Transforming Finance With Blockchain

Transcript

right I think uh we can get started well first of all good evening everyone and uh welcome to this special webinar organized in collaboration between the crypto valy Association and storm Partners storm Partners is a professional service firm dedicated to the blockchain industry and as a proud and active member of the CVA we're thrilled to co-host this event my name is Axel sabag and I'm the Innovation manager at storm Partners I lead lightning box a Sandbox aimed at fostering blockchain corporate Innovation for organizations in finance luxury and impact I'll be sharing more about Landing box later in this session

and before we begin I'd like to address a quick change in today's lineup Saia con from Circle who was originally scheduled to join us had to step back due to unforeseen circumstances however we are lucky and delighted to welcome Dennis sheller as her replacement Dennis is the business development director for Circle at Europe and we're grateful to to have his insights with us today so I'll provide a quick introduction on both our speakers first of all thank you so much for being here with us very excited about the conversation and I'm sure that we're going to get a lot of very valuable insights from your experience in the industry so Dennis represents circle circle is a global

leader in financial technology and blockchain solutions circle is best known for usdc a stable coin that has become critical infrastructure for blockchain powered Finance Dennis brings expertise uh extensive experience in driving blockchain adoption across Europe and is well equipped to discuss the opportunities and challenges the interest ref faces today also joining us today is Kristoff Elli Deputy CEO at c c is a private bank offering personalized Wealth Management solutions for Swiss and international clients they are also a leader in digital Asset Management combining its strong Foundation

traditional Finance with cuttingedge blockchain technology to deliver Innovative Client Solutions Kristoff has been instrumental in shaping the company's blockchain strategy and we're very excited to hear his perspectives so today we'll explore how blockchain is transforming the financial industry focusing on Innovation regulation and opportunities for collaboration between traditional institutions and blockchain companies we'll also have a Q&A section at the end so if you have any questions feel free to uh put them in the Q&A at the bottom and uh we'll try and answer as many as possible so let's uh let's dive in first off thank you again both

for being here um I'm excited to ask all these questions very curious about what your answers are and um I'm not going to take much more time and we can get started with the first question which is for both of you more of a general macro question which is um how do you see blockchain currently transforming the financial industry and what do you believe is its most significant impact over the next five years so maybe Kristoff you can start with this one hello every um to me being a very traditional uh private banking

institution uh what is uh what is today puzzling is the way we handle assets um many ways uh but especially speaking about custody and transfers and the modern world in which we are living and frankly I would say we have a distance of of 20 30 years um I always I always repeat myself but if I want to transfer a hedge fund in one of my clients account to a bank 1 kilometer away Swiss bank same uh same kind of

Technology uh same activity it can take me between two weeks and four months and it's not a it's not a an individual hedge fund it is a well traded hedge fund everywhere in the world and as I can explain this via many argumentations but the client experience is just nowhere and especially when you you begin to deal with the Dig assets the the average age of of client of private Banks is is quite

old but uh you are all young but you will also move through time and if if I if I do not move with my technology you you will just not understand this is not credible so I think the tokenization of of such asset is absolutely key it is impossible today to take more than what a day or two days till we have assets being transferred cash is relatively better but it can be enhanced it's not as worse as as we as we are experiencing with the traditional assets so they are I think tokenization is is is really a fantastic

service that we could bring to to clients yeah amazing and um what about you Denis yeah hi everybody and axel thanks for having me today um I I would just second what Christopher was just outlining right if you if you look at the financial industry in general what are we looking at we're looking at a technology that's built on on payment rails right to move assets from A2B and then we have a regulatory legal compliance environment as well the the current industry has been built on Rails that have been there for quite some time right if you look at uh Swift especially for US dollar transactions and and sepa in in Europe for for Euro those are not

bad looking at themselves but in the end they are just Regional fragmented and sometimes slow that then leads to a let's say customer experience transferring a hedge fund and they can take up for for four weeks right um that's definitely something where the industry the financial industry has also acknowledge that the blockchain technology is actually a let say a good way to move move I used to say in my old days move money around but I would say now move value around and that can be money digital money like a digital dollar digital Euro but also tokenized assets so I I fully agree to what Christoph is saying here and in the end I believe that a for example stable coin

cash leg on chain will power such tokenized economy in the future going forward what we see from circle is that there are different use cases of the financial industry that are moving onchain if you if you ask us we believe that actually in the few year in a few years ideally there will be a a move to an onchain um economy right onchain infrastructure that will power um money movements and asset movements from our experience what we see is there were let's say two waves of of mass adoption right so the first one is digital trading digital asset trading mostly driven by by the retail uh space and then uh what we see is that let's say

the traditional financial industry when they they tip the toes into the water of digital assets what they do is digital asset trading and then custody uh service for for their clients to offer this and what we also see is that there is a pretty let's say growing um space in in the market which is around payments I would say there is the remittance payments that has been driven Again by the retail side uh the second wave of mass adoption by institutional players now shows a larger uptake for let's say B2B payments that could also then include let's say Banks doing um crossb payments or Banks doing treasury management flows on chain and then I

think last but not least this is also what what Kristoff was referring to is in the end a let's say the global Capital markets that move into the tokenization space when we think about what we do see today is let's say tokenized assets that are mirrored on chain but I think the true opportunity will actually unfold when you have a tokenized assets let's say bonds um shares stocks hedge fund whatever asset you you want to tokenize fully issued on chain and then this will also enable the the cost savings so I think looking at this as a nent but emerging growing Market over the next five years is definitely something where I would um focus

on yeah thank you so much uh for for the answers um I think you you mentioned briefly um regulation and I think that's an important uh part of of innovation especially in the finance financial sector um Kristoff how has C navigated the regulatory uh landscape when adopting blockchain technology and we we have um the chance to have a an open-minded regulator and I cross fingers that it can stay that way in the future you never know um but I think finma did quite a finma and the

Parliament did quite a an impressive job over the last years um we didn't run into uh into those new territories as we know the Swiss they are more prent um but we walked there and uh we had very constructive uh discussion and exchange with our Regulators um we learned they learned and I hope it will continue that way um my um my concern today is probably education not at the regulator but probably at the compliance and risk officers in traditional

Banks um it seems that uh even today although although the number is decreasing but for some of them blockchain is like this is impossible no this is completely the opposite of of what you can do U and that reflex is is show showing to me that from an educational perspective we still have to convince those people that we are not talking about money laundering we are talking about technology which is fantastically useful not only for the transfer of assets or transfer of value as mentioned by Dennis but also for security reason we are faced with

external fraud people are getting more and more agile and intelligent by taking over the identity of our clients and of course if I know Denny since since 25 years I will recognize his Avatar is not speaking and reacting the same way but it's not always like this in banks no not in our banks but in other Banks you you replace a banker by another Banker he doesn't know you he doesn't know so also from a security perspective I am sure blockchain can create here a fantastic environment to to to be Freer and uh and to to deliver better value to clients there I see

really the need for an education The Regulators have been as for now open-minded and and the communication was really good yeah I agree I think I think we've been quite lucky with uh with the finma so far hopefully as you say it continues in that um that direction but um for for Dennis circle is a a global company how do you um uh how how does Circle Global presence shape your strategy for balancing innovation with compliance uh across like many many different uh regulatory uh environments it's a bit more complicated

than just one country yeah absolutely and I think the the challenge really comes from the fact that the blockchain technology is an open infrastructure right it's an open network that allows people to to participate at at their liking and from a circle perspective we've always taken a regulatory first approach from our goto Market strategy and when you think about this um that it's great right it signals trust to to the counterparties you actually engaging in in doing business and building Partnerships but it also creates a let's say a challenge because you need to adopt to different Regulatory regimes and I think if you

look at let's just say look at Europe right I think we're fortunate that we have um around Switzerland with its own impr the DLT regime since 2019 I believe we now have MAA regulation in place and I think that builds a nice block and and from my experience here in working with Swiss Partners what I see is everybody's trying to find a way to actually engage also in the EA area finding a way on how you can set your business up to be compliant to to reach out to this block but then think about the US right it doesn't have a a regulatory framework yet I think a lot of uh people in the industry are now looking to the states to at least pass a stable coin

regulation uh sometimes uh nearby and then I think you would have a big big push in the market having a US clear regul regulatory framework going forward but in general um I think this is still somewhat fragmented and um this will come around in in the next years trying to yeah set up regulatory compliant um businesses not only for Circle but I think for the entire industry across the different um hubs crypto hubs in the region right I think you see in APAC um regulation coming out of Singapore which is leading you see in the Middle East there are regulatory advancements that

we can witness so I think in Europe it's actually great to see that we are a first and Innovative here in this in this regard it's great yeah I think a fantastic uh perspective on on regulation which is a tough one but uh as you said hopefully we get more clarity from the US and um and continued Clarity here in Switzerland and the rest of the world um now I know you both have mentioned some really interested interesting use cases but is there any particular use case that is quite underrated or hasn't received enough attention yet that you think is is

something that will significantly grow in the in the coming years maybe first I I just had a bad connection sorry Exel could you could you repeat the question um yeah sorry is there uh um I know you've mentioned a lot of different Innovation and use cases in blockchain but is there any particular one that you feel is quite underrated at the moment and um doesn't have a lot of attention but that you really believe will will grow a lot in in the coming years yeah so I would go go back to what I what I said to your first question right I I truly believe that the the

tokenization of financial instruments will have a huge impact in driving efficiency managing counterparty risk and um think about the ability not only to trade but also really to to issue to record to transfer and to store digital financial instruments on um yeah on the blockchain I think this will be a game Cher U for the industry and will not only drive down cost but also will make it a more open market because um suddenly you can invest into tokenized assets probably you didn't have access to in an earlier um in the earlier days I think what we see also

here is that there's a more more specializ specialization happening in the industry right um You have a separation of Duties if you think about um the old days of of crypto trading you have a a centralized exchange that does the trading the settlement the custody part and now what we see is that there are specialized players who will then build trust and bring let's say uh credibility to the industry and that will also Drive adoption going forward and um if you then think about what just has happened I think yesterday um in Germany right there was the first DT TSS license awarded to company 21x right that really means that nowadays you can

issue for example the hedge fund that Christoph was talking about onchain polygon with a very I think we lost Dennis here I'm sure he'll come back in a couple of seconds yeah sorry we we lost you a bit I'm sorry for that where did you guys lose me um at 21x just a bit after that okay yeah let me just finish this thought quickly and then I hand over to Kristoff apologies for that um yeah I was just saying so 21x I think it's just an

example right I think there will be many more going forward but what it allows is actually to issue a a h hedge fund on chain um then distribute it via the primary Market enable secondary Market trading and in the end what you can do is you can bring down the settlement time also the counterparty risk instead of t+ 3 to a t+ zero or even Atomic settlement right you will streamline the entire value chain of let's say the traditional markets where you um have no Central Securities depository anymore and I think these will be trends that will grow over time it is still very early days but I believe the vision

that's behind this will be amazing to watch and um I'm looking forward to that we didn't talk with Dennis but uh to me the the biggest advantage that uh will have an impact on on my industry is as he said Atomic settlement um the fact that the bankers today uh they they finish their day in essence from an investment perspective at five or at 6 in the evening and uh from Friday evening till Monday morning it's it's weekend I mean that's if if you if you think a little bit about the power

that will be generated and the impact on on the financial industry about being able to do a 247 anytime I don't know if there are only positive things can be also very negatives but for the client it's just wonderful just fantastic no you you you you forget to do a transfer Saturday you're with your friend you say okay okay let's I I do that now um and it's very easy so I think Atomic settlement is is something that will shape a lot the industry of course there are as well many people gaining money being intermediaries will will slow down a little bit the

process but uh it's just a lost uh lost battle just the question is how long the battle will will last um but uh for the client it will not only be better will be cheaper so I'm very happy to be a client of a good blockchain financial institutions in 10 to 20 years and see that Evolution as well is thank you for your great answers um I want to talk about something I guess very important in this um development phase uh which is Partnerships um C just is a Traditional

Bank um and there needs to be some Partnerships as I know you you've done a partnership with Taurus um there how can traditional Finance Financial instit institions and blockchain companies collaborate more effectively to drive Innovation and adoption because I know on on the traditional side it's um it's hard for for traditional Banks to uh start innovating with Partners in the blockchain sector is there anything that both sides can do to Foster more Innovation on on on the in the sector again I I think uh number one

city is a small bank so we will never be a translator in infrastructure so um I would need to to invite Goldman Sachs or or or City Bank colleague or whatever but um many times great RDS are being shared with people at the front head of commercial entity um or commercial Department and as soon as the ID is on paper then it goes goes in the the Committees and as I said then you have a risk or compliance person and some of them are great fantastic and some of them still needs

to to to get a bit expertise and then they say no no too complicated we have this we have that um so either those people need more education or we need to start the project with them um and uh they have great power in the organization if we can if we can just outline the Fantastic change that it will generate for them as well with traceability that's super I mean again imagine compliance traditional compliance in in financial industry private banking client comes he says I have 3 million I did this out of my

company in any countries and I will send you the balance sheet you get a PDF okay looks great you look a little bit in Internet that's all right and then you open the account and you receive the money nothing to do with what you can achieve with blockchain so for those people it's a fantastic achievement that that could blockchain could bring from a traceability of funds so I think yes th those people would need to be taken care of very early in the process and not only outlining a fantastic Vision uh with the commercial Department that that is my take on

that and maybe Dennis I know Circle has had some experience quite a lot in that I would love to see your your point of view yeah so what we what we learn is that there are actually in the meantime if you look at for example large banks in Europe I think um all of them in the meantime have built up large departments that are actually investigating different usability let me call it distributed leer Technologies and how they can employ it within their Banks right so I think that's one thing um what that also or what Mika in the end did for us a regulation is that it opens up the ability to actually discuss with such large financial institutions right

I think um you know Kristoff's entity the small ones they even though you say you're not a trans Setter I do believe that you guys can move very fast and very agile you can offer probably Services much faster and in a compliant way than than these large entities but um what we see is that they usually start with a proof of concept right and then coming out of the Innovation department and in the end it's always a question on you know how can we manage the risk what's the business case behind it and then um if you successful in these phases then this will move into the implementation phase and then um you actually go through all the different committees that christofer was

mentioning uh and this is then where the fund starts but I I am very positive that we will see over the next uh let's say two to three years also big steps by traditional players in the space I think um stripe not traditionally in the in the banking but in the payment space just made the the huge acquisition of of bridge which is a stable coin orchestration layer so I believe that there will be a lot of innovation a lot of adoption coming and um yeah I'm looking positively in the future for for the for industry amazing yeah we we we all are well that um that's that was my last question some questions uh from the audience uh so I'm I'm going to pick uh

two consider to keep consideration on time um the first one is from Rodrigo Pinto um and the question is are cbdcs a threat to stable coins or could they coexist and complement each other in uh in the financial ecosystem so let me take this one ex if you don't mind um I believe that cbdcs are definitely something that will coexist with let's say privately issued stable coins um I do believe that there are let's say different considerations for cbdcs right you have a wholesale CBD which is more in the background settlement larger payments between Banks

I think Switzerland has been again at the at the Forefront here with project helvia and um then you have the retail cbdcs I think those are the ones that could compete with let's say stable coins but in the end I believe that um the way that cbdcs can and will be implemented is very much uh a decide deciding factor about adoption I think that you know privately issued stable coins like uh the ones that Circle issues they are very easy accessible and uh functional there's large liquidity right you can use them nowadays so the utility is there let's see how this is being adopted on the on the cbdc uh side

but in general I believe they will coexist yeah amazing thank you Kristoff do you have uh anything to add on this one just maybe one View we're always thinking in Switzerland us EU I think the the use case uh or that question um is probably a different answer if you're in in a more Emerging Market um but that's of course not the first use case so um I think the coexistence is is of course the the only driver because when it comes to exchangeability so easily

you basically don't care if you hold one currency another currency well in in the in the when everything is is tokenized it's that's so easy you can coexist without any issue with two or three that's not the problem amazing and um I'll just ask uh a last question from DS um it's about NAA and um do you think that it will actually stay as it is or will the EU make some step backs or or will there be an adoption to the situation coming up in the US and in the

rest of the world um I okay yeah let let me take a first uh uh step at this one um so it's it's it's definitely difficult to to speak for a regulator right um what I can tell you from from my view of of circle in working with Regulators not myself but I'm aware of that our policy team is is doing this so let me speak for myself here I I do believe that a regulation is and mik has been pretty close to to Mid right so I think a regulation is always something that um will undergo an

evolution um and we we do expect this also for Mika because there are certain topics that are not yet entirely um specked out right just one example is for example if you think about e-money tokens would e money then also require a compliance to for example a psd2 regime that you have in Europe so those are things that um everybody is working very constructively on and um let's see in which direction a possible us regulation will go right I'm not quite sure on on what they will do but I am almost certain that The Regulators are also talking among them themselves

um but yeah this is outside my my knowledge and my my expertise here the next month will be fantastic something will move competition is always great and although they talk to each other they are national interests or Regional interests um and we will be spectator probably of those interests crystallizing will be will be a nice time uh we did good steps proud of Switzerland although bit shaky now because as usual sometimes we we we have good ideas but they are then uh then used by others

to make a multi-billion companies um but yeah for sure uh very happy about for the blockchain I'm very happy about the evolution that is taking place we have another big actor in the room um which will shape the future that's going to be positive for everybody amazing well um I think we're we're done with the questions for today thank you uh very much Dennis and Kristoff I think uh your insights were really valuable and I hope uh the audience has gained um some uh information and some education from the session um it's clear that blockchain has the potential to uh do a lot in the financial industry and it's exciting to

see developments going in in the right direction um and I'm just going to take a little bit more of your time just to introduce lightning box we have h c one of our members and uh Circle one of our integrators lightning box is uh corporate Innovation sandbox designed to empower organizations in three sectors Finance luxury and the impact sector um to innovate and scale impactful blockchain Solutions we want to see some real use cases uh we have on one side integrators uh such as Circle for payments taus uh cardano Multiverse X

valer for legal and compliance services and hack for cyber security and uh on the other side we have our members such as C uh where we offer workshops Innovation days one-on-one consultations with our integrators funding opportunities for diverse range of projects that are done by our protocol Partners such as cardano and Multiverse X um there are a lot of speak engagement events participation and public relations so port and uh we're really proud to have Circle and and and C as part of of this um sandbox and uh on that uh it concludes today's session

I'd really like to thank again uh Kristoff and and Dennis really appreciate you uh joining us and Dennis special thanks to you for jumping in uh last minute um and yeah I mean if if you'd like to learn more about lightning Box about storm Partners you can reach out to me on on LinkedIn um and thanks again to the CVA for co-hosting the session uh I don't want to take too much more time on uh Wednesday uh night but uh yeah really thanks a lot I hope uh you found uh uh it insightful and I I believe it will be posted the session will be posted online tomorrow um on the

CVA account