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The Future of Crypto Trading Environments Speakers: Stephanie Ramezan, Chris Tyrer, Chris Tyrer, Mark Jennings, Bart Smith ...
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Good afternoon, ladies and gentlemen. Thank you so much for joining us on the institutional track today. I'm loving the headphones. It's very silent disco. So, if anyone wants to break out in some sort of interpretive dance, excited by any wonder of things my panelists might say, please go ahead. So, let's start with round of introductions. >> Sure. Thanks, Stephanie. So, my name is Chris Tara. I'm president of Bullish Exchange. Uh, Bullish is an institutionally focused exchange. Uh we're regulated by Baffin, HKSFC, uh GFSC, and we just got our uh New York uh state built license. Uh we do around $2.4 billion ADV. Uh we've been operational for the past four years. Nice to be here. Uh I'm Bart Smith. I'm the CEO of Avalanche uh Treasury Company, uh which was just announced a few weeks ago, actually in Singapore. Uh previously I was the CEO of Susquana Crypto. >> Mark Jennings. I'm head of Gemini's European business here covering our Mika entities, our FCA licensed entities uh and Miffford entities out of Malta as well. >> Hi everybody, Chris Lawn. I'm the CEO of Elwood Technologies. I want to thank Block Works for the uh conference this week and definitely excited to mix it up with these gentlemen on the uh panel today. So, who and what is Elwood Technologies? We're a product and engineer and technology firm. We are FCA authorized. We are institutional only. Our core platform is an endtoend modular OEM IBORE risk and portfolio management system. It's a comprehensive and sophisticated where we give our clients the ability to trade across the ecosystem with our algorithms and then we ingest that risk live for live positions, risk management, P&L that's attributed and at the end of each day or throughout the day we mark and can value their books and records. We think of ourselves as a connectivity engine and we also think of ourselves as digital heavy trad light and what I mean by that is on the risk management side of the system we are able to represent traditional finance assets as well as digital native assets super excited to be here >> thanks Chris and my name is Stephanie Raman I am co-founder and CEO of the crypto collective we are the world's first strategy growth and communications consultancy dedicated exclusively to institutional crypto So before I kick off, I would like to share a personal memory of mine. Almost three years ago to this day, I was sitting on a very similar panel surrounded by fellow exchanges and we were about 40 hours 48 hours into the FTX collapse. The atmosphere in the room was obviously one of disbelief, shock, despair, and fear. So, I really want to take a moment just to acknowledge everybody on this panel, the companies they represent, and all of you in this room. It's because of your grit, determination, resilience, and belief in what we do, of why we are here today, and what we've achieved as an industry. There are three publicly listed companies on this panel. This is not just an incremental snail change. This is a complete paradigm shift. So without further ado, let's lean into that and hear from our panelists. So the first thing I'd like to ask of you all, how do you each define what people call the next generation of trading? For years, the debate has been very much CFI versus DI, us versus them. But now we're seeing those worlds converge more than ever. What does that convergence mean for you? not just necessarily from an institutional trading perspective, but also from perhaps a product roadmap for your companies and how you're going to be moving forward. >> Chris, why don't you kick us off? >> Sure. Look, I think that, you know, that CFI defi debate still goes on. Um, look, our thesis has always been that, you know, if you look at the universe of exchanges, the preponderance of exchanges, the vast majority are f focused really kind of exclusively on retail. And there wasn't really a venue that uh aimed to serve institutions and was designed for institutional product requirements. And so we saw a gap in the market and we stepped in to fill that. And so what does institutional mean and how do you design a company in order to be attractive to institutions? You know we have KYC and AML everybody that's ever been on platform. We you know have deit we have three half billion dollars of net liquid assets. um you know we have never had uh a regulatory infraction or inquiry etc etc. Now the the thesis is is that you put that in place and you you know again we've gone out to seek the hardest licenses from the toughest regulators in the world. Like whilst most of our peers went to Malta, we went to Germany. Why do you go to Germany? It's I mean it's almost like self harm but you you kind of you do it because it's hard. You do it as a signal to the market that you take governance, risk, transparency like very very seriously. And that is you know that the Germans are an incredibly tough regulator in that regard. now you know and I think that that thesis will play out and look you know retail is already very well served the institutional space less well served and I think that the institutional like volume and growth is going to be uh vast over the the the next kind of 3 to 5 years so the thesis has always been that you know as they come into the market they would need a venue um that uh you know that suits their requirements from a compliance and risk and so on and so forth. Now at the same time and I I think that is true for for kind of 3 to 5 years. I think if you look beyond that I mean you know you look at some of the volumes that you know these DeFi derivative exchanges are posting up. I mean you know Asta is printing kind of like 10 billion a day. Hyperl's printing 10 billion a day. Light is printing 5 billion a day. These are enormous numbers very very material. And so I do think there's a question as to you know in three to five years people I don't think institutions are and banks and you know other investment firms are ready to engage with DeFi directly but in you know sort of five to 10 years what does that look like does the thesis of having you know a heavily regulated uh business that people can interact with over uh you know the the the coming years I think it definitely makes sense for a period of time what does it look like further out and that's something that we ask ourselves every day and look One other one other anecdote, you know, we so we have like 24,000 Bitcoin where where up until we IPOed, we were typically shorter dollars. We wanted to keep, you know, we're believers in crypto and we wanted to hold our treasury assets in in crypto. What that meant is that, you know, we were usually looking for dollar borrows. We went to every every single bank and said, "Hey, we're willing to put up Bitcoin as collateral. Like, what can you give us from an LTV perspective and what kind of yield can you give us?" you know, you could get to kind of like 4 to 500 over sofa direct with Bitcoin. If you say, okay, well, that's ludicrously expensive. Why don't we try and securitize that? We'll put it into IBIT and then it just goes into your SEC lending desk and then that's a sort of flow that everybody can get on board with. What does that look like? And you could get it down to two to 300 over sofa. Where did we go for the majority of our lending needs? We went to our because it was cheaper and it was a better experience. And so even as a even as a a corporate um you know we still found the benefits of DeFi just through you know because it's easier and because it's more liquid and because it's more aggressive in terms of rates. So I definitely think that we're going to see you know I think you know growth in CFI is going to be massive as we on board institutions and I do think that wave is coming um and we can see it in our own our own product our own client pipeline. I'm sure these guys will will will say the same thing. I do think, you know, as as DeFi gets, you know, more um sophisticated and we find ways and we we we have regulatory um you know, direction in place such that institutions might be able to engage with DeFi. I do think there's a question as to what you know things look like in 5 to 10 years time. So, sorry that was a fairly long-winded answer, but >> it was all it was all accurate. Um yeah, I I think I think last Friday is an example that institutions, you know, are not going to utilize DeFi until they grow and and and events like last Friday are supposed to happen, right? This is a it's like this is an evolving asset class. You can't do this in a sandbox. You can only do it in a live environment where people need to take risk. And so I think that that it'll continue to develop. Um, so I think but institutions are going to come in through IBIT, you know, listed, you know, they're going to use CME, they're going to buy IBIT on the New York Stock Exchange. They're not going to go onto Hyperlquid, right? And and and who doesn't do KYC and AML. So I think you're you're going to see these two things continue to coexist where I think retail will will go into kind of DeFi. DeFi will continue to get better. you just saw so much latency in in blocks in all the different chains like not you know Avalanche I think versus its peers last Friday did quite well if you look at some of the other chains is just impossible to move on some of these exchanges and so like if you're in a downturn and you have a bunch of money on hyperlid and you cannot transact for 30 or 40 minutes like that is just an untenable situation for an institution so it it it it will continue to get better and evolve it just goes to show you how early we still are. I think people sometimes, you know, when you get to the tail end of uh one of these bull runs, they feel like they kind of missed it. And then you have kind of a reset last week, which is supposed to happen in very volatile asset classes. And it just goes to show you like it's still super early. There's still like a lot of money to be made by investing in these platforms and they're going to continue to evolve. So I think like I think that the D C5 DeFi is really like a retail institutional argument and then underlying that there is kind of the crypto native market makers and then like the incumbent traditional market the the Susuanas and the and the Citadels and the Jane Streets of the world and they're kind of like fighting for that institutional marketplace and then the crypto native kind of market makers out there the GSRs and the winter mutes uh that are they're you know that are underlying that market and that's going to be interesting. thing to watch as those two things kind of slowly converge over the coming years. But yeah, I think that the CFI DeFi argument is just an institutional retail argument and like not which one is better. >> That's fair. >> I I don't think you can disagree. I think there's elements of risk appetite like centralized exchange like Gemini exist to try and give institutional players access through a regulated environment and that that aligns with the risk appetite for a number of those institutions that need to partner with an exchange like ourselves and want to trade across the OTC desk across the exchange itself. I think when you get in and you look at the DeFi, the chase for yield, the chase for alpha, it's available there in DeFi, but there's a technical aspect that most of the traditional players don't have and they haven't seen and grown up in this space where you get these native players who know how to access DeFi, know how to risk manage it, understand the mechanisms that support that. So I think each of our businesses play a slightly different role in supporting that environment, but I think that gives us as Gemini, we're that on-ramp to give people access to that point. But we're certainly not at the point where we're moving into DeFi to compete in that space because again, I think it targets a different generation of investors, a different platform that's required. So I see it as an innovative move and as we start to look for new solutions to be able to take advantage of the asset class, people will start to move split allocations across CFI defi exchanges. But it drives innovation. It drives us to come up with more innovative products and we launch per we launch tokenized equities that can then move into a D5 space as well. So for me it's it's all about innovating. It's we've done the regulatory piece. We understand what that benchmark looks like. How do we then take it to the next level to drive return for the user? Uh whether it's an institutional base or or a retail base. >> I'm not even sure where to begin. There's so much here. Uh uh really um look, I I think the future is one where we have um the sophistication of tradi coupled with the transparency of blockchain. 100% that's common in my view. Um as a software provider we have a wide array of clients. We have institutional clients, we have OTC desks, we have lenders and so we see uh quite a we have different requests right from our client base. What I what I see coming and what we continuously hear from the institutions, God I wish I could trade DeFi. G this is awesome. I wish I could trade it. And DeFi is really it had in my views moved down the risk curve with the change in administration in the United States in my without question. And because of that as a software company we have to prepare and we have to build and we're making a bet on DeFi and uh blockchain and we just recently announced and and to be clear years ago it was simple farming and arbitrage. Today it's structured products on chain. You have yield strategies on chain. You have credit mechanisms on chain. And so uh institutions, funds, asset managers want to access that. At least portfolio managers do. The legal and compliance teams have a problem with it. And we definitely need regulatory clarity for that. And I think it's coming. I really do. So we're preparing for that. And one of the things that we did, we we actually have a partnership. We announced a partnership with or a collaboration with Maple Finance leading onchain lender uh to help with part of their stack and their tooling in anticipation of this. I do think it's coming. I understand that you know this is institutional uh and we are um we're institutional FCA regulated and we need guidance without question. But why are we doing this if we're not going to be on chain, right? Why are we doing it otherwise? Right? I do see a world where we have onchain settlement and off-chain liquidity without question. Uh but we ultimately we're anticipating uh DeFi to converge with CFI and Trafi. >> Thanks Chris. Yeah, absolutely agree. I think it's it's the year of disruption um in terms of the underlying blockchain disrupting traditional markets that have for years have been very broken whether it's to do with access whether it's liquidity and that spans across all asset classes. So I think it's going to be very interesting in terms of what we see going forward uh of businesses that are using the underlying blockchain but the end user whether that's an institution or a retail investor actually won't even know that there is a blockchain element and that's to me it's uh extremely exciting. So let's talk about friction and bottlenecks something we're all very familiar with with regulatory clarity seemingly uh closer on the horizon. People probably argue how close we are on this panel one way or another. It depends on your jurisdiction. Are we now going back to focus on bottlenecks, friction around banking rails, around settlement frameworks, etc. From your perspective, what do you think is something that is still maybe not quite moved on as far as it should do? Uh maybe we'll go the other way this time. We'll start with with other Chris. >> Okay. I need to uh a little parch. Just bear with me a second. Pardon? Um so yeah, definitely frictions in the space without question. I've been in the space since 2017 and we're still in some ways talking about the same issues then as we are today. Right? Access and infrastructure has largely been solved in my view and that was a big problem in 2017. Uh we still have we I in my view we need regulatory harmony. uh we need a clear uh framework around settlement and credit right credit is the problem in the space and clearing and uh the way I see it is uh in the US it's moved down the risk curve where the administration I want clarity from the clarity act I really do I want to understand where the US stands on several issues one tokenization and real world assets on chain what is that going to look like what's that framework but ultim Ultimately, what is and I mean I cannot believe we're still talking about this in 2025. We were talking about it when I entered it. What is a security and what is not a security in the United States once and for all? Can you define it clearly, please? I know that that it's coming. Uh I know that Atkins said something to the effect that everything is, you know, a digital asset or most are digital assets. Uh also as a US person as a US person I cannot trade on an international exchange. I can't trade on Darabit, OKX and Binance. I find that challenging to me. Can we finally once and for all solve that? I believe that that harmony that regulatory harmony is needed in order for adoption and scale to come. And ultimately, look, you know, the reason why Tradfi took off in my opinion and I'm, you could tell by my age that I was around during this time when the PB network worked, the banks worked together and they were able to solve credit and settlement with each other. They settled on behalf of their with each other on behalf of their clients. We need that framework in order for there to be mass scale and adoption. And I think that's coming. I mean, look at what's happening with chain link, UBS, and Swift for the payment rails. It's a great uh I hear they're doing great work. And then also, I don't know if you show saw uh I use wa I watch a guru uh they announced and I saw this online that they announced um the U uh sorry, international banks are going to work together as a consortium for stable coin rails, 10 banks globally. That's what we need. And I think that we'll have mass adoption and scale and the frictions will go away if that occurs. So thank you. >> Well, I think the friction still remains the traditional banks >> definitely >> access to fiat fiat rails that can match the 247 nature of what we do in crypto is still the challenge. We have people who expect to be able to fund account, trade on that account, store their assets, and they want that to happen at any point in time during a week. And I think we still face as a business that supports a lot of retail customers, we still find that as the biggest issue that we're trying to take on. Some banks don't like crypto. We know this as a a fact as well. >> Yeah. I mean, that's we're >> banks don't like. >> We're coming to eat your lunch. They're not going to like it. >> Just to say the quiet part out loud. >> Yeah. But again, they're not giving their customers. We're talking about doing what's best for the customer. They want to get access to a platform that allows them to trade 24/7. And if a regulated financial institution like that is not doing what their customers want, we would be treated very differently in the crypto community versus what that would look like in the the traditional space. So I think when we solve those issues, payment rails, the swift network identifies blockchainbased solutions would be better for their own payment networks. We can see those improvements happen. that then relies on exchanges like ourselves to support that 247 mechanic and that is what we're trying to get to. Whether you want to buy tokenized equities, you want to open a per position, you want to invest in the exchange itself, we're only bound by the constraints of our users and their ability to get onto our platform. So that still needs some work. I think when we get legislation like Mika, like the Clarity Act, and then soon to be more FCA legislation, that harmony brings banks to the table and they understand that they can integrate. >> Yeah. I don't think they're going to come that I I'll take a bearish perspective on this. Like the banks aren't dragging their feet by accident. No. So I think I think there's a lot of there's a lot of uh enthusiasm around regulatory clarity in the United States that still requires that Goldman Sachs and Bank of America and all these other firms come to the table and it's not in their economic interest. And so in the meantime, you have exchanges like the the the native exchanges and then you have traditional exchanges and it's a little bit of like the athletes want to be rock stars and rockstars want to be athletes, you know, like the the the crypto the the the crypto natives want to create more traditional, you know, products. the CME wants to go 247. They want to list PERPS. And so then and then the the the consumers are going to choose, you know, what which one they want to go to. But right now, like let's look back to Friday, not to to to go back to that, but like that was $19 billion in traditional finance. That is nothing. That is a pimple, >> right? And so the idea that that you have market makers who are just not capitalized enough in the marketplace to absorb $19 billion of liquidations like you need to have a prime brokerage solution where you can get cross asset collateralization. Until that happens you're going to have these kind of like bubble up and bubble down but you know the reality is if I'm on derabit and I'm short you know the market I sold a bunch of calls or you know in this case I'm long the market. So I'm I'm I'm long the market and the market goes to sell off. I can only hedge on Derabit, right? Unless I want if I want to go to buy bit or if I want to go to Binance and it the the liquidity there is better or at a better price, I have to collateralize both of those independent of one another. Right? So the fact that I'm long on one and I'm short on the other, I can't pair those off. And that given the fact that most of these, you know, these market makers are not Goldman Sachs, they're not Morgan Stanley, their balance sheets are like in the hundreds of millions rather than in the trillions. Like that's where you see like that last part has to get fixed before any of this can really hit the next level. I think regulation is a is a good step forward, but like until the banks come to the table and they feel like it's in their benefit, which I feel like is very far away, I think we're going to continue to slug along this trip. I know that's an unpopular thing to say at a conference like this, but like that's just the reality of it. Like we need we need more capital and more professional uh you know services like the ones that you guys provide where you can cross collateral and you can be more efficient with your capital and trading. Otherwise, you know, we're just going to continue to have these episodes. >> Yeah. Well, I I I think that's ex I think that's exactly right. I think that the, you know, and you're right, $20 billion is just like it's it's it's it's nothing in the grand scheme of things. I think that um >> it's one the size of IBIT. >> Yeah. Yeah. Yeah. Yeah. Um so look, I look I would agree. Look, I think banking is still an issue, you know, just in terms of using bank accounts even as a it's still way more difficult than it should be. I think that is getting easier. I think like the regulator regulatory clarity will be helpful. Um, you know, it's funny. We did actually I about two, three months ago, we went and did like a full tour of all the US banks and brokerages just to see where they are. Um, some of them are nowhere. A lot of them though, you know, in fairness to them, somebody put somebody put it I thought really well and they said, "Look, up until like really 6 months ago, if I had a meeting about crypto, I had to write a memo and send it to send it to the Fed." And he's like, "So now all of a sudden I got my CEO asking what's our crypto strategy." Well, guess what? We haven't had any meetings on this in four years. So they all they all name a head of crypto and that person is like the most useless person on the >> Yeah. And they just run around doing internal education. >> Yeah. So they go to conferences like this. So I apologize to any of like the big bank head of cryptos in the room. Uh but yeah like it's like it's like what do you do? And they're like well I'm just kind of gathering information right now. >> Right. Yeah. Um so I think I think that that will be helpful. I think there is in certain areas I think there's there's appetite to do things. When you say that it's not in their interest to go into crypto. What do you mean by that? They get paid billions of dollars a year to move trillions of dollar fiat around the world and this asset class was designed specifically to interrupt that. >> Yeah. I think well yeah so I think I think >> that's their core business right and so >> and and and which I guess like belies where they're going in. I mean, you look at certain people, how's how's, you know, Morgan Stanley getting in through Erade because they need their their brokerage offering to be competitive with what's out there with Robin Hood and so >> Yeah. But and I IBIT's been around for 20 months and the average wealth management client at Morgan Stanley cannot buy IBIT recommended by their adviser. So, it's like it's kind of absurd. It's a hundred billion dollars. Yeah. biggest revenue producing ETF at EyesShares. Yeah. And I can buy it in my brokerage account at Fidelity or Schwab, but if I'm a corner office financial adviser at at Meil Lynch or Morgan Stanley, I have to sign a waiver that says the person who bought this from me was unsolicited and I can't get paid on it. >> Yeah. I mean, that's that's wild. >> Yeah, it's wild. So, like >> I have I have a question. I have a mind just to just chime in here. Um, two two points. one, don't you think the banks uh this is really for everybody, but don't you think the uh the banks it's in their interest to be more efficient in the collateral movement? So, if we're moving to 247 365, which is definitely a push to do that. So, why not if and weekends are digital? If we're going to 247 5 days a week and eventually to seven days a week, you need to have efficient movement of cloud. Wouldn't they be isn't that in their interest to be part participate in that movement and to be able >> Yeah. for them to absorb the technology. So, you know, Avalanche is kind of like lead this is like one of the areas where Avalanche is kind of like leading the the pack whereas like they're working with uh with um JP Morgan and Apollo and KKR to help rebalancing specifically on Avalanche Rails. So, that's very different like that's enterprise software. I mean effectively avalanche is just enterprise software that these banks can take in and they can implement it but they're implementing it in a you know what's we call the C chain where they it's it's basically their own chain where they can customize it they can permission it it's not totally transparent right the idea of like fully transparent blockchains being accepted by you know institutions particularly financial institutions is it's it's an impossibility it's like a non-starting point. So either they can build an like an a level a layer 2 application on top of Ethereum or they can use the Cchain at uh Avalanche or Canton or something like that. But that's that's one solid point of implementing it. The other side is like they don't have a way to monetize this by selling it to their customers and so they're not like they're two totally separate arguments like >> well it's it depends right like from a markets business like sure you know you can all of a sudden if like like I'm sure the guys at Goldman Sachs would love to start market making physical crypto like I'm sure that they would love it depends I agree with you though like are they going to you know is JP Morgan Payments going to start like engaging in in stable coins no because they're the you know they're the they're the they're the toll keepers like they're the they're sat in a toll booth and they're just collecting >> um you know collecting rent. >> So I think I think I think it dep I know what you're saying like you know so so >> you know changing the rails on which financial assets move will introduce operational efficiency like engaging with you know certainly digitally native crypto assets as a new asset class that's that's there's a there's a lot of market opportunity there. I'm just saying that if if prime brokers wanted to allow access to Bullish and Gemini and and the offshore exchanges and you could you could core collateralize all of your assets, you could have fiat assets, you could have crypto assets in one place where they had a reasonable markup and provided you leverage in centralized area. Like they could do that tomorrow. They've just chosen not to. >> Well, the regulation hasn't been there in fairness. Like I think that just in terms of the capital requirements for banks to hold hold crypto assets has been just ridiculously punitive to the point where they just can't economically. Yes. >> And and that hopefully is is about to change. >> So tomorrow is an exaggeration but they but do you feel like you are seeing progress on that front? Cuz I >> definitely I Yeah. I mean from the conversations we're having Yes, definitely. >> 100%. >> Definitely. I mean not not from every bank to be clear. Yeah. >> Like I think it's the small it's the smaller banks that want to go first because they have >> the most to gain. >> Yeah. Exactly right. >> So So if that's not going to happen, Bart and everybody, what why doesn't the digital natives, the bullishes, the Geminis, the OKXs, and the Binance have their own settlement between each other as far as credit to each other? Why don't they have that framework? Well, if if if the the early stages of like the Clarity Act like proved anything is that in crypto oftentimes we're our own enemy, right? Like you need to get all these people to agree on things, right? like and and you know when everyone was kind of jockeying to be in like the strategic Bitcoin reserve like you saw you saw kind of like you know claws out a little bit and so I think you would need to get all of these exchanges to agree that it's mutually beneficial and then you know if you're Coinbase like is it mutually beneficial to you to have Bullish and Gemini benefit from the same kind of structures for you probably not >> I mean what we should what we should have like which is a bit of you know I think a critical piece of missing market infrastructure is is proper clearing >> uh Now, you know, the way that crypto derivatives have have developed, people want to be able to collateralize open derivative positions using crypto. Um, but, you know, if we're doing like big, you know, capital C clearing, you know, crypto is an eligible collateral. So, you can't marry those two things together. Um, I think if I think if we had that, that would be a meaningful step forward in um, you know, what you're what you're talking about. It could be solved at the PB level or it could be solved at the it could be solved at the industry level. It should be settled at the PB level. But yes, so they but that's that's out of to to your point that's out of kind of crypto's control. Like crypto does have the ability, but I don't know you you've I Gemini's been working on this for >> I mean we were years >> we had done Gemini clearing 10 years ago and it was something that we saw as a a future state forward. But again, it's the interoperability of crypto firms, the different chains you need to support, the tokens you want to support that becomes a difficult technical solution to try and build that. So that can happen. Could we build it ourselves? Yeah, I think it it takes time to Chris's point, you know, ma all of the legislation in the US that's less than a year old and there's a long time for that to bed down, people to build and allocate and we're still in that competitive space right now. like you say it's not as it's a what 1% of the global markets that actually trade on a daily basis. We're not there in terms of size. So from our opportunity, yeah, we've got to build it ourselves. I think the Geminis, they're the the group that got to lead from the front and we're the ones that will have to point that direction. But then we we're a regulated exchange. There's other offshore exchanges that have large volume as well. Are we going to integrate with them without them coming to the table to be regulated venues as well? like where do we draw that bar? >> Even Gemini, right? You have you have three different exchanges I believe, right? Because you have the different you know different international kind of venues. >> We yeah we run the the main crypto exchange itself. We run our per venue as well and all of those sit under the regulated environments we've got. So even that in itself is under different regulations as a whole. So it it's not easy to try and combine all of them. We're not the size the large banks are as well. So we're we're playing that game of catchup. But we can see where the future's going to be. So we know what we're building towards. I guess it's not up to us to catch them. We got to wait until we got to push that forward and drive it ahead. >> We have to start somewhere. I mean, look, if the banks are if you're correct, which I hope you're not, but if you are correct that the banks are have zero interest in having a clearing and settlement and credit mechanism for this space to scale, then we have to do it ourselves. the Geminis and the Bullishes and the Binances and the Derbits of the world have to come together and form their own consortium to give credit and settlement. >> Yeah, I think they're going to get I mean I'm not saying they're never going to get there. They're just not going to do it until it's in their best interests obviously, right? And so you saw that headline, I guess it was last week where like there was a consortium of like all the big banks and they're going to create their own stable coin. That's it. like this is basically that is just like a purview into the the the front window of everything that's happening behind the curtain of what they're trying to do before they step up and offer these services to institutions. They're like they they you know they they got to make sure they protect their own interests which is I'm not saying it's like it's bad. It's just you know it's that's >> don't you think that's the first step? If stable coin can be used as the move the the collateral to move and to settle, isn't that really the beginning of the PB network for digital assets? >> It it it could be if and you could build you could build a non tradi kind of structure around that, you know, now that that you know, with the the with the and we don't I think we're also taking to you know, taking for granted that the the second part of this legislation is going to get through, right? The government's shut down right now. Yeah. you know, like I think people are just like saying that that's done and like I don't know that that's done. >> So I think they like they spent a lot of bullets on the stable coin bill which was important. >> Um you know I don't know like you you get through this year and you get into midterms next year and you know the the Democrats going to roll in midterms a little bit like I don't know that that act gets passed on the floor. So um yeah I I think that we've made tremendous progress over the last 24 months for certain. I think people are just like taking for granted a little bit of like well the banks will come in and clarity will come in and there'll be harmony between kind of Mika and like all the other money centers right like you know New York Hong Kong you know Singapore Tokyo and like I don't know like I I don't necessar >> I think that's an excellent point but I think there's a whole other panel that is probably happening later day down the track so uh I have another question we've got just over five minutes left and I was going to single you out uh a little with this one. I think we can't have a panel like this and not talk about digital asset treasuries in general, the good, the bad, and the ugly. And so there are critics out there talking about DATs as the the spa of 25 2022 it didn't always end well, huge capital inflows and then unsustainable business models when the music stopped and a lot of people lost their pants. So what do you have to say to that and why is this different or not? Well, so I, you know, for I ran one of the largest ETF groups in the world for a long time and and and ETFs, I don't think people will remember this, but in 2008, ETFs were labeled as being bad, that they were like a systematic risk to the entire structure. And then there was this silly like thing that was going on where like small and midcap companies don't have the ability to grow and it's like ETFs were unpatriotic, this like nonsense. Um, and so I think that listen, a a a digital asset treasury is just a wrapper. The same way an ETF is just a wrapper, right? It is not good or bad. It all depends like you can put some stuff in an ETF that makes it ultimately not very efficient. You know, it's not appropriate for the structure. So I my personal view uh on digital asset treasuries and why I actually chose this position is because it it it's kind of like an integral fund. They create integral funds for things that are basically not as liquid. And we talked about $19 billion taking the entire industry down, you know, 20% 30% in a matter of hours. Having a permanent capital vehicle where you're not subject to daily creation and redemption requirements allows you to build a portfolio that is long-term, right? And so if you just want to own an underlying asset and stake it, right, there's going to be vehicles for you to do that. I think the next generation of these digital treasuries are people that do more than that, right? There's a lot of activity that happens within avalanche that that is value that will not acrue down to the actual token itself. The same way most of the value creation in Ethereum has happened in layer 2s. So having a vehicle where we can access the the holistic opportunity set and allow that to uh for people to invest in that I think is a super unique opportunity. If someone wants to buy the Bitwise, you know, uh, avalanche staked ETF, like that's a great product and the those guys are great. We're going to offer something that's different. There are a lot of people who in this space who, you know, we're just there was a little bit of a gold rush and people are doing that. And so like that's just in any enthusiastic market, you're going to deal with that. Um, I I believe that what the next generation of this is, you're going to see some consolidation. you you you have seven, eight, nine, Salana, Ethereum, you know, of these digital treasuries. They're going to have to compete. Uh some will fail and some will be acquired. And like that's what capital markets is all about. So, uh I feel fantastic about the position that we're in and what we're going to be able to do. Um and I think, yeah, I think the markets are going to, you know, or they're going to choose with their dollars. Um and you're going to see a lot of efficiencies over the next couple of, you know, quarters and some of these things are going to merge. is would you would you say sorry to turn panelist turn moderator but would you would you see the main would you see the main advantage of a a digital asset treasury is it like solving market access or is it because that's what >> that's what strategy was ultimately it was a market access >> strategy listen strategy is a pioneer right because they they created they created the ability for capital structure beyond >> you know what was out there every other industry was allowed to grow this way except ours right software internet, uh, telecommunications, you had an idea, you brought it to a public company, you issued debt, you issue equity, you converted bonds, you preferred, you met investors where they wanted to invest, you took that money and you invested it into an enterprise. And if that enterprise did well, shareholders and bond holders did well. Like we were not afforded that, right? This whole idea of like foundations and labs is a Gary Gensler construct that is no longer relevant. And so all we're doing now is allowing ourselves to access capital the way that every other industry was allowed to and we invest that. Now if I had to provide daily liquidity to investors, the universe of things that I can invest in in a nient asset class is fairly limited. And so I believe that this is just a natural structure that has existed for everybody else that we just weren't afforded. And now we're afforded it. So like a lot of people came bumr rushing in and there were some people in there who probably weren't in it for the long game and that's just like unfortunately what happens that happens in every other industry also and so this is like a very much a like don't throw the baby out of the bathwater type of scenario where like you know over the coming you know months and years I think that you will see that these vehicles end up being a tremendous advantage for investors. Um, the last thing I would say is like there are very few opportunities that investors have in the current capital market structure to invest in early stage growth, right? Like Stripe is like probably the most successful financial services company that's existed. It's worth a hundred billion dollars. It's still private. The only people who got to benefit from that were, you know, institutional investors. For retail investors and and smaller institutions to be able to invest in crypto in a regulated entity that has, you know, that's audited. it's regulated by the SEC at this early stage of growth is very unique. And so I think that that's what you're seeing when Bullish goes public and Gemini goes public. There's tremendous amount of enthusiasm for that stock. We've, you know, because there hasn't been access to it. So like that's what we're solving for. We're solving for people to >> But you're so But you're managing that alpha, correct? In-house. You're managing the treasury of that. Yeah. >> And there's two schools out there. There's the outsourcing of that management of their strategy and then there's you're managing it yourself. To me, that's really what we've seen. We've seen a movement away from outsourcing the management of the treasury of the DATs to bringing them back inhouse to actually be responsible and to take risk in a responsible way for the future. Like we've seen that from >> it's the same. It's just basically like a Berkshire Hathway model. >> Guys, I'm afraid we are at time. We could talk for hours and hours, but uh >> it's time for the next one. Thank you so much to my panelists. Thank you to the audience. Thank you to Block Works.
