it's not that simple so it would affect inevitably the the classification of risk would affect the the regulation of of of that risk so of course then we we go to the you know the question of how we're going to regulate it so it here we again as young emphasize that this is what's important pace of policy making yeah I remember the first presentation of iso enough uh finma guidelines in Zurich next to the bank of stress I think it was one of those hubs absolutely uh it was it was done in a timely manner it was absolutely a brilliant interesting um and very a very timely uh thing to do and to draft that legislation but often the base of

legislation is just the way to slow so we couldn't align that with the speed of the digital economy and the balsoft laws you know it's it's uh it's it's good but to a particular extent and then at some particular moment we would need to see how the the a healthy hybrid of hard laws and soft laws would be used to to build the the legislative framework so it's not only the the laws and regulations it's also the ecosystem right because yes I think the question was more even about the ecosystem and because I mean yeah uh sorry yeah no I just wanted to say like because it's you know he he asked sort of you know what

makes Switzerland attractive for a smart cities so I mean I I see what you were saying Pablo weather being you know the standard organization it's important you know we've set the standard here in Switzerland and regulation is obviously important and there's obviously always risks to something right but we need to we need to think you know a little bit broader you know and it's not just you know saying you know we have regulation for one aspect it's it's also about you know saying you know we have the the competence you know like the digital literacy with the the the experts that are here from you know from the I.T to the from to the business side to the to the legal to whatever whatever else they you need right you also need to have a regulator that understands the business

and is willing to talk to um companies in the crypto area right so it's not like you know what's happening with the SEC in in in the US where you know it's just regulation by enforcement you know here in Switzerland if you if you talk to the fintech desk you know they'll talk to you and they'll they'll give you feedback on on whatever you're you actually want to um you know realize and you know I think Yang can can can say a little bit more about that you know um and he he knows he because he got he got the fintech license right so I think that's one of the biggest advantages to to settling here in Switzerland um and having you know uh people that know what

um you know blockchain is about crypto is a button but also the classical um Banking and finance and and whatever else comes into web three that's sort of you know being mixed between uh you know the traditional web 2 and the you know the web 3 which is now you know swapping over from FS2 to non-fs right so it's uh it's a big ecosystem and I think we you know there's a lot of other a lot of other other ecosystems that are that are up and coming but um you know there will be um uh we we are in a great place to be Arena yeah thank you thank you Cedric we um about out of time just to summarize I suggest

um now all our panelists maybe in to name just one characteristics of Switzerland that makes it outstanding country from compared to other jurisdiction from this perspective of like um what makes exactly it's attractive during this uncertain period and banking crisis four crypto companies let's say or investors in crypto I just say it's openness um you know for whatever is to come and not you know having a rigid rigid system that you know supports just like the biggest and the traditional people out there and it's really yeah it's it's

open okay yeah I I absolutely second the opinion of Cedric it's really open and feed my stick to their technology neutral approach and they keep of course the core uh um and the the core problematic which are the emitter protection and money laundering uh as long as you know as a financial institution you can ensure uh those two points Cinema are really open and supportive to the financial innovation okay

Innovation also yes Father Alexander do you have something to do yeah yeah of course uh of course I promised to Cedric so I couldn't skip that part um so this again guys well it's this legislation in Switzerland it used to be technology nature it's not technology anymore because we couldn't just stand on that point all the time there is time time is time has passed by now we need to regulate particular technological solutions the least recently adopted DLT law if you haven't read my article about it I do strongly recommend it's it's an example of how the legislation is getting into the depth of the technological regulation so here what I

would like to emphasize regarding a question Olga is that the question is here how to regulate this this or another hopes to go as entry and exit points so the most typical for all the states would be to regulate entry or exit points which means that access to the system which is you want to build a smart City you need to get a license you want to do a fintech get your fintech license you want to be a licensed Bank get your license so it means that the entry point would be regulated but how to protect it whether this would limit the freedoms of the citizens and in Switzerland the the legislative framework the the supervisory uh supervision framework um prudent regulation framework uh

doesn't limit the freedoms the individual freedoms and protecting uh a particular set of activities and business activities and interpreter ships and innovativeness of the economy at the same time I would agree with Alex from the koscope is saying that we would need to prevent monopolistic or even our globalistic Behavior so if before there were two Banks involved in the settlement and the international settlement of the accounts it fit so now there would be one big player so it's not that interesting so um as as an action plan I think we would need to employ a multi-disciplinary uh absolutely a new interesting perspective um to protect startups to make

Switzerland and to continue to multiply the the reputation of Switzerland as a place where I equipped the company that is good good could come and ask for an advice or to relocate or to set up a legal structure or their main business um okay this is this is for me yeah this is would be the the most important part I also uh uh promised that I would show you the the the the picture that I used in making those slides um all the slides were containing a small part of that picture now at the end of the presentation I would like to thank you of course so well for an interesting uh time together and as a small compliment for me especially for

Cedric of course because he was so concerned about that presentation I'm waiting for this let's use this small picture to um to to to to to to for you to to enjoy okay Alexandra do you have something to to add what one word yes yes I'd say that uh the benefit of Switzerland uh or the consequence of it is that you don't need to whisper the word crypto you know when you are speaking to to a bank in Switzerland unlike uh many other countries uh even close to Switzerland uh yeah so that's I think the great benefit which and the path that the

Europe will have to take and it will it will take years until uh they arrive to uh Switzerland is today okay yes great so to summarize we have Clarity we have the good regulations maybe not ideal yet one but something still can be improved but already way Advanced compared to other jurisdictions we have openness we have Innovation so these all these combination of all these factors makes make Switzerland very attractive place from precisely from crypto business also so I won't think um our fantastic panelists for the

experience and thoughts you shared today with us and I want to thank all of you who find this time to to join us this evening and so please stay tuned for present TV events I believe we are running out of time thank you thank you thank you bye-bye thank you guys fine thank you I mentioned that when we started there was only 230 people of participants joining us but now the amount actually increased to 250 that's what I mentioned on the records and I'm very impressed to impressed that those interesting conversations and slides that of course they get you interest so I think it's time for an ipro guys the

weather is perfect again at least in Swiss romandi where I am now currently so enjoy your evening and thank you thank you very much indeed thanks thank you bye-bye Mercy