TOKEN2049 - The Regulatory Landscape

welcome everyone so we're gonna have a panel this morning about the regulatory space it's perhaps you know not the most exciting topic to talk about in the morning but it's really crucial for the whole space to grow and we're gonna try to make it as interesting as possible we have a great panel here this morning we have representatives from four companies from circle from Vanek from origin X and from GSR so I would just like to start this discussion by you know letting the panelists quickly introduce themselves and talk about talk a little bit about the company that they're representing here thank you so my name is Benedict Nolan I'm the head of regulatory affairs for Europe in Asia for circle and circle is one of the u.s. leaders in the token space we have an exchange called polonius and OTC desk with our ot C sales right there so if if you need there they are we also have a u.s. DC US dollar coin which I think you'll hear about later today so also one thing you might find really useful is our free research so you can go online and check just search Google Circle crypto research and you can subscribe to that research and learn more about these assets my background is six years with the Securities and Futures Commission in Hong Kong so that's a bit the equivalent of the SEC in the US and I was in that regard leading the FinTech efforts so including looking at the phenomenon of Bitcoin and then later tokenization and before that my background is in classic finance perfect so my name is Gabor drew batch I'm the director of digital asset strategy at Vanek Vanek is a 50 billion dollar ETF manager primarily and so we are the Bitcoin idea of guys hope hoping to have some good news for you guys sometimes let's see Vanek is manages a lot of what one might call non traditional asset class we we bought the first gold equity ETF in the 60s in the u.

s. so our gold holdings around 15 billion and our founder is a direct student of Ludwig von Mises kind of sort of like a relationship within missus before Bitcoin is cool and we basically we have all kinds of funds and emerging markets we built the first Russia fund Vietnam Indonesia the first Chinese tech and biotech oriented funds and and we are hoping that will bring the first Bitcoin ETF to market right now we have through our wholly owned subsidiary it called MBA s we have the first set of regulated crypto indices so if you guys are interested in the over-the-counter price of back corners just generally price of digital assets around the world and then you can see that on our site I work a lot with regulators such as the SEC CFTC and primarily in the US but also a little bit in Europe and Asia and so that's been why I lost about this much of my hair as you guys might later down and let's see my background is in mathematics and distributed system and Bitcoin class of 2012 and again we're hoping to bring you guys to first Bitcoin ETF the underline good morning everyone I'm Sandra Wu I'm one of the founding partners of origin X capital at origin X capital we aim to deliver transparent and tactical advice to our clients which are typically ceos of founding members of a project team what we also do is actually invest so we have our own investment proprietary fund which we also use to invest in very very strategic sort of projects that we like and are also incubating by way of background I was formerly a trained lawyer so private equity fund formation and M&A was my bread and butter prior to coming to crypto for about 12 and a half years and my last position was the chief compliance officer and head of legal for Mercer investments in Asia hello everyone my name is rich rosenbloom I'm one of the cofounders of GSR we got started in 2013 we were probably the first algorithmic market maker dedicated to crypto and we got started marketing making on behalf of issuers one of the lead alt coins market makers last couple of years we've traversed market making on behalf of exchanges also in addition to coins and tokens market making on derivatives and that the burgeoning derivative space is coming this disappear my background prior to that I was a manager director and head of crude oil derivatives trading at Goldman Sachs where I was for 12 years and after that worked into new york-based hedge funds so now we'll jump into the discussion that will take about 35 to 40 minutes and then in the end we'll have a Q&A session for anyone who wants to ask questions in the audience they'll take about two or three minutes in the end so my first question that I want to jump into it's kind of broad but just to get the discussion started you know you've all dealt with different regulators what have been some of the challenges in navigating the space and dealing with regulators or you can just jump in a few okay I can start but look I I think I find it hard to answer your question because sometimes you can also ensure you don't enter into a challenge with regulators so so one of the ways to not enter into the challenge with a regulator is not to go into the regulated space so one of the principal discussions around these crypto assets was what they are right what are the commodities securities are other right and so are something new right and in the US the decision was fairly clear very fairly early that Howey test was very broad so a lot of them became securities and then a decision was pretty clear as well on the commodity ends that was not the case outside the US so true a platform which is called global digital finance which is a membership based organization that circle is also members of we have formulated two regulators that they're different types of tokens that there are payment tokens securities tokens and then utility / consumer tokens now these things may evolve but that latter category is the one that in a lot of jurisdictions arguably is not regulated so the challenge now for the regulators that have taken of you that these are indeed new things and that don't fall in standing definitions of commodities or securities the challenge in these markets is whether the regulator will build a special regime for them nevertheless yeah I will get to AML later but it seems the direction is now to focus from the regulators and it's pretty broad direction is to focus on the AML side first rather than on creating special regime so there is this difference between the US and outside the US I dare say on this definitional end and it will have different outcomes I think so my experience with regulators is sort of fun the highly regulated side Vanek we we think that basically the everyday investor should have the rights to invest in digital assets in the same way that we invest in securities commodities or futures today since the digital asset space is not very well established right now that is not the case so people buy digital assets and different platforms are state regulated or not regulated at all whereas benedict's that sort of like outside the jurisdiction so we again are our job and this is kind of non-sexy work that we do is is to bring digital assets into in some ways to the existing frameworks and we believe that actually it's possible so 105 105 initiatives as the Bitcoin ETF initiative which would give the everyday investor the opportunity to buy Bitcoin in an exchange rate for fund with the same sort of like safeties rights and and insurance and operational processes that you're used to on the on the equities market there's a ton of work to do to get there and when we start working on it roughly probably the first conversations around four years ago or so we realized that you know there's no specific pricing that can be used for a fun custody of digital assets they are still problematic because we don't know as Benedict mentioned too that when what is the classification of certain digital assets then another idea that regulators are asking a lot is surveillance in the market manipulations already exchanges that are really crypto trading platforms because they're not most of these websites are not fully regulated and don't provide the States's that you're used to in the equities in future space are they clean enough so that the everyday investor can participate and with the same protections as for equities so slowly on the pricing end we built indices for both surf like we we have data feeds from 150 trading platforms or exchanges globally we work with the largest over-the-counter trading vessel including circle that to provide some transparency into the over-the-counter markets we're working with the lead custodian candidate in the space and you might have seen on the surveillance and so Vanek's index subsidiary MVIS and nasdaq is right now surveilling about three digital asset exchanges in the same way that you are used to for larger markets and there's four four additional one in the works so really the digital asset space is going up generally from our 80s we have seen three five years of work before a new asset class come to market and I'm hoping that Bitcoin and other digital assets will take it at the same time right now again it's a lot of ground sort of like round up work and I'm lie to you if your company wants to participate and sort of like a more highly regulated space down the line then we're happy to work with everyone and we're working with deleting exchanges and over-the-counter firms already so that's for now so I can talk about the the regulatory landscape from Hong Kong and us because that's where a lot of my clients come from so speaking from the project teams or the funds that have decided to form a new entity in Asia what is that like talking to the regulators in Hong Kong so one thing that's quite confusing for a lot of asset managers who are looking to expand their operations into Asia is the fact that the regulators in Asia themselves aren't really clear on exactly where they want to take the licensing regime for example for an asset manager do they need a one for a nine which are the licenses in Hong Kong what what sort of aspects are they looking at in terms of the custody solution to sort of give the regulator's comfort around the custody of the asset is that done by a third party is it self custody is this acceptable to the SFC so one thing besides traversing through the various jurisdictional landscape in terms of regulatory perspective I think just within one country such as the US you see a divergence and fragmentation of the classification of cryptocurrency so as Benedict has correctly pointed out the SEC sees cryptocurrency as a security however CFTC sees cryptocurrency as commodity oh fak Caesar as fiat money but when you see IRS they treat crypto currencies as property so that divergence and fragmentation of classification is quite confusing and naturally so for any founders or ceos who are studying in this space so one of the main challenges we see is that do the the global nature of crypto and the Easterday of extraterritorial jurisdiction know not only have to know just one or two countries or regions but you have to have a PhD in Island publics to know the changing laws in each jurisdiction and try to follow them based on where your your customers are coming from what kind of services are allowed to offer them yeah cool so now I want to briefly talk about the regulation regarding icos and so in late 2017 you know I SEOs basically fueled the ball around and most of them since then have crashed by ninety percent some of them buy even more than ninety percent and so my question to the panelists is you know could more aggressive regulation couldn't have prevented you know that irrational exuberance like greenspan called it in early 2000 couldn't be prevented by more aggressive regulation and could that you know prevent investors from losing so much capital okay happy to take this one so yes of course it could have but I think you need to think as well about what on the other end of the spectrum that would have meant if the regulator's had on day one applied all the rules of securities law and if they had done that globally then there wouldn't have been that capital raising which is estimated around 16 billion now I don't want to speak for the France but let's say in the non France and and let's say there are people much better positioned than me do to distinguish these these projects have raised capital that they can now use to build this blockchain infrastructure and ecosystem and I think we were just discussing on this panel how early days it is for some of the the legal questions are the valuation questions are the tax questions it is equally early frankly to to make a decision even as to which blockchain is going to be having more adoption and for what type of activity so most recently for example regulators are questioning settlement finality in the context of in the context of public block chains so these kind of questions still need to be resolved and are largely dependent on kids mechanism so if there is no one working on the consensus mechanisms because no capital would have been raised for it we would not be either where we are today so yes it could have avoided that but on the other hands probably we wouldn't all be in this room right this this kind of creativity purse that there has been wouldn't have existed either right so the valuation burst would have existed but the creativity bursts are the amount of talent that moved into the sector would not have happened without that burst now secondly what what you see right now which I find really interesting is that there are some natural forces at work here and the natural forces that people now start realizing this and that's why you hear a lot of talk about stos suddenly people go like okay maybe I SEOs maybe what you're saying is there too unregulated and therefore people want to go for stos but I said one should not ignore that SEO s use the word security and consequently are 100 percent regulated product which means that it will need to jump through these different regulatory definitions and hoops in every single country and that includes questions around as I said settlement finality custody and AML I think those are are really the big ones and normally what regulators tend to do to protect let's say themselves in the market is to limit these distributions then to sophisticated investors so anyway I think in concept people have jumped but in practice these other things that I mentioned still need some form of progress so generally I advocate for protecting innovation and I think some of the ICO is out there in the market it's really bad that we don't have enough information on what to do so in my opinion most of the ICO is our securities and actually that is what the secures and Exchange Commission including the commissioners say as well so might as well worth registering your ICO or fun right anytime you raise money tried to fit into before you start a crypto business see if you're offering fits into an established framework and I think a lot of the ice has missed the opportunity to register as a security but maybe you should at this point a number of them are actually started doing that because for a few reasons one legal action obviously everyone fears from there but secondarily the global capital markets bring a lot of liquidity to projects and it is possible that you find more investors if you register your offering under an established framework and you will have a much easier time going to a regulator saying that I like to fit into an existing system before it's rather than saying that we want to build a new system it takes time to build a new regulatory framework and it will happen eventually but before that again maybe look for in the United States there's something called rag a shelf offering so you can raise 80 million dollars to your project registering your work and that's okay I think startup with 80 million dollars are funding shouldn't be more than enough and then you know race follow arounds but again I think it's best best approaches to register talk with your regulators don't be afraid of them I think there's there's real benefits to start a conversation early and even if you have a project engage with them and have a good legal counsel make no mistake actually the format I think roughly a year the SEC has a person who is probably monitoring the entire IC o---- space to take snapshots of that and saves that so everything that is public is available to the regulators to and the regulators are very up to date with this space so start your conversation will be interesting to see what projects and teams would actually do an unwind of the raise and we start all over again actually I think could there have been more aggressive regulation to sort of prevent the bubble I think the answer is no greed and fear natural human behaviors right and this is what fueled the ico bubble of 2017 so I don't think there is any regulation out there that could have been implemented that could have been more aggressive to stop the bubble that had occurred in the subsequent bear market however what we could have seen was definitely a reduction in SEO scams I see oh well I mean Ponzi schemes and just shady operations right and shady raises now that could have been minimized and sort of encourage quality projects quality teams to really surface however I don't think any regulation or any regulator could have prevented what we had experienced in 2017 and 2018 so it all really depends on how severe the regulations would be because if every single person who bought Bitcoin had to be kyc most of in this room probably wouldn't have heard of Bitcoin by now so it comes to Victor point specifically I think it helped in the early days but then more about I SEOs and the phenomenon of 2017 if there was just stricter regulations to prevent as many i ciose to come to marketing and fun think that could have changed the trajectory of the shape of the market and I think what happened 2017 with the parabolic rise of Bitcoin people cashed out and they'd made money so quickly they then put their dollars into some of these ICO so if they didn't have as many avenues to reallocate their capital then you could have seen a even bigger peak in Bitcoin and perhaps not as big of a trough because they didn't have alternatives I think it also would have preserved some of the integrity in the space so I think you could have had a more institutional entrance if there was less distraction from Bitcoin I think one thing to add is actually bubbles are marked by severe hype marketing speculation rampant speculation deep pockets I think if there was regulation around the marketing of I SEOs that would be quite effective a lot of the times you saw influencers actually advocating for a particular coin imagine if the influencer had to say you know hashtag this was actually sponsored I was paid two million dollars to actually you know advertise this coin I think people would have been more wary of the offering itself so I have a follow-up question to the ico issue and that is in you know now the famous speech by William Heyman was the director of of the division of corporation finance at the SEC he said that when an asset is sufficiently decentralized he doesn't think that it is a security anymore and a similar thing was said by Lester purse lately in her lecture where she said that tokens sold in a functional network are no longer securities and even though these are just their opinions they don't represent the SEC but my question here is you know is the SEC or are the regulators really in a position to make the call if something is sufficiently decentralized what's the threshold for the centralization how did determine that how can you determine whether a network is already functional what are the criteria so my question to the panelists really is know our regulators in a position to determine these issues sure it's a currently well it's possible I think it depends on the regulator whether regulators just don't have the manpower or the education to make those decisions on a quick basis but over over time I think they could and it's not as if it's a problem that's too difficult to solve like they can be masters at points for there's nuances in a situation when it comes to marketing a population often they'll follow a case for multiple years before they can prove something drowned and shadowed out and one of the terms it's often uses made a mosaic of information it's not just one piece of information that's used it's a blanket of facts used to make a determination so I think that even if it seems like a difficult question I think certainly within their power to make those determinations so I'm actually you guys might have seen some way to eat surrounded there's no response to the coin Center P some better Metiria missus security or not I think you make no mistake actually the chairman of the SEC or the Commission never said that the theorem is not a security director Henman said that it's area may have been a security and issuance didn't explicitly answer where was or not if he asked it was an illegal offering if not no and right now it may not be a security there was no cont so all that what you've seen recently and the news is all fake news there's no new information in the market around the status of eater or really any other serf like you tokens in this space the if you it's all what the SEC says is that every single token is evaluated on a facts and circumstances basis so what that means is that they look at it one by one and evaluate whether that's a security offering or not most of the token said there are security offerings because they raisin that like investor they raise money and then fund the project in one way or another my advice to you guys in the space is be ethical about it because every every single dollar raised from an investor is debt to the investor it's a promise that you will deliver of equal value or better or it's you know and I'm sure you may lose money or not but I think most of the ICO is today just sort of lived up the enormous amounts of money raised and that's that's that's a big problem again register your I think it's just important to register anything that may look like the securities offering and from my firm is actually exclusively right now focused on Bitcoin because bitcoin is a commodity and it's fairly clear from in the United States from CFTC guidance that it is so just on the sort of concept sufficiently decentralized I believe the SEC was looking at the concept of where its that stage where the purchaser or holder of the token no longer reasonably expects a person or a group of person to either sort of engage in sort of managerial effort to to sort of manage the network right so there is no central role played by the initial issuer that's what's sufficiently decentralization means however what about the in-betweens right where you have the birth of that network but at the same time it takes time to develop it to become sufficiently decentralized SCC does not give any hasn't given any guidance on everything in between these two stages likewise with the concept of a functioning network how it will fall outside the rules of securities if there is a functioning network so from my perspective the only clear fact that is unequivocal here is if a project is raising on the back of a white paper only no code in the github and nothing is actually functioning right that to me puts it automatically in the securities bucket however everything in between again is contestable and it's up for interpretation so for example if I don't know where the test net or main net will be considered functioning and then you've got other shades of gray there which is main net launch 1.0 where you have certain aspects of functionalities of the network being released at 1.0 release will the main net release and then 2.0 there'll be a greater number of functionalities or at least then and then 3.

0 so at what point would the SEC consider that as a functioning fully functioning Network Jamaat's today I had actually a quick note and this is the whole D sufficiently decentralized in the meeting I guess downright stupid to look at something whether it's a surface if something is sufficiently decentralized Ensenada security there's you know four additional points on better or something something as a security or not and you cannot measure decentralization the ETF market making system is decentralized the internet is decentralized some of the capital markets functions that we are used to are technically decentralized because owners in the process are different entities is that a decentralized Network no they fall under securities laws so I think the this idea of measuring something but it's a security are not proving the decentralization basis is a slippery slope and I just I have a hard time believing that in common law systems you know we will see so if if etherion for instance was not a security that was set a precedent and everyone would start raising a ton of money and say that you know my token turn into some something sufficiently decentralized I don't believe that approach so another question I think this will be pointed specifically a little bit more at the cowboy here is the question regarding ATF so he's perhaps you know one of the most crucial people in getting the Bitcoin ETF on the market and you know it's taking the SEC still a lot of time to get comfortable with with the ETF and there are several factors one of them is custody one of them is market manipulation so I want to ask Gabor specifically you know what have been some of your learnings from dealing with the SEC recording with the ETF what do they think is really you know the most crucial step in getting to ETF to the market so yes I'll be quick with this so the the world wants a Bitcoin atf because investors are used to protections and i think investors do deserve those Peart so we've been working with the SEC for years now and the primer basically we had to build a market with some few guys from the bottom up so we need proper pricing evidence that the markets are surveilled and not not uniquely manipulated compared to other markets and proper custody solutions so through various partnerships we believe we have the right pricing solutions and we believe that we can prove that the markets are not uniquely manipulated compared to other equities futures and commodity markets the only question outstanding question in my opinion and I think that's some other people think is this custody so right now the large banks of the world are not custodian digital assets so hopefully you know hopefully that will change down the line and I think again just to just to emphasize I think it's unfair that today the average investor has to go through random offshore you know whatever the term was tropical island jurisdiction to but to get access to bet coin why can't someone just buy through a regulated instrument I think in the future that will change and Bitcoin is again Reggie basil II known to be a commodity so an ETF based on that would be a commodity based security and if that was approved and I think that might change quite a bit for the digital asset space I put a lot of content out on Twitter and other places on this if you guys want to follow just a quick you know a follow up question to that you know there's still the SEC still has an issue with market manipulation and a lot of the you know underlying exchanges where most of the liquid comes from are still unregulated right that's its Finance bit phonetics Betamax is that an issue at this point that you know a lot of liquidity comes from these exchanges or is does you see okay with just having you know do regulated exchanges as the basis so I mean specifically to our to this point our ETF is priced based on over the the trades of Bitcoin so the entities aren't we are dealing with are either broker dealers or affiliates of broker dealers that transact large amounts of Bitcoin the OTC space is somewhere between really twenty to fifty percent of the market so we have circle Genesis and Cumberland or our partners in the space and we have appropriate agreements with them and some of the large through a separate project that I'm working with with Nasdaq land futures and surveillance I think three of the exchanges today are signed up already for surveillance like equity markets and information sharing agreements and we are we're open to register other exchanges as well and work with us and also help protect the exchanges so that that's kind of what I do try to protect the exchanges from regulators and at the same time satisfy regulatory requirements so it's getting up there so we have large OTC market makers sort of getting into the space with sufficiently large volume and that's what our ETF is based on and they were broker dealers again some of them have higher requirements than gold another commodities so my my answer is we have sufficiently surveilled volume for the purposes of a Bitcoin ATM so another question now I think the most appropriate for Benedict some of the companies in the space you know cryptocurrencies spaces as a whole as a global phenomena some of the companies have been known to you know go from jurisdiction to jurisdiction until they find the most favorable one that maybe has the least friction so my question is you know how does circle view the strategy because you know in theory it could actually you know it's harder to compete against companies that don't have the same same rules so for example we look specifically you know advanced they've been moving from one country to another and now because they have the least or the most favorable jurisdiction maybe they it's it's you know easier to compete and they've maybe unfair advantage so I'm curious how you view that yeah I don't want to speak about a specific company but def we looked at that is a strategy and it is in fact frankly becoming increasingly prevalent as opposed to less prevalent and the reason why is becoming increasingly prevalent is because the development market regulators have a hard time deciding what to do with this asset class except for for the reasons previously it is set out because it's not one thing it's the application of technology to many different aspects of Finance secondly as I mentioned before there is a new thing in it which are these consumer in utility tokens the other new thing was to try and place these things without prospectives without a revenue model so there's a lot of new things in that that that developed market regulators are just concerned about creating new frameworks for at this time so then naturally people start hopping around to little markets that either come up with the framework of some sort are that otherwise are frankly not regulating at all so so I've been looking at this and and there definitely is a series of favorites in that regard let's say multiple examples every team but the reality is if you read that regime which I did from the back when it came out it's very clear that they are not denying the existence of European law so the moment it's a security you're into European law including method so let's say if I hop with a platform to Malta and I start offering securities I'm actually violating European law and what may happen is that Malta doesn't enforce that but you have a long term liability against you from the European authorities and and you know there is actually a history to the EBA already having gone after mouth of a certain practice so it is not to be excluded that European regulators point in that direction and say look that line of security was was infringed upon I've seen other examples I've seen one in Vincent and Grenadines which I still have to find out where it is actually but interestingly that's island or that platform in that island if I recall well in the future space is then limiting the offering of that platform meaning that the residents of even that small island can't access it so it's not only an honor activated island it's on top of it a place where then they try and protect themselves this way we've seen many other examples in many other different islands on earth so yes it's not something we we can stop because it's going to be up to every single party to choose that for themselves I would say though that these broader trends we discussed are much more important so the fact that there is such deflation in in in the token prices for tokens that were I see owed I will lead to less retail in an institutional interest and then points in the direction of needing to go as I said before into the regulate the direction anyway and then if you want as you mentioned liquidity then you have to go for leading market regulation you can't do that from a small island so the question is are these kind of advantages temporary advantages as this market anyway is pushed to evolve and not only push to evolve but frankly as it as it becomes able to evolve because I said the custody issue is not resolved the settlement finality issue is not resolved so until we have solutions for these things is actually maybe not I I can tell you for sure that some leading regulators are not going to approve the product until these issues are resolved so I said if you want to do a regulate the product then these issues need to be resolved the infrastructure needs to be in place so so what I think will be in this intermediary period of this kind of island hopping continuing for a while but long term yes for healthy markets you you probably need a level of regulation and you need it in developed markets i I did want to add a small point on the prior discussion on on fraud and I and this is a point I've prominently made in the in the gdf global digital finance since very very early last year is anybody who thinks that isn't caught by criminal law is just frankly not on top of even the most basic of laws which is criminal law right so you don't need a securities regulator to say that was a failure of disclosure it was a security no in fact you just need the police knocking on the door and saying you committed a fraud you issued a paper and the content of that paper created so misrepresentations and the other thing I would also say on the on the security side is we mentioned where the regulators acted fast enough I frankly think they did because if you look at the history of them making statements on the limits of their security law it started with the first statement by the SEC in the summer of 2000 17 17 not 18 and if I remember it was only about three months earlier that that the Dow phenomenon had started so I think it is just that people weren't reading these consecutive statements so let's say the Hong Kong SFC has one out there right away in in August or September as well and they can all be accessed on a website for IOSCO so if you do IOSCO crypto you can find the full list there and you can see the chronology of it so it's not like they didn't act they actually did but it would it came so fast that they could only do what they did yeah so we're running out of time but we'll take two questions from the audience so whoever has a question feel free to ask I will have a question regarding regulated security some on crypto assets so there's already been some issuance of exchange-traded notes here in Europe xpt provider is probably the most known one what's your view on that and and do you think that Europe might be a leading and you know leading the frontal net I don't think I understood the question he couldn't hear it it was too far from the Micah or something did you think he's essentially asking about a ETFs in Europe and why it essentially been able to have I can quickly answer your question D the reason is because right now they're two products out there so one of them is recently the AMA one multi-asset kind of crypto ETP which we actually helped with on the pricing side to launch and them that's isolated to the Swiss market and it took two years for the Swiss market regulated to comfortable with basically a structured product which is a very small market offered to limited number of investors and and so that's that sort of isolated small market offered the limited number of investors the the Swiss side with and and again I should I don't want to be specific with the the idea there is they have a note issued locally hitting any regulated that got comfortable with with another offshore jurisdiction on an island and it's an exchange-traded you know where someone you know an organization takes to counter for you have a hundred percent counter for the risk but the issuer of denote the when eventually I hope that we'll see in an ETF where you don't have gone through party red squid with your video issue and as Benedict mention actually earlier I do believe that we need liquid capital markets to these solutions and right now the jurisdictions like Switzerland is one point six trillion dollars only you know a small fraction if the percent is in structured notes so it's a small market Sweden is also even smaller market yeah we need larger markets to be part of this space and no GA jurisdiction will be great I mean my prediction is that the next one to three years there'll be a ga jurisdiction that will get comfortable these Bitcoin I've got a question I'd say given there's been so much time for institutions to figure out as well as retail to figure out ways to get long Bitcoin how much in effect you think there will be on price if we did have a Vanek Bitcoin allowed I I don't like to speculate on price I think the I don't I don't know I think there are more important things about Bitcoin that most people tend to underestimate and the more important things that it's this is my personal belief but it's trust minimized non-sovereign issued sound money and that is there's way more important than price that of price how much capital do you think would be contributed the first year oh I can't be specific on the first year but I think the most of the institution's are not in the space other sort of like the retirement funds larger banks they simply cannot get in get in here so one example is that when we launched the first gold fund gold was around 200 million dollars total market capitalization it was in 1968 and gold is around seven point four trillion now again I may be Bitcoin will get there maybe not but one thing is for sure regulators need to get comfortable with Bitcoin to the same level as well at least you know afford a space to grow otherwise I think we will just see consistent shrinking and and make no mistakes actually regulators have not delivered a decent punch to the space yet so that's just something to keep in mind any last quick question hi how are you tone vase to questions hopefully you can answer involve so one of them is lately the terminology has changed from ICO to sto is there really a difference and the other question do you feel that companies that did I that did I co had a competitive advantage over their competition like finance for example became the biggest exchange so quickly because they I see old but the other exchanges that were there before them did not so just to answer your first question is a difference between icos and stos yes there is an sto is essentially an ICO but within the current legal regulatory framework that we're all operating in right so if you were to conduct an sto in Hong Kong you need to work you need to comply with Hong Kong's marketing rules offering rules and also the documentation around the offering has to be or vetted and probably done by a law firm now an ICO back in the days you could have done all that within three to six months from inception of idea without even a law firm involved right because there were so many saps and contribution agreements running around people are just cutting and pasting slabs of these clauses and compiling themselves right however with an Sto there are regulatory guidelines in the in the US for example there's the filing requirement if you do a reg D so there's pre pre filing and also post filing within 15 days of the initial first offering so there are rules that you need to abide by to do an sto just on the point of marketing now you may be offshore such as in the Cayman so you may have an entity incorporating the came in to be the issuer of the Sto however if you have boots on the ground in Hong Kong or in the US you are still subject to US and Hong Kong regulations if there's active marketing by those individuals on the ground so you can't escape those rules in any way for the second question I'd say that if you're in exchange whether you have your own native ICO or not is that an advantage I'd say it gives you unique funding advantage to the other tool to raise money but I think overall it's more of a negative expansion changes are meant to be extremely impartial and not have ulterior motives and when you're marketing you're your own token and encouraging people to trade it whether it's an access token or other other use case I think you know wouldn't see in exchange like Isis back by the proper institutional exchange function that way I think that it's worse than just a distraction and I think the other thing to up there is it's important to look at the definition of securities again right normally if there is a right to any form of earnings it gets very close to security so it's still a question on how that's to be tested the other thing is the motivations that the token provides on the conflict level is another important question to ask ie does it encourage you know it's a wash trading or something like that these are questions I think to ask if anyone wanted to do that let's see in a principled market yeah I think that's it we've run out of time so thank you everyone for paying attention and have a good time you