Banking with Crypto: Insight from the Bankers - TOKEN2049 Singapore 2023

hey everyone welcome thanks for staying for the final panel of the day and yes it's the final final panel of the day but I think it's the most exciting panel of the day we get to talk to bankers no um but let's get started so um I'm Samantha uh as uh you know the host introduced me I'm the founder and CEO of Yap Global we are a PR agency that you know has been telling the story of crypto for the last five years we've been keeping up with the narrative um and you know speaking of the narrative uh we work with a you know a range of digital asset players uh really Niche Tech web3 D5 protocols and there's this General sentiment that Bankers don't really know what's going on with crypto but um so I'd like to just you know let each panelist share a bit about their role and what they do and actually add on like yeah what do bankers know about crypto so AVU how about we stop with you first of all for welcome thank you for coming um for those of you who don't know DBS DBS is southeast Asia's largest bank and we are at the safest bank for the last 14 years but we are also known to be a very Innovative bank so we've started our crypto journey in 2020 when we launched our digital exchange to give access safe access to our private banking and institutional customers to crypto and then we also have a lot of innovation initiatives which we do in collaboration with the industry here in Singapore and last we Bank digital asset companies uh in the corporate bank and that's what I do within DBS so hey guys I'm Renee Michelle I'm the global head of digital assets for Standard Chartered we're also an old Bank um 160 years and we've been in Singapore um I think longer than DBS actually um so uh from uh my perspective I look across everything that we do we've got a ventures business that launches Ventures um two of those have made announcements at this conference audio markets and Soviet custody people play crypto Focus exchange and one's a custodian we work we're doing work across our institutional Bank on Central Bank digital currencies various other projects and then also crypto as well we mentioned earlier in the year that we're including Bitcoin and East custody into our security services business in um Dubai we're working closely with the difc on that our Market Focus we're in 60 markets uh we're mostly in Asia Africa in the Middle East headquartered in the UK um but yeah are we supposed to know about crypto sounds like you've got yeah a lot yeah the next half an hour to find out yeah great thanks so much uh hi everyone my name is Gerald I'm a co-founder and CEO of Singapore for Signum uh Signum is the new kid on the Block uh you know next to these old dinosaurs over here um but we are purpose-built you know for crypto for digital assets uh we are fully regulated digital asset focused financial institution uh we have a full Swiss banking license and in Singapore we operate with uh you know four regulated activities under Capital Market Services license and we have an in-principle approval for payment services license which is well underway in addition to operating out of our two hubs Switzerland Singapore we've also in the last 12 months extended our Global footprint to include Luxembourg as well as the UAE now like having licenses is you know great and I think increasingly necessary to be a player in the space but we're more excited about what our licenses allow us to do and that's to serve our clients globally which comprise institutional investors corporates High Network individuals as well as other financial institutions to empower them to own manage and build their digital asset exposures including cryptocurrency exposures with complete trust and peace of mind we're still you know getting started we're six years old but we already work with more than 1 600 clients globally and we help them to administer north of three and a half billion US dollars in assets so that's a little bit about us yeah sounds like they did with crypto but but I challenged with crypto adoption of whether you you know purely hold your own Bitcoin or ethereum and you know and engage with the decentralized finance uh world but also do it with like as Gerald mentioned with you know safely holding your assets so um you know to the floor what what challenges do you think banks and centralize you know yeah entities like yours uh face when trying to adopt crypto and offer you know crypto offerings to your to your customers I mean I'm happy to pick that up to start with I think when we're looking at how we offer um I think there's two parts one is banking the ecosystem and actually providing very traditional banking services bank accounts payments and FX to um cryptocurrency firms um that that require those services and I think that has been a challenge in terms of regulatory certainty um the level of kyc and CDD that's required and so so that's one challenge I think stepping back the other challenge in terms of bringing crypto product to Market or digital asset product to Market I think that's a much broader Spectrum so on one end if you have a look at Pure Play Cry crypto so you know public chain Bitcoin eth potentially further than that um where the way that we work today is that we run a set of ledgers within the bank and we use messaging systems like Swift and other clearing networks in order to update help each other update each other's Ledges so that everything matches but we fundamentally got the admin username and password to the databases that sit within our organization obviously we've got lots of controls around that to make sure people don't do the wrong thing but the um the when we're talking about offering product based on a particularly public chain these are networks or we don't have the admin password right we can't change that what we have to do is we have to focus on securely managing uh public-private key pairs whether it's for our own money or for the money of our clients in order to bring that to Market and so that's that's a much more complex set of challenges to work through and a very a very different Paradigm and then you add to that the regulatory burden around that or the regulatory uncertainty the evolving regulations um that that's again you know more of that so they're some of the challenges that I think we face and even if it's you know other forms of digital assets Central Bank digital currency tokenized assets um public sorry private permission networks all of these have more challenges around um you know maturity right are we there yet is it is it big enough is there an active Market with which we can interact so so yeah I think that they're um you know there's lots of challenges but with challenge comes opportunity so hopefully that's helpful I I would like to add to that when you look at we we've done a lot of projects around using blockchain to transform the way that we operate some of the parts of the business so if I give an example on the um on digital assets the security tokens space when you look at the security token space it doesn't just require the technology to be ready and scalable and ready for large size transactions but it also requires you to have the liquidity in the system it requires you to be able to get a secondary market up and running so these type of real world issues need to be solved for you you cannot only look at the technology you need to look at it in conjunction when you look at other areas such as using a D5 for um for doing we did an fx spot exchange with SBI under project guardian what you saw there was that this works in this very experimental way but this is not necessarily how the financial markets operate as a larger whole so you need to then think about how do you build solutions that can actually mimic the larger Financial space not just a small a small block of that and I'm just going to say um that you introduced us as centralized financial institutions and uh you know last week I was on the panel with a bunch of our D5 friends and there seems to be a presumption that you know centralization bad decentralization good but we don't really see the wall in you know in that way and that's I think a very very much a false dichotomy as a financial institution as a you know Bank in Switzerland our business broadly breaks down into what we classifies Wealth Management Services so providing our clients with the ability to invest buy and sell and hold both tokens directly as well as exposures to digital assets via fund products that we manage this is Wealth Management our corporate commercial banking services with more like transaction banking payments Fiat on and off-ramp services and finally our still nascent advisory business around Capital raising using both traditional Securities as well as blockchain based assets like nfts and utility tokens and the such and what we're seeing is that across the board the office of course clients in particular High net worth individuals or investors managing their own personal wealth that can take the decision and have the option now to use decentralized rails to interact with smart contracts to obtain Financial Services um you know in a more decentralized fashion but by the same token there's a whole other spectrum of clients corporate clients fund managers who have an obligation to use regulated Financial Market infrastructure like Banks like custodians and other Financial Market intermediaries because I think a lot of the lessons that the industry has learned over the last 18 months is that you know there's a there's a role for regulation and as a role for trusted counterparts like the three institutions on the stage so yeah no I like how you touched on that Gerald that you know um centralization centralization is isn't all that bad um and even there ever you touched on it as well as you got to bring this level of like maturity to engaging with your your clients your customers that are large institutions and high net with individuals and yeah I mean a lot of the wealth in our world today is is you know held by corporations and if the crypto industry wants um adoption to happen uh yeah there needs to be regulated entities that people trust so that means that everyone on this panel like you're representing the banks that are well on their way but with that being said it'd be good to hear specifically you know what products and offerings in each of you have is there any kind of in the pipeline in the works that you can tease if you're not ready to announce it but yeah be good to hear what DBS has in the pipeline as well as Standard Chartered and maybe I start by building on the point that you just me when you look at what happened over the last year especially what happened in November you can really see that understanding of counterparty risk come become a lot stronger and when we looked at what the effect that we saw in the bank or our AUC of our custody grew by 150 percent while the prices of Bitcoin and Eid did not grow by 150 percent quarter quarter quarter year on year so we've seen that growth and that growth came from institutions as well as private banking customers and accredited investors seeing that need to go to a trusted player and actually going to a centralized party but a party that they can trust that is properly regulated setup has the right governance in place so with that we definitely see that shift happen um so we like I said we have our exchange where you can buy Bitcoin ease and a number of other coins as well as stos and then we and and we customize as well those assets within the bank and I know that you guys are going to do it now we were one of the only banks or the only bank that was doing that within the bank itself holding the assets so of the exchange within the bank called storage and then um we continue to work on the initiatives here in the industry and we also do our own initiatives we launch an ecmy wallet in China we did an uh bill of lading using nfts to authenticate the bill of lading Initiative for trade Finance we've done a number of initiatives Beyond just the industry initiatives to further develop use cases within within our industry and using blockchain as a technology and then like I said we've we've been banking responsible responsible players within this space and we do go through the very rigorous risk management standards for us to offer Corporate Services but that's also helping Innovation here in this space we did a bit of research about thousands web 3 companies here in Singapore close to 500 in Hong Kong um so when you look at this space there are quite a lot of companies and they do need access to bank accounts they do need access to the cash rails and that's something that we help as well with as a bank yeah I guess um I think I I agree with everything Evie's been talking about and what's important you mentioned that we're going to do some stuff too I think um for from a banking perspective it's crucial that it's not just one institution doing a thing one of the what if you look at the crypto ecosystem the web 3 ecosystem where it works best is where firms are working together and building infrastructure that that works across multiple institutions and supports the whole community and lifts uh lifts everyone right so I think that's that's a super important point to from a product perspective so our you know our house view is that we believe that digital assets are a permanent part of financial services and they're important to how we continue to innovate where we have been focused is in our non-bank subsidiaries so sodium markets and zodiac custody where we can offer services that have gone through a bank level of due diligence which I'm sure for um my friends the CEOs of those companies has been quite traumatic um but what that means is you've got these um robust institutions you've got a segregation between trading and custody and they're part of a broader banking ecosystem within the Standard Chartered business but they're also working across you know several other financial institutions as well so from a product perspective that's where our Focus has been what that does do though is it supports a view that there is commercial opportunity in crypto markets today there's a there's a demand for the ecosystem participants to get access to banking services and for traditional institutions get access to products that can allow them to access the asset class so to that end as I said like within the institutional business in particular we've got work happening on the crypto space we are constantly thinking about what is the world look like tomorrow when you have a much broader base adoption of crypto assets much broader base adoption of tokenized assets on large-scale chains arguably public chains but potentially very large scale permission chains as well and so that's that's very much a focus of where the different business lines are building within Standard Chartered we do have quite a lot of work on the cbdc side and that's less less driven by immediate commercial opportunity and more by the Strategic requirement to try and make sure that cbdc is a functional and and helpful but yeah I think it's you know it's honestly it's a really interesting time to be a bank and to get to do a lot of introspection around what works and what doesn't great um well signum's bread and butter right now although we do a full Suite of regulated financial services and asset management and I have a full Suite of asset management product centered on digital asset strategies but our brand about it right now is really the provision of more basic banking services to crypto natives to web3 firms foundations as well as institutional and accredited investors who are building exposures in the space as I mentioned Samantha you asked us to be provocative so I'm going to love one at my fellow panelists we wouldn't be doing as well as we have been if our you know conventional and more traditional Banks were doing you know the necessary jobs of banking these players in the first place so I'm glad that we have that first mover Advantage I'm glad that you know um myself my co-founders and our team you know being so enmeshed and embedded in the crypto crypto and digital asset ecosystem being really firm and early Believers of the transformative potential of this technology means that you know every single feature every single product and service that we offer at Signum has been purpose built for the innovators the builders right in the space and purpose built also to help onboard the next million 10 million investors and mainstream institutions into digital assets well as I mentioned these more classical financial services are really generating the core of our revenues today we still of course continue to push the envelope in terms of Future Finance we are particularly proud of I think a few initiatives that we have pioneered in the last couple of years the first was really around you know empowering and enabling other regulated financial institutions to also be able to onboard their existing clients into crypto we call it our B2B offering or bank to bank in Switzerland we are the leading B2B provide in Switzerland today we have 16 Swiss banks that have onboarded with us in our various stages of integration most recently we announced the collaboration with pulse Finance it's the postal Savings Bank of Switzerland is I don't know now after you know Credit Suisse whether they're the second or third largest uh retail financial institution they have 2.7 million Swiss clients and from next year these clients of post finance will be able to buy sell and hold crypto assets with Signum in the back as a white label full Suite service provider so we're very proud of being able to help you know this next wave of crypto adoptees to get access via their existing banking relationships and then um on the tokenization side I know we're going to touch on that a little bit later on in this conversation we have also been I think a forerunner in this space we have tokenized everything from a Picasso to a crypto Punk and everything in between and we're very much looking to bring this offering to you know Asia as well with a focus really on the structuring and advisory piece I'm I'm not gonna like give too much away but we have a few initiatives right now with large traditional issuers so these are your Fortune 500 companies who have been watching uh fascinating developments on the crypto fund from the sidelines but are now ready to be able to engage with the web3 community by also raising capital in the form of nfts or utility tokens and what they need are regulated financial advisors like ourselves to be able to navigate help them navigate the space there are lots of teasers in there Renee did you want to respond to to any of that well I mean he's right [Laughter] thank you because I guess I guess you know a single has the opportunity to be a bit more agile I guess to the larger institutions I mean do you are there challenges with say working with Standard Chartered to innovate and cater cater I guess to the to the web 3 crypto native clients so so maybe maybe I'll pick that up in this way right so um what's interesting is um the you know let's talk the web 3 Community there's so much being built on um very large scale networks um with functional business models economic economic models that work um and so you when we talk about web threat it's a really big space and then you start to add in you know online virtual spaces or metaverse if you want to call it that it becomes a very big space but if you look at the again I'll come back to those foundational things like if you look at the thing that gives you access to that it's your wallet address right fundamentally I I would include um you know Roblox and and fortnite in the general metaverse stuff and yes you don't need a wallet to access that but maybe one day you will so I think that you know we need to be really thoughtful as financial institutions around like just where we are you know the ability to offer foundational um it will you know we get excited about the ability to offer foundational um Services bank accounts uh payments and FX to ecosystem players and I think that's super important but the Gap to then being able to take our existing customer base into a web3 world with identity uh wallet addresses and things like that is um I think that's getting a bit over enthusiastic for where we are and we've got a lot of work to do so you know the challenge I think for for all of us on stage although some of us are much more focused on that issue than than you know those of us with a really diverse business um is to really focus on what are the next steps we need to take to remain relevant in a world that's changing this fast and I think that um we there's a lot of discussion around oh well Banks aren't banking crypto firms and you know that and and yes lack of access is a is a really important problem but I think that there's responsibility on um you know on all sides for that in terms of uplifting risk uplifting capability uplifting knowledge uplifting talent and depending on which side of the you know uh fence you sit on you might have built a great product as a crypto native but getting the right level of compliance and risk infrastructure into your space which we saw late lastly year is not always prioritized is equally as important as building digital asset and crypto experience in 160 year old institution so so I think that um I my my the way that I would think about this and and what I like about you know what what um Gerald was saying is these guys have seen the opportunity and pushed really fast to and and far ahead to get into that um I kind of think that the expectation from our clients and from the industry should be and I think it is for the rest of the traditional financial institutions to develop the capability to critically think about how to serve this space and how to you know as I said before introspection like what do we need to change what's working and what's not working yeah we actually I I agree and what I see yeah supposed to not agree with you um but I do um and what we see a lot is that we provide and and this is what we see these days is that companies are actually open to listen Open to get advice on how to adopt some of these practices how to put in place the right governance how we partner with them to improve on certain fronts where we do have expertise age-old expertise on how to handle these matters and I see there's a lot of openness and and for those who are willing and open we partner with them to look at how do you improve your own standards and can we help you uh to do that and I also very much like working together because it gives you a view on how your product when you're a builder how your product will work within a large scalable way because you there is a difference between small retail adoption and institutional adoption of a product and how you need to think about scaling it for institutional adoption so that as well again both sides I would say work with banks or work with financial institutions or corporates to see how can you make your product ready for that institutional adoption and and really break out of out of the smaller views and and in the same way how do you manage your company in a way that allows for scale and has the right standards in place to do so so that's something that we we really work on with companies to help them then Thrive within the space no great responses um you're all banks but your clients are different and you're all coming in coming at it with uh different strategies and if there are other Banks like Renee and me were good but please join us I mean I would say yeah we were all get get in there going after the same goal trying to get more institutions and um companies to adopt crypto so well the more the more knowledge there is the more you are in the space and understand the space the the more we can work together and enable things um so so I think in general more players and yeah great in it will be better and speaking about understanding the space uh you know you're all based in Singapore um token 2049 has attracted 10 000 attendees I heard and a lot of them uh come from around the world uh I think due to I mean you've you've heard it across the different panels today but due to the maybe harsh regular Tori climates in in the US and and potentially in Europe um Asia has been quite attractive to uh companies I think that a lot of you here and and a lot of projects I've seen are here to learn more about the region so what insights can you share about the appetite for crypto adoption in Asia um the asia-pacific region which is also very complex region so yeah Gerald you will start first sure happy to do that so um we serve a very geographically Diversified mix of clients as I mentioned we have north of 1 600 institutional investors corporates and high net worths on our platform globally and about 20 of our client base comes from the Asian or Asia Pacific region I'd say so I think that provides a little bit of insight to the similarities and differences between like the Europe and and Asia clients um I think in general on the call it the investment side of things the speculation side of things I think um that activity in Asia as with the rest of wall is pretty subdued it's a function of the macro economic environment that we're operating in and uh sort of a risk off sentiment that that persists so um in that way and for that segment of the market I think um the the pain being felt in the US and Europe is also similarly felt out here but we're very uh encouraged by the level of development um in terms of you know software engineers and other Tech talent that are still being drawn into the space that are still you know committing code and developing the next uh wave of innovation in the web 3 space so a lot of web 3 companies are still being founded out here and still require you know basic banking services to be provided to them and then on the other side I think um the the fund management industry and you know funds that incorp operated in Asia Singapore under the VCC regime or structure they are also have there we've also seen some of green shoots emerging these fund managers have been able to raise more AUM and are starting to you know tentatively to to make some deployments again uh into equity in web3 startups but also in some cases taking direct token exposure and those folks again uh not telling my fellow panelists what they really don't know those folks also require a solid banking rails to be able to do what they do in a completely compliant fashion which you know everyone is seeking to to be able to do in this environment so in general um I think that's still a lot of activity happening in the Asia maybe we don't see it reflected yet on the price action but it's coming and we are confident and we continue to be committed to our Asian client base and to helping them succeed in spite of the momentary conditions we're facing I I think it's really I think they think it's um it's it's not super simple it's very hard to work out like if like I feel very um empathetic towards firms that are trying to work out where where to be in the world to build the business that they want to build um regulation and the way that it works uh is you know helpful for some business models and models in some markets and really unhelpful for other business models in other markets and so from a talent perspective it's a huge challenge for everyone um I think Asia if you include if you include Hong Kong Singapore and and the Southeast Asian region um if you go slightly broader include include the Middle East and Dubai this is kind of where most of the time there are the most alignments that can allow people to kind of get as solid as they can to build a business and that's true whether you're running a fund and wanting to wanting to allocate to crypto it's true if you're trying to build a web free business and it's true if you're trying to build product or service clients in a bank right it's that um the more certain you can be about how certain products are going work in the economic benefit of that and the longevity of that the easier it is to go right this is the place where we're going to be now I think that if we look at the markets that I've mentioned there is much more certainty and specificity in the environment in those markets which is why we're seeing a the engagement here in in this conference but in general the the talent migration into into those markets yeah and I would also add look where we are here in Singapore and now it's also starting across the region but we had a very um proactive regulator who looked at this space and we started to invest time and energy in learning about this space early on so we've seen that here in Singapore so I have to think that Singapore is a is one of the largest Financial Centers in the world so you can expect that from that a lot of the activity is going to start and then thirdly the country itself and the region is very Innovation forward so a lot of innovation will happen here naturally and it's being supported Again by a regulator who is supportive and then by a system which can enable that further so that is something that you can see and I just mentioned a thousand over companies here for 500 over in Hong Kong that is a testament to the fact that that has worked over time and don't underestimate the amount of time it can take you to actually learn how to operate in this space you don't go in and know it all in day one you've got to really no it's it's harder than you might think so you gotta you gotta build up that knowledge base and so starting early is positive for that and that's what I think we're bearing fruits of now no that's great um I know we're running out of time but just um quick 30 second um partying thoughts uh what message do you want to say to either other Banks uh and and other projects that are not in Singapore at the moment um yeah learn go go out there and learn go go talk to people and get yourself into the community it's a great space so I think um risk management and I mean that in terms of building that embedding that into the product for your project for your business for the way the business works that is the key to unlocking um Financial access licensing all of that stuff and whilst it's painful in the short term in the long term the economic benefit is large for the Webster companies out there I would just encourage you guys to keep building uh and the knowledge that uh you know on the financial services side between these two uh Banks here and Signum we're going to figure something out for you guys and then eventually if you are a financial institution listening to this then I would just continue to like give that call to action get involved right get involved get get informed and get involved because there's a lot happening in the space and um yeah you can't miss out that's some great reassuring parting thoughts um so Banks actually do know a lot about crypto so um yeah please give the panel a round of applause thank you so much Gerald Renee and Amy thank you guys and thanks for staying on uh for the final panel of the day enjoy your evening