Onchain Capital Formation & The Next Wave of Institutional Crypto Products | DAS London 2025 | Day 2
Summary
Onchain Capital Growth: The cryptocurrency market cap is projected to grow significantly, reaching approximately $4.6 trillion by 2025, driven by increased institutional interest and the adoption of onchain capital formation.
Institutional Adoption: Traditional financial institutions are increasingly investing in infrastructure to connect to crypto networks, focusing on borrowing, lending, and earning yield through mechanisms like staking.
Infrastructure and Utility: The development of decentralized exchanges (DEXs) and smart contracts has enhanced the stability and functionality of the crypto ecosystem, making it more appealing to institutional investors.
Onchain vs. Traditional Markets: Onchain capital formation offers advantages such as programmability, smart contracts, and instantaneous settlement, which could lead to significant operational efficiencies compared to traditional markets.
Privacy and Compliance: The integration of onchain identity and privacy-preserving technologies is crucial for meeting regulatory requirements and ensuring secure transactions in the crypto space.
Future Outlook: Experts predict that a significant portion of capital formation will occur onchain within the next five years, with estimates ranging from 50% to 100%, depending on technological advancements and market adoption.
Market Predictions: The onchain capital market could potentially reach $50 to $250 trillion in the next five years, reflecting the massive scale and potential growth of the crypto industry compared to traditional financial markets.
Transcript
Good morning. Uh, I'm Casey Wagner. I'm a reporter at Block Works and I am joined by Alex Prager who is the head of Kexus Labs at JP Morgan and Constantine Reiker who is the CEO and founder of Block Damon. Thank you guys for joining us. Um, this panel is called onchain capital formation and the next wave of institutional crypto products. It's a lot to cover. I wanted to get right into onchain capital. So when we were talking about this talk on our our prep call kind of defining what that is. So to put into context in 2025 if you take the whole cryptocurrency market cap including stable coins and rwas we're looking at about 4.6 trillion. In 2022 it was 2.5 trillion and in 2020 it was around 195 billion. So we've definitely seen a massive increase. Constine I want to start with you. What do you think is driving some of this movement into onchain? Well, um, yeah, there's I mean, maybe if I give a quick, um, quick perspective on how I look at it because, you know, I'm we're kind of a tech company and so we build the sort of core infrastructure for institutions and and really what that means is like the physical nodes that allow institutions to send transactions through crypto networks, pull data, um, and then earn, yield, and protect keys. And so the only reason I mention it is because what we've um so so so what we notice a lot is that we see a lot more traditional financial institutions buying infrastructure that allows them to connect to crypto networks, submit transactions, and specifically earn yield. And so the the biggest shift I've seen um since um really the beginning of of the crypto cycle um is where everything was focused about allowing people to hold and and and and sell Bitcoin basically like we enable people to hold cryptocurrencies. And in this iteration it's all about borrowing and lending against those cryptocurrencies. And the minute you borrow and lend these numbers become enormous, right? Because you're creating collateral people borrow against it. they move it in other other asset classes and um and that's I think been um the biggest immediate driver of change we've seen is all these dots and ETFs and and folks and and and treasure companies who are like you know kind of hey let's put I don't know a billion of ETH on the balance sheet um now you realize that hey if you hold a cryptocurrency like a normal currency you need to offer yield and there are very organic ways in in cryptocurrencies to do it that are actually automatically on chain And so staking is a good example. Um staking is when you protect a network basically like a mini bond offering uh on chain but it's it's on chain you earn yield automatically. And um we've we just see that become a much more important impetus for institutions. >> Alex, how do you think about onchain capital and the the growth we we've seen in the last few years? >> Yeah, definitely. So at Kexus we have been live since 2020 and working in the space since 2015. So many cycles uh have been seen but this time I think is unlike any other that we that has been in the past. And so when I think about onchain capital formation and what Constantine mentioned as well and from an infrastructure perspective, we really look at what is the right kind of suite if you will of components needed in order for us to be able to serve our clients in in whichever way they want. I think we've seen a huge huge shift um especially in the US in the last year. And I think for us where we really started to see a ton of explosion was around when asset managers in 2024 started launching products on public chain. And I think that was a really big catalyst for a lot of other activity as well as you know the product market fit of cash on chain and other um assets as well. >> What do you think some of the next catalysts will be for driving more institutional demand and interest? I think at the moment it's going to be real utility for institutional clients and the more utility that is present on chain um in a number of different ways that Constantine mentioned as well is when you're going to see participation rise and activity rise and so it's really about you know at this point in time it's no longer convincing institutions and and convincing players that there is something here and that there is value to be had. It's really when you can see those results and and quickly and that's what we're seeing in the market right now. >> When thinking about increasing institutional demand and interest, what fundamental advantages does onchain capital formation have over traditional markets? Constantine, did you want to take this one first? Yeah, I mean I think a good uh you know if you just look at last Friday for example which I don't know if you guys in crypto you might have had a some restless hours but um that you know if you're not aware there was an event basically Donald Trump and China disagreeing that triggered a 20 billion liquidation cycle very very quickly and um I thought what was really interesting this time around is it was the largest day of liquidations in the history of crypto. I think it was 10x what FDX was like. And um you know, we're sitting we're not sitting here today talking about whoa man all these guys are now in jail. All this stuff blew up. Um you know we had bank runs. It didn't work. That's actually not what happened. It's actually remarkable how stable um the crypto ecosystem stayed. And a lot of it is networks like Ave uh for example like the the DEX infrastructure that actually exists that still you know really holds up a lot of the crypto infrastructure because we're talking about institutions but most of the volume right now still is owned by cryptophin sort of you know well gunslingers I'm air quoting but um and so that these dex infrastructures just automatically handled these basic liquidations and uh you know pulled liquidity from the right sources and basically automated these liquidations on chain without a disruption of the system is actually truly remarkable, right? and and really a um an indicator that also the DEX infrastructure has evolved massively and uh which we think is you know again when however you define you know really what DeFi is and decentralized exchanges and stuff but this is really where the crypto story lives right it's the smart contracts the software facilitating transactions and finding liquidity and so um I think that's a fantastic example of um what happens when this works um you know that we're here today and prices just kind of went back up everything well not totally back to normal it's just a you know for lots of people who lost everything on Friday but um uh but the system is sort of just back up and running. >> How are you all moving your product stack to be more on chain? Yeah, I mean for us it's been, you know, we we we're well, we've been really challenged because our, you know, our partner base is is is really uh traditional financial institutions and you know, I think we you know JP Morgan is an investor for example and Alex is a board observer and so we have uh you know we have people and partnerships with the city banks, the bank of New Yorks, the Fidelities, the Goldman Sachs, the um all those different people and so I think what's most notable is one that they're getting actually very very serious to look at the the wallet components and key management components to hold digital assets and and so that's really the starting point. The primary is like where do you physically you can see they're preparing um to actually hold digital assets and then secondary um for us the biggest selling product now is really what we call our earn stack which is actually yield on stable tokens for example or yield on bitcoin and so um you know as mentioned stable tokens specifically since the genius act in the US became a really big thing and people want to use them to also earn yel right and so how do you physically actually go about offering this and now we offer connectors for that for institutions for example and so we're a lot more focused on that um my sort of internal prediction is that onchain fees will triple in the US alone next year you know and that's actually pretty conservative if you look at how small the current digital asset landscape is compared to you know the 130 trillion even just equity markets you know >> Alex thinking about some of those use cases what do you see as the fundamental advantages of onchain capital formation versus traditional capital markets. >> Yeah. And this is an area that I spend probably almost all my time in because if you think about the financial markets and and traditional infrastructure, they've been around a very very long time. And so part of my job on the lab side is to work with all of our businesses and our clients to figure out what are the right use cases and what are uh the right products to be developing on chain. And the really fun part about that is being able to take a look at what works today and what doesn't work because there are some things today that work just fine. We move trillions of dollars a day and and there are, you know, no issues. But if you think about starting at a place of onchain, that's when you can think about, okay, now we've got programmability, we have smart contracts, we have the ability to have instantaneous settlement versus, you know, t plus 1 2 3 um etc. So looking at where we can kind of rewrite if you will the financial ecosystem to take advantage of new technology that is somewhere that I think becomes very compelling when you think about operational efficiencies that can be gained and new functionalities that can be had and then on the flip side of that you know it's figuring out how you can actually achieve those efficiencies while still being cognizant of legacy infrastructure because legacy infrastructure really underpins everything that we do today. And if you think about gaining efficiencies and creating products on the front end, you still have a ton of work to do to settle on the back end. And so it's kind of a push and pull at the moment of how do you gain the most efficiencies possible with the newer technologies at hand while also making sure that you're making progress on the legacy infrastructure side to move that along um as well. But I think you know smart contract capabilities, programmability, and a lot of the onchain ecosystem are just these net new components of a new financial infrastructure that that are really exciting for us. >> Are there areas where legacy systems still have an edge? I think it depends really on the products and the asset classes, but I mean there's still if you think about the way that trades settle on the back end today and the amount of systems that that they go through the different counterparties that exist across the ecosystem, they're also all operating on their own infrastructure, right? Um they're not, you know, they don't have the benefit of decentralized technology. So, it's really um pervasive across, but I think it's also something that is known across. And so we talk a lot about onchain efficiencies, but there's also um a lot of work going on from a legacy infrastructure uh perspective across the market. >> Constine, do you agree? Are there areas where legacy has the the edge? >> Yeah, I mean I think we're really just a tech vendor and so what we notice the most is how complex and individual all these financial institutions run their IT stack, right? like and so I think the the it's just fascinating how um old some components of that stack are and then there's you know iteration and and very novel things but as a whole it's a really difficult system to navigate which is probably why I don't know JP Mong has I don't 100 thousand engineers or something like it's insane numbers of people and it's because it's it's it's an it's a stack that basically you know protects whatever hundreds of billions trillions of dollars of assets um has to provide um KYC, AML, all the money laundering, all the tax requirements and stuff. So, there's huge legal implications. Um and um the willingness to change and take risks here by pulling out little different pieces of software and replacing them and doing it in a way where um you can generate innovation is insanely complicated and complex. And so I'd say that um um the the big question for us is actually um is AI and quantum compute going to take crypto to a level where you can generate a a totally new financial stack or do you have to iterate with the existing one and and and you know it goes back to like you know does crypto replace the existing financial system or become part of it right and so I think we see that also play out within these institutions >> we've been talking about infrastructure a But when it comes to onboarding more institutional clients, where does the infrastructure currently stand? What gaps still exist? Constantine, did you want to start? >> Um, I mean, I think for us the the hardest part is again that these institutions are so massive also. So there's so different so many different parts in in financial institutions. There's the custodial part, there's the trading, the wealth management, the you know there's all these different bits and they all have different laws and applicable rules. I think maybe um to to take it to a political level like with the clarity act and in the US there's this really big debate if a company like Coinbase is actually allowed to offer all the services they do which actually in a traditional financial industry um you wouldn't be allowed right there's normally these different sort of Chinese walls between I don't know prime brokerage and custody and consumer banking and stuff and so I think what's interesting is is really um to kind of see if the existing crypto infrastructure with the rules that are coming is going to get broken up a little bit to reflect more what traditional financial markets look like. But yeah. >> Yeah. And I think from our side an area that we spend a lot of time on in thinking about how to make on boarding and and other you know KYC and AML and all these different policies uh fit for onchain is identity and onchain identity. And so uh you know thinking about what can be done there is is something that that we've been looking at for the last five plus years. How can verifiable credentials be used to make this more efficient? How can privacy preserving onchain identity help with the continued um activity on chain and not having to go back each time, right, for KYC and AML for the next piece um you know of the the next leg of the trade is is really important. And so there are incredible tools out there today across the ecosystem that are used for onchain activity. But what I think is a huge focus point is how can we get some of the existing requirements kind of fit for onchain if you will and privacy is another one that we think about a lot. So privacy preserving identity how do you make sure that you know investors today and and the privacy that they have and want to continue to have you know can remain there and so uh solving for some of those off-chain pieces and and figuring out how to get some of them onchain I think is a huge enabler. Constantine, I see you nodding. How how are you all thinking about privacy and compliance? >> Yeah, I mean, I think it's such a great point. You know, I think if you think about the whole identity play, um that's kind of really where it's at, right? Like because I'm not a financial guy and when I think about really what banks do is basically they match like value with identity, right? And then they make sure that that's correct. And so the the whole identity thing is just massive. And so really how you go about um um defining that and how you move that onchain in an encrypted way is going to be really interesting. Again I I don't want to you know like but but I do think it's important to understand that um again AI is going to be so important in the identity management because we need these like the the fun thing here is when uh you look about uh when you look at online identity is what AI is going to do it's going to really really suck because it's going to create um it's going to take identity of people it's going to make everything sortable there it's going to be really really hard to have privacy in a world that's fully AI enabled and so uh the actually that's where crypto and financial institutions will become uh much more lookalike because really the only way to protect yourself from um AI becoming um sort of totally centralized in terms of uh everything is um with cryptography, right? And so, you know, we kind of say that like AI is the big centralizer and crypto is the big decentralizer. And so from an identity perspective, that'll be really really interesting and a lot more important because if you look at the attention economy, um I'd say that probably didn't go to well. You know, we really monetize the worst instincts of people and the way identities are monetized in the attention economy is isn't fantastic. And so we want to make sure that for the financial economy, we do a better job here. >> I want to zoom out for a minute. Looking ahead, we'll say five years. What percentage of capital formation do you think happens onchain versus traditional rails? Constantine, did you want to start? >> I mean I mean I have to say uh 100%. Because I feel like five year I just feel like again quantum compute AI and crypto together I think is going to break traditional development timelines. Um, and so I do think in five years time, I mean, you know, with Agentic agents for payments and everything, like you'd be foolish not to be on a digital rail. >> Do you think we'll we'll need to see a big catalyst to get there or you think the tech is just going to keep improving and adoption will kind of follow? >> Yeah, I mean, you know, crypto was created on the premise that the current free market global capitalistic structure doesn't lead to good outcomes. And I think it's questionable. you know, let's see what the world looks like in five years. >> Alex, what's your take? >> I think five years in this environment is very different from five years in any other environment. If you ask me this question in 2020, my answer would be totally wrong today in 2025. But if I think about where we are today, I'm not as bullish as Constantine. I don't think it's going to be 100. But I I want to say uh over 50%. Um and the reason I say that is I think some areas and and asset classes will probably be fully there and and others will take more time. I think the uh in terms of catalyst right like the amount of onchain cash options that are you know coming into into view and into clarity are really big enablers of that as well. I think having, you know, crypto and and RWAS on chain is something that I think we've seen now for a while, but now the cash component to be able to actually have DVP and instantaneous settlement on chain to me is the huge catalyst to see more and more change over the coming years. >> Um, we we just have a minute left and I want to do another prediction question. So, as a reminder, current onchain capital is 4.6 trillion. Give me a number five years from now. Um I mean again I well I don't know 250 trillion is my bet because I mean if you like I think the total financial market it's like a quadrillion or something. I mean it's a massive number and I think that's an important point to make is like when we say financial institutions are coming to crypto. People don't understand the scale like the scale of of flow is just enormous. like I mean crypto is tiny um you know we're like at 3% or something um of of where the global markets are at and so I think um it's just yeah it's going to be exponential for sure >> we'll come back in five years and we're going to get these predictions on them in >> five years I'm not going to talk to any of you guys >> agents everywhere >> exactly >> I think uh if we're at 4 trillion today I want to say 50 to 100 trillion um maybe closer to 100 Okay, I'll see you all in 2030. That's right. We'll have a conversation. >> O eyes will have this conversation. >> My agent will talk to your agent. >> Definitely. Thank you guys so much. Thank you for joining us. Great discussion. Thank you.
Onchain Capital Formation & The Next Wave of Institutional Crypto Products | DAS London 2025 | Day 2
Summary
Transcript
Good morning. Uh, I'm Casey Wagner. I'm a reporter at Block Works and I am joined by Alex Prager who is the head of Kexus Labs at JP Morgan and Constantine Reiker who is the CEO and founder of Block Damon. Thank you guys for joining us. Um, this panel is called onchain capital formation and the next wave of institutional crypto products. It's a lot to cover. I wanted to get right into onchain capital. So when we were talking about this talk on our our prep call kind of defining what that is. So to put into context in 2025 if you take the whole cryptocurrency market cap including stable coins and rwas we're looking at about 4.6 trillion. In 2022 it was 2.5 trillion and in 2020 it was around 195 billion. So we've definitely seen a massive increase. Constine I want to start with you. What do you think is driving some of this movement into onchain? Well, um, yeah, there's I mean, maybe if I give a quick, um, quick perspective on how I look at it because, you know, I'm we're kind of a tech company and so we build the sort of core infrastructure for institutions and and really what that means is like the physical nodes that allow institutions to send transactions through crypto networks, pull data, um, and then earn, yield, and protect keys. And so the only reason I mention it is because what we've um so so so what we notice a lot is that we see a lot more traditional financial institutions buying infrastructure that allows them to connect to crypto networks, submit transactions, and specifically earn yield. And so the the biggest shift I've seen um since um really the beginning of of the crypto cycle um is where everything was focused about allowing people to hold and and and and sell Bitcoin basically like we enable people to hold cryptocurrencies. And in this iteration it's all about borrowing and lending against those cryptocurrencies. And the minute you borrow and lend these numbers become enormous, right? Because you're creating collateral people borrow against it. they move it in other other asset classes and um and that's I think been um the biggest immediate driver of change we've seen is all these dots and ETFs and and folks and and and treasure companies who are like you know kind of hey let's put I don't know a billion of ETH on the balance sheet um now you realize that hey if you hold a cryptocurrency like a normal currency you need to offer yield and there are very organic ways in in cryptocurrencies to do it that are actually automatically on chain And so staking is a good example. Um staking is when you protect a network basically like a mini bond offering uh on chain but it's it's on chain you earn yield automatically. And um we've we just see that become a much more important impetus for institutions. >> Alex, how do you think about onchain capital and the the growth we we've seen in the last few years? >> Yeah, definitely. So at Kexus we have been live since 2020 and working in the space since 2015. So many cycles uh have been seen but this time I think is unlike any other that we that has been in the past. And so when I think about onchain capital formation and what Constantine mentioned as well and from an infrastructure perspective, we really look at what is the right kind of suite if you will of components needed in order for us to be able to serve our clients in in whichever way they want. I think we've seen a huge huge shift um especially in the US in the last year. And I think for us where we really started to see a ton of explosion was around when asset managers in 2024 started launching products on public chain. And I think that was a really big catalyst for a lot of other activity as well as you know the product market fit of cash on chain and other um assets as well. >> What do you think some of the next catalysts will be for driving more institutional demand and interest? I think at the moment it's going to be real utility for institutional clients and the more utility that is present on chain um in a number of different ways that Constantine mentioned as well is when you're going to see participation rise and activity rise and so it's really about you know at this point in time it's no longer convincing institutions and and convincing players that there is something here and that there is value to be had. It's really when you can see those results and and quickly and that's what we're seeing in the market right now. >> When thinking about increasing institutional demand and interest, what fundamental advantages does onchain capital formation have over traditional markets? Constantine, did you want to take this one first? Yeah, I mean I think a good uh you know if you just look at last Friday for example which I don't know if you guys in crypto you might have had a some restless hours but um that you know if you're not aware there was an event basically Donald Trump and China disagreeing that triggered a 20 billion liquidation cycle very very quickly and um I thought what was really interesting this time around is it was the largest day of liquidations in the history of crypto. I think it was 10x what FDX was like. And um you know, we're sitting we're not sitting here today talking about whoa man all these guys are now in jail. All this stuff blew up. Um you know we had bank runs. It didn't work. That's actually not what happened. It's actually remarkable how stable um the crypto ecosystem stayed. And a lot of it is networks like Ave uh for example like the the DEX infrastructure that actually exists that still you know really holds up a lot of the crypto infrastructure because we're talking about institutions but most of the volume right now still is owned by cryptophin sort of you know well gunslingers I'm air quoting but um and so that these dex infrastructures just automatically handled these basic liquidations and uh you know pulled liquidity from the right sources and basically automated these liquidations on chain without a disruption of the system is actually truly remarkable, right? and and really a um an indicator that also the DEX infrastructure has evolved massively and uh which we think is you know again when however you define you know really what DeFi is and decentralized exchanges and stuff but this is really where the crypto story lives right it's the smart contracts the software facilitating transactions and finding liquidity and so um I think that's a fantastic example of um what happens when this works um you know that we're here today and prices just kind of went back up everything well not totally back to normal it's just a you know for lots of people who lost everything on Friday but um uh but the system is sort of just back up and running. >> How are you all moving your product stack to be more on chain? Yeah, I mean for us it's been, you know, we we we're well, we've been really challenged because our, you know, our partner base is is is really uh traditional financial institutions and you know, I think we you know JP Morgan is an investor for example and Alex is a board observer and so we have uh you know we have people and partnerships with the city banks, the bank of New Yorks, the Fidelities, the Goldman Sachs, the um all those different people and so I think what's most notable is one that they're getting actually very very serious to look at the the wallet components and key management components to hold digital assets and and so that's really the starting point. The primary is like where do you physically you can see they're preparing um to actually hold digital assets and then secondary um for us the biggest selling product now is really what we call our earn stack which is actually yield on stable tokens for example or yield on bitcoin and so um you know as mentioned stable tokens specifically since the genius act in the US became a really big thing and people want to use them to also earn yel right and so how do you physically actually go about offering this and now we offer connectors for that for institutions for example and so we're a lot more focused on that um my sort of internal prediction is that onchain fees will triple in the US alone next year you know and that's actually pretty conservative if you look at how small the current digital asset landscape is compared to you know the 130 trillion even just equity markets you know >> Alex thinking about some of those use cases what do you see as the fundamental advantages of onchain capital formation versus traditional capital markets. >> Yeah. And this is an area that I spend probably almost all my time in because if you think about the financial markets and and traditional infrastructure, they've been around a very very long time. And so part of my job on the lab side is to work with all of our businesses and our clients to figure out what are the right use cases and what are uh the right products to be developing on chain. And the really fun part about that is being able to take a look at what works today and what doesn't work because there are some things today that work just fine. We move trillions of dollars a day and and there are, you know, no issues. But if you think about starting at a place of onchain, that's when you can think about, okay, now we've got programmability, we have smart contracts, we have the ability to have instantaneous settlement versus, you know, t plus 1 2 3 um etc. So looking at where we can kind of rewrite if you will the financial ecosystem to take advantage of new technology that is somewhere that I think becomes very compelling when you think about operational efficiencies that can be gained and new functionalities that can be had and then on the flip side of that you know it's figuring out how you can actually achieve those efficiencies while still being cognizant of legacy infrastructure because legacy infrastructure really underpins everything that we do today. And if you think about gaining efficiencies and creating products on the front end, you still have a ton of work to do to settle on the back end. And so it's kind of a push and pull at the moment of how do you gain the most efficiencies possible with the newer technologies at hand while also making sure that you're making progress on the legacy infrastructure side to move that along um as well. But I think you know smart contract capabilities, programmability, and a lot of the onchain ecosystem are just these net new components of a new financial infrastructure that that are really exciting for us. >> Are there areas where legacy systems still have an edge? I think it depends really on the products and the asset classes, but I mean there's still if you think about the way that trades settle on the back end today and the amount of systems that that they go through the different counterparties that exist across the ecosystem, they're also all operating on their own infrastructure, right? Um they're not, you know, they don't have the benefit of decentralized technology. So, it's really um pervasive across, but I think it's also something that is known across. And so we talk a lot about onchain efficiencies, but there's also um a lot of work going on from a legacy infrastructure uh perspective across the market. >> Constine, do you agree? Are there areas where legacy has the the edge? >> Yeah, I mean I think we're really just a tech vendor and so what we notice the most is how complex and individual all these financial institutions run their IT stack, right? like and so I think the the it's just fascinating how um old some components of that stack are and then there's you know iteration and and very novel things but as a whole it's a really difficult system to navigate which is probably why I don't know JP Mong has I don't 100 thousand engineers or something like it's insane numbers of people and it's because it's it's it's an it's a stack that basically you know protects whatever hundreds of billions trillions of dollars of assets um has to provide um KYC, AML, all the money laundering, all the tax requirements and stuff. So, there's huge legal implications. Um and um the willingness to change and take risks here by pulling out little different pieces of software and replacing them and doing it in a way where um you can generate innovation is insanely complicated and complex. And so I'd say that um um the the big question for us is actually um is AI and quantum compute going to take crypto to a level where you can generate a a totally new financial stack or do you have to iterate with the existing one and and and you know it goes back to like you know does crypto replace the existing financial system or become part of it right and so I think we see that also play out within these institutions >> we've been talking about infrastructure a But when it comes to onboarding more institutional clients, where does the infrastructure currently stand? What gaps still exist? Constantine, did you want to start? >> Um, I mean, I think for us the the hardest part is again that these institutions are so massive also. So there's so different so many different parts in in financial institutions. There's the custodial part, there's the trading, the wealth management, the you know there's all these different bits and they all have different laws and applicable rules. I think maybe um to to take it to a political level like with the clarity act and in the US there's this really big debate if a company like Coinbase is actually allowed to offer all the services they do which actually in a traditional financial industry um you wouldn't be allowed right there's normally these different sort of Chinese walls between I don't know prime brokerage and custody and consumer banking and stuff and so I think what's interesting is is really um to kind of see if the existing crypto infrastructure with the rules that are coming is going to get broken up a little bit to reflect more what traditional financial markets look like. But yeah. >> Yeah. And I think from our side an area that we spend a lot of time on in thinking about how to make on boarding and and other you know KYC and AML and all these different policies uh fit for onchain is identity and onchain identity. And so uh you know thinking about what can be done there is is something that that we've been looking at for the last five plus years. How can verifiable credentials be used to make this more efficient? How can privacy preserving onchain identity help with the continued um activity on chain and not having to go back each time, right, for KYC and AML for the next piece um you know of the the next leg of the trade is is really important. And so there are incredible tools out there today across the ecosystem that are used for onchain activity. But what I think is a huge focus point is how can we get some of the existing requirements kind of fit for onchain if you will and privacy is another one that we think about a lot. So privacy preserving identity how do you make sure that you know investors today and and the privacy that they have and want to continue to have you know can remain there and so uh solving for some of those off-chain pieces and and figuring out how to get some of them onchain I think is a huge enabler. Constantine, I see you nodding. How how are you all thinking about privacy and compliance? >> Yeah, I mean, I think it's such a great point. You know, I think if you think about the whole identity play, um that's kind of really where it's at, right? Like because I'm not a financial guy and when I think about really what banks do is basically they match like value with identity, right? And then they make sure that that's correct. And so the the whole identity thing is just massive. And so really how you go about um um defining that and how you move that onchain in an encrypted way is going to be really interesting. Again I I don't want to you know like but but I do think it's important to understand that um again AI is going to be so important in the identity management because we need these like the the fun thing here is when uh you look about uh when you look at online identity is what AI is going to do it's going to really really suck because it's going to create um it's going to take identity of people it's going to make everything sortable there it's going to be really really hard to have privacy in a world that's fully AI enabled and so uh the actually that's where crypto and financial institutions will become uh much more lookalike because really the only way to protect yourself from um AI becoming um sort of totally centralized in terms of uh everything is um with cryptography, right? And so, you know, we kind of say that like AI is the big centralizer and crypto is the big decentralizer. And so from an identity perspective, that'll be really really interesting and a lot more important because if you look at the attention economy, um I'd say that probably didn't go to well. You know, we really monetize the worst instincts of people and the way identities are monetized in the attention economy is isn't fantastic. And so we want to make sure that for the financial economy, we do a better job here. >> I want to zoom out for a minute. Looking ahead, we'll say five years. What percentage of capital formation do you think happens onchain versus traditional rails? Constantine, did you want to start? >> I mean I mean I have to say uh 100%. Because I feel like five year I just feel like again quantum compute AI and crypto together I think is going to break traditional development timelines. Um, and so I do think in five years time, I mean, you know, with Agentic agents for payments and everything, like you'd be foolish not to be on a digital rail. >> Do you think we'll we'll need to see a big catalyst to get there or you think the tech is just going to keep improving and adoption will kind of follow? >> Yeah, I mean, you know, crypto was created on the premise that the current free market global capitalistic structure doesn't lead to good outcomes. And I think it's questionable. you know, let's see what the world looks like in five years. >> Alex, what's your take? >> I think five years in this environment is very different from five years in any other environment. If you ask me this question in 2020, my answer would be totally wrong today in 2025. But if I think about where we are today, I'm not as bullish as Constantine. I don't think it's going to be 100. But I I want to say uh over 50%. Um and the reason I say that is I think some areas and and asset classes will probably be fully there and and others will take more time. I think the uh in terms of catalyst right like the amount of onchain cash options that are you know coming into into view and into clarity are really big enablers of that as well. I think having, you know, crypto and and RWAS on chain is something that I think we've seen now for a while, but now the cash component to be able to actually have DVP and instantaneous settlement on chain to me is the huge catalyst to see more and more change over the coming years. >> Um, we we just have a minute left and I want to do another prediction question. So, as a reminder, current onchain capital is 4.6 trillion. Give me a number five years from now. Um I mean again I well I don't know 250 trillion is my bet because I mean if you like I think the total financial market it's like a quadrillion or something. I mean it's a massive number and I think that's an important point to make is like when we say financial institutions are coming to crypto. People don't understand the scale like the scale of of flow is just enormous. like I mean crypto is tiny um you know we're like at 3% or something um of of where the global markets are at and so I think um it's just yeah it's going to be exponential for sure >> we'll come back in five years and we're going to get these predictions on them in >> five years I'm not going to talk to any of you guys >> agents everywhere >> exactly >> I think uh if we're at 4 trillion today I want to say 50 to 100 trillion um maybe closer to 100 Okay, I'll see you all in 2030. That's right. We'll have a conversation. >> O eyes will have this conversation. >> My agent will talk to your agent. >> Definitely. Thank you guys so much. Thank you for joining us. Great discussion. Thank you.