️‍The Institutional Entry into Crypto and What It Means for the Market

[Music] hello everyone my name is Ryan uh founding partner of a hash uh today uh we will talk about uh how institution can join to the crypto world with Richard tank the CEO of binance uh first of all uh happy to uh talk with uh Richard Tang today and maybe can you introduce your yourself but briefly hi everyone I'm Richard T CEO of binance we are the largest crypto exchange globally we currently currently serve close to 250 million users globally and myself and Ryan have been friends old friends so when Ryan asked me to do this I said certainly back great to be back to ABAB Global Market I was here from 2015 to 2021 where CEO of financial services regulatory agency so glad to see everyone uh before we start who owns crypto before 2024 before 2024 good for you all of you are happy people yeah today um yeah we will talk about like know institution uh trans so uh Richard T is a perfect person to uh interpret like a how in institution can join and maybe you can talk about like uh what kind of trend is uh happening in in institution sure so the question the first question I ask who owns crypto before 2024 is you see quite a lot of retail people embracing crypto very early right so crypto is the only asset class that goes the opposite direction every other asset class from stocks to FX to bonds starts with institutional adoption then goes down to corporate then finally High netw worth and then retail if you remember crypto was embraced by retail for the longest time institutions say it's a passing fed it's a scam you go away Regulators are not spending time energy investing into this space so 2024 has been a landmark year for crypto firstly beginning of the year you have the Bitcoin ETF approved in the US giving this Bas credibility and recognition that it has always deserved right and then you have ETF approved around the world after that from Hong Kong to Canada to Brazil and the least goes on and then you have the some of the largest institutions in the world uh the likes of Larry finin Black Rock largest asset manager went from a crypto skeptic to a crypto believer now I think that's a huge shift so this year alone we saw a huge increase in terms of our institutional onboarding of clients onto our platform many clients are starting to do institutions are starting to do allocation into this space a lot of traditional trading desks that just used to trade Commodities FX stocks and bonds are now adding crypto trading deaths to diversify debt trading and to take advantage of those opportunities right so that Trend will continue we are still in a very early stage and with a pro crypto president being elected in the US I think that's a landmark shift I think the US has gone through a tough four years in the crypto scene for the last four years the next four years will be I believe a pretty good ERA a good time to be involved in this space so crypto adoption now is about 7 7% globally if you look at what happened to internet once you reach 6 to 7% the next 10% will come through very very quickly so next year will be even better year I think I believe for crypto because more and more institutions will come on board institutions as you know need time to do their due diligence it ranges from 6 months to 12 months and many of them are very early but we view are saying that it's going to have a Bitcoin strategic Reserve I think that foro was set in towards the rest of the government agencies and governments around the world and more and more countries will adopt that uh in terms of having Bitcoin strategic reserves so it's quite interesting to see what will happen in 2025 but I believe it's going to be quite bullish and then with inflation under control in most part of the world interest rate coming down we see a lot more allocation now sure I mean like uh after Trump got elected and everyone is going into crypto is especially uh Abu Dhabi obviously the first one and and also Singapore Hong Kong Korea Japan all the government is announcing like a web Street uh like a friendly policies and we are definitely looking know a lot of adoption institution and if you see a retail investors like uh now like they're trading like thousands tens of thousands uh coins obviously like uh like you said the BTC ETF is like a for signal that like uh institutions uh will buy buy into your ETF but um you expect like more assets like U maybe our coins will come to in institution pretty soon or it takes time I think that will take time I think institutions especially much more traditional institutions are much more familiar with products that they see have already been listed on exchanges right so ETF of Bitcoin uh ether I think those they're familiar with but the institutions would realize there's a very high liquidity cost and liquidity risk associated with just pure exchange product because if you think about it crypto is 247 it trades 247 throughout the weekend but if you just look at ETF if you just have exposure by ETF let's say in the US it only trades within a certain number of hours in the US weekends it doesn't trade public holidays it doesn't trade in a night it doesn't trade at all so you can't take exposure you can't get in you can't hatch you can't exit to manage your risk so there's a very high liquidity cost and risk associated with that and once institutional realize that you'll see more and more activities gravitating towards 247 type of platform globally because if you take that away 40 to 50% of the time you can liquidate your positions you can take advantage of new information coming onto the market I think that is a huge price to pay on on on those friends yeah definitely and also so like know um currently uh I think such a huge uh Euphoria in institutional Market but still um from our perspective it's little bit slow so what is the biggest barrier for institutions still there for example like hesitating to invest to crypto directly or like regulation wise uh infrastructure wise what is the biggest uh barrier for now so you have to understand institution are corporate animals that have you know bureaucracy involved in it they have you know board structures key decisions have to go through multiple layer of checks and balances so it tends to be much slower in terms of firstly decision making and then secondly all the necessary due diligence they have to go through getting buying from all the different stakeholders to come through but we are seeing that shift starting to take place it will take time as I mentioned even some of the due diligence to be conducted by institutions that take between six and 9 months and that's pretty normal before they start allocating into any new asset class right so that will come true but in the first wave what you said what you saw coming through very quickly are things like the family office right they come through very quickly once they see the shift in momentum shift in terms of sentiment they come through very quickly because they are structured very differently they can make decisions very quickly and they can move very quickly right so we have seen that coming through very quickly some of the more Nimble institutions have come through quite quickly and with that mindset shift and change globally uh many of those will will come true but it will take time and then you will filter down from some of the top institutions and then slowly uh toward the start the more conserv conservative ones yeah uh we are meeting a lot of like a financial institutions now but um maybe it takes time like Richard said and firstly uh my gaming company or Tech science or like uh a lot of like uh also recently like RW is coming so real estate company are very interested in so we'll see the trend uh slowly and maybe we could talk about the behavior of uh institutional investors and Retail investors if you see retail investors now they are like they're Beast they're no going to defi they're trading me especially in Korea Korean Traders are like crazy and I think like a lot of retail investors uh I think they're definitely moving forward and institutions um obviously they're uh they can think like they're losing arpa but at the same time they have to think about security and like how like uh they can address um like a good infrastructure for the clients and what is how can you can you compare like institutional investors and Reta investors in terms of um like what kind of U maybe a custody service they have to use and what kind of limitation institution have and also uh in the other hand like what is the benefit they have compared to retail investors okay so in the first instance I mentioned just now that crypto is the only asset class that's embraced by retail in the first instance and for the longest time institutional doesn't understand it have been staying on the sideline so but Al it also shows the sav of I mean crypto took off initially being embraced by the very it savy the gigs right uh because they understand what blockchain technology is right the beauty of it the immutability the trustless of this and how important it is for them right so if you if you speak to any of the 20 something year year old here they will understand this technology compared to a on just average right don't don't come after me on average the 40 50 60s because they grew up in this era they they know this technology much better than most and they have done a lot of research so their mindset is very different because to them you didn't know how to set up a private key if you ask a person in the 50s go and set up your private key private wallet Co wallet they may not know how to do it so there lies the challenge so it's awareness issue among the institutions but now they are coming true in a big way I think going forward there's they're going to raise that level of awareness so the challenges between institutions and Retail are different for retail we always say that be careful do your own research right don't don't F more don't just jump onto the bandwagon because your friends say buy this or this going to be a next big thing do a lot of your own research we have binance Academy which is uh freeo air portal we have thousands of very good uh information in there if you want to learn about blockchain crypto get acquainted understand it if you want to invest invest more uh understand this space first right so that's our advice to retail for for institutions the opposite is true they tend to be very cautious so again we educate them in different ways right to say that this technology uh is something very different you I still have institutions coming to me to say how what's what's the clearing and settlement risk is it t plus2 t+3 and we have to explain to them as well as to The Regulators that this is blockchain is instantaneous you have taken off the clearing and settlement risk once the transaction is done it's done right there's no t plus2 t plus3 we have Regulators asking us to set up a clearing fund which is a very tread fire web tool concept that applies to stock exchanges and Futures exchanges because you have clearing members you have risks that you need to mitigate if the members don't go through and satisfy their trades right but again blockchain is instantaneous and then uh the technology is different you can trace people said you know crypto is associated with scams or fraud money laundering if you look at global data and this came from us Financial crime office europol if you look at uh the amount of money laundered through the crypto industry is 0.02% of what's happening globally right most of the laundering still happen through the Fiat channels banking property etc etc so there is a misunderstanding because unlike Fiat you 100 million you start Distributing them in cash I can assure you you can trace that in crypto for those that understand crypto no you can trace to see where the funds are being transferred to so it's a traceable technology and we we work with law enforcement agencies around the world to deter and fight crimes on that front every year we receive 60,000 law enforcement requests so a lot of this education has to go through for people to raise their awareness we are now the most regulated exchange globally right so we have 20 different places that we are regulated including here so we look forward to continue to educate both the Regulatory Agencies as well as the institutions on that front you just mentioned like um The bance Academy the like you know istion have to follow uh with a study and research um as a CE of binance um is there any uh initiative to uh unbo uh institutions to binance or like um also a bridging between a traditional world and crypto world oh certainly so as I mentioned this year alone we saw a sharp increase in terms of the number of Institutions that have on boarded r on our Global platform uh I don't have the latest figure but by August this year compared to last year there was a more than 40% increase right um and that figure has been very robust I think after president Trump has been elected and the shift in sentiment happened I think that figure has skyro rocketed right amongst the institutions as I mentioned a lot of trading firms that just trade Commodities Futures products in the past have now added a crypto trading desk we have family office starting to allocate we have institutions starting to allocate so we are seeing a lot of a lot of new institutions coming through on our platform now so today there are so many institutions are considering to invest at least I think a 1 to 5% of a crypto asset uh out of their budget and and can can you share advice like how to allocate their asset um any advice for the institutions here how to locate the I mean allocate I mean uh what what what kind of uh asset or allocate their assets well I think all of them will have to do their background thinking on this issue right so it's not for me to give Financial advice I think they will seek advice they will have different points of reference and consideration and they will come to a decision on that front I would think that in the first instance most institutions will start allocation into the majors right so things like Bitcoin I think that's the first natural Port of Call if you look at Bitcoin dominance within the crypto industry it accounts for more than 50% of market cap so it's very easy way of referencing the industry so I do think that in the first instance they will come via Bitcoin as and when they get more comfortable with that and the awareness knowledge continue increase they will start to venture into other parts of it yeah and like I think know everybody dos like uh Richard Tang used to be a CE of adgm long time ago uh can you share your like um insights about why uh Abu Dhabi will become a hub of crypto and what is the benefit of estab in entity here yeah so I was CEO of ABW Global Market Financial Services regulatory Authority between 2015 to 2021 right so it's also here that I got to know about crypto in 2017 and then I after I got to know about crypto I invest quite a lot of time to understand this sector and the more I understand the more I believe that this is going to be the future of Finance the future of money but for it to go mainstream if I remember if those that involved in 2017 you remember those were very early days probably less than 1% crypto adoption globally today is close to 7% right so for it to go mainstream it needs two elements to come into play firstly you need proper rules and framework um to regulate this space I'm looking at wam one of my co-conspirators who still with adgm now in financial services um and we work on a framework to say that look we need a proper framework to try to regulate this space to give certainty to Industry players like yourself that wish to be regulated but also certainty to Consumers that are looking out for what protection they have right so it's only with clear regulatory framework and that the institutions will come in if it's pure retail space the asset class is going to be very volatile right there's going to be slightly less Research into this asset class but once the institutions come in there'll be new product structuring there'll be new research you know different type of liquidity long short strategy coming into to play so all those are big positive and 2024 we have seen that come to come to play right so again this is very early doctor but I must say in general Abu Dhabi UAE is has foresight to invest in many of this new technology way before the rest president Trump has just announced his Ai and crypto Zar highlighting the importance of this two technology for the future of the world in terms of supporting every economic sector but Abu Dhabi has invested heavily in into these two sectors very very early on so is that foresight the willingness to experiment support Innovation that will continue to make Abu Dhabi the place to go to we expect uh over time Abu Dhabi will become a definitely crypto Hub and AI Hub and eventually uh center of the war and today uh I'm going to wrap up here thank you for coming to uh our session and please uh I hope like everybody here get a like take a break of Richard today thank you thank you [Applause] [Music]