The European Crypto Scene - TOKEN2049 London 2021

hello everybody and welcome to the first conversation of the day undoubtedly the best one no question we're gonna be talking about the european crypto scene which is quite extensive and uh as mike so eloquently put it we have some heavyweights on this panel to talk a little bit about it so we're going to kick off with some introductions charlie let's start with you good morning a pleasure to be here my name is charlie morris i'm the chief investment officer at bytree we're a data business blockchain database business been around a few years we pride ourselves on data accuracy and also research and a small asset management arm my background i came from the big ugly old world of finance i was a fan manager for many years at hsbc excellent marcus morning my name is marcus hughes i run coinbase's european business joined about three years ago now which feels like a lifetime in the crypto space previously was in traditional finance as well and tim thank you good morning everyone my name is tim grant i'm the head of europe for galaxy digital uh i think by now everybody knows what we do we're we're across sales and trading asset management mining advisory venture principal investments and of course custody given our impending closing of our bitcoin acquisition so really in every area of the space historically i'm a trad fire guy but it's been six and a half years since i met coinbase and ripple it's actually the 19th of march 2015. i'll always remember it now wow i had no idea about blockchain and bitcoin before i turned up that day and by the end of the day i had bought bitcoin at 200 on coinbase um but let's not talk about what happened after i bought it at 200 well i'm just impressed that you got through kyc that quickly so well done so lots to talk about but as as mentioned this is a conversation about the european crypto scene so where does europe stand versus the rest of the world i mean this is the country or sorry the continent i should say where ethereum held its ico where some of the most prominent names in crypto not only originated but are doing their development and today you could probably find more github polls on uh from europe than anywhere else in the world but charlie let's start with you you have seen some interesting data points i'm talking about first just kind of the adoption overall of bitcoin your organization is really tracking flows of bitcoin right now um first what's going on overall in the bitcoin market and where does europe stand when it comes to bitcoin and crypto trading there's so many there's so many things to say there firstly i've split the world into into three time zones um the overnight to art from our perspective the overnight asian session uh the european session which would include uk and africa and then the americas which would include north and south america not just the usa and and it's notable that asia was huge until the china ban basically and now europe is really punching its weight and um you know i think that there is a lot of there's obviously a burst of volume in the market every day at 2pm when america wakes up but i think one of the one of the problems with the on-chain activity is is tax in the united states so if people buy bitcoin and then they don't move it which i think in europe they're probably doing much more in defying those sorts of things on the data point of what happened overnight well let's look at the fun scene so um you know everyone third of the greyscale bitcoin trust which which holds you know 650 000 odd uh bitcoin having started accumulating in 2013 pretty pretty good stuff and that stopped taking flows earlier this year but we track all the publicly available funds in the world and that's exchange traded funds mainly they started in europe back in 2014 a long time before they did so anywhere else you know starting in sweden now they're very active in switzerland and in 2021 we've seen lots of fun launches in canada as well so those are the hubs those are the crypto hubs for asset management and last night you know last night how many bitcoins did the funds buy yesterday two thousand ten million dollars ten million dollars went into bitcoin through funds alone yesterday which i think is um is pretty amazing that that collapsed of course in may there was panic in the market may may june time but it's been picking up and and last night we're starting to see accumulation again fantastic and tim you've recently seen some reports indicating that europe is overtaking of the geographies yeah i think it's it's definitive i just found it on sunday uh it's worth going to check it out there's a chain analysis d5 transaction report you know we all know chain analysis do great work so we trust the quality of their data and you know three elements it's actually quite a big report and it's worth sort of absorbing it all there's lots of elements that are really quite meaningful but i i'll highlight three one and this is the one that i think is great for this panel uh the as a percentage of transactions globally uh europe is now the biggest of those three uh those three jurisdictions uh didn't i did not see that coming i thought we were a little bit away from that but it's it's definitive it's true it's now happened uh so that's great uh secondly europe perhaps unsurprisingly but it's worth saying is the biggest trading partner of the other jurisdictions um and so that's pretty significant and thirdly then then you ask the question why where did the transaction volume come from uh well it comes from the large institutional 10 million plus tickets so that tells us that basically institutional defy is being run out of europe everybody's trading more with europe than any other jurisdiction uh and and this is the sort of the platform now where europe comes into play and i think what's interesting i've had this conversation with a few people this week is you look at the other two jurisdictions us and asia and and though they got in earlier they were somewhat plagued by by issues and the very natural issues that we all know uh you know the hacks et cetera et cetera some unnatural issues i would say some extremely unnatural issues including the llamas here and although i do love that uh and um but here it's been more muted we haven't seen as much of that sort of those negative headlines per se and i think that's now about to to switch and be a benefit because the european community has been a bit slower on the uptake i think it's fair to say but now we're seeing this increase in activity with no real negativity to get away from sure we've got headwinds and i'm sure we'll talk a lot about regulation but uh it's an extraordinary platform for europe to go on and dominate from here so galaxy coinbase and waxman all found initially in in the united states but of course with major european presences marcus you're responsible for the european business of what i think is the most important company no question within our industry and clearly they put you in charge because they think it's a big deal what are you seeing from your vantage point um is there real growth opportunity in europe and is this happening at the retail level institutional infrastructure or everywhere yeah great question i mean so much to unpack there and we could talk all day about the opportunity scale of the opportunity i think what we've seen recently is um you know a sentiment is a really important factor here and if you you know rewind even a year or two ago you know the sentiment in the mainstream media more generally was you know crypto is a bit of a kind of side thing um often focusing on negative aspects sure have been exchanges that got hacked that's bad for the industry as a whole of course but they're also for a lot of reputable players um and i think that narrative has shifted now you know nfts various other things have kind of captured the mainstream consciousness and now you see a much more balanced assessment of the industry of course there are challenges there are problems that need to be tackled it's the same in any nascent industry so i think that that broader sentiment that brought a narrative for me is a really important um shift and that's great to see um more broadly i think you've seen more and more people move into crypto take that first kind of dipping the toe in the water um and i think that's an important kind of psychological step because once people you know look into the ecosystem often they get drawn in it's kind of a bit of a rabbit hole you know the excitement that that's out there the amount of products and services um and so you'll find that you know that to my mind you know buying bitcoin for kind of investment purposes was you know if you ask the average person they might just say that's all they really knew about crypto i think that's changing now i think we are moving more towards this kind of utility phase where there's a whole range of different products and services kind of powered by crypto that will really kind of capture people's imagination i think on the institutional side it's been kind of revolutionary really you've seen you know up till about six to 12 months ago again it was primarily kind of crypto market makers crypto hedge funds that kind of dominated volumes and this was quote unquote institutional crypto which should be noted for everyone in the audience isn't exactly the same type of institutional finance that you gentlemen all came from before at least it wasn't no i don't think it was but i think it's now increasingly trending a direction where where everybody realizes that they have to be part of this um and so you've seen a lot of kind of traditional pension funds traditional hedge funds and so on um you know family offices high net worth individuals everybody now is at the very least having the conversation and many are committing you know meeting for capital so i do think that that narrative has shifted um i always kind of say i think we're really at the beginning of the journey here this is not the end you know this is things are literally just just beginning and so i i think there's so far still to go but a lot of encouraging signs notwithstanding obviously their headwinds i think regulation which i'm sure we'll touch on um you know is an important part of it um particularly on the institutional side but also on the retail side you know consumers want that confidence that they know that you know what they're dealing with is kind of overseeing that the rules of the road and so i think that will be important for kind of gaining trust and confidence in the industry and again lots of positive signs there as well so so it is i just want to make sure it's crystal clear you see this as a growth market europe massively for crypto massively okay no question at the beginning the beginning of the journey totally i kind of see it as a bit the end of the beginning in some respects like we if you think if any you can define it in so many different ways but if you look at the we i remember when i started then i was doing this circuit back in early 2016 we're doing these these conferences back then it was a different bunch of people and it was a different vibe altogether but we would often compare to the beginning of the internet that that old chestnut like we're about 1990 x versus the beginning of the internet and it's like well okay whatever i don't know what year it was but i know this the pace of acceleration versus what we were going through back then is vastly superior that you know this this is an inflection point where you just look at this year alone look at some of them i'm talking this but this was someone else this morning look at look some of the stuff that you thought was completely bananas six months ago is now just part of the mainstream some of the nft stuff some of the the more metaverse stuff that's harder to get your head around so we're moving at a breakneck pace but and and so much has happened and look look at every big traditional financial institution that's ontario in this space look at the coinbase story look at the galaxy story look at the aum look it's all of that great but we're still only really just at the end of the beginning like now we've got this phase where there are there are infrastructures we can we can rely upon more to build though uh there is a lot of money in but we have only you know as novo was saying yesterday we're only at kind of a small fraction of the of the assets and get into this this is the end of the beginning now we're in the next phase where it's real growth it's a bit more institutional it's a bit more buttoned up it's a bit more trusted it's a bit less beneficial so let's let's let's kind of define that a little bit you mentioned aum and certainly there's a lot more money in the space that's clear but i think one of the more interesting things to talk about and and all of you here are responsible for this new respective organizations is the flow of human capital into the space it seems today to me that there's less of a career risk and that people in europe are now willing to take jobs in crypto that previously simply wouldn't they'd shy away from it they thought it might be too risky are you finding the same things and let me make sure to find it for this specific panel are you finding that to be the case when you're hiring people across the continent yeah i mean i i think in terms of you know a career path people want actively to work in crypto now it's not a question of even having to sell them you know they're coming to companies like ours and saying look we'd love to you know to to work in this space um so i think that's very much shifted you know even three years ago when i kind of came on board i thought to myself you know how much of risk really is it i had a huge conviction that this was going to be big says the guy who joined just before the crypto winter hit yeah it's true but i mean you know once you've been through that kind of period of time and i think you just have to kind of take the view that this is a longer term thing it's not going to happen but i mean part of the you know interest in joining the crypto industry whatever part of the ecosystem you find yourself in is is building something building something kind of revolutionary and and new um so i think you know there's a huge amount of capital i mean the figures in terms of venture venture capital coming into the space this year has been the biggest already on record by some considerable margin um you know the amount of people coming into the space you know has grown exponentially and of course people bring with them the kind of processes and the structures you know to help kind of take things to the next level um so yeah i think very very very interesting from a human capital perspective and tim did you see that as well um back when you were sdx definitely it's it's actually been an interesting journey you know i came in in 2015 you know bitcoin clearly was there but you know ethereum was not really that much of a thing yet right you know it was it was 2015 theorem obviously came into being but it wasn't hadn't permeated the consciousness defy wasn't really something that we talked about in the same way we do now so when i came in i i owned some bitcoin and i'd kind of scoured the internet for information and that got me the job that doesn't work anymore you kind of need to know what you're talking about so it's interesting that there's a lot of people that want to get in uh but you kind of the bar has raised for the quality of people that you need to be effective very very quickly so you know it's broader talent pool but you still got to be discerning but it's hard there's also a talent war right any anyone who's any good uh is going to be bid up in multiple places and the other thing that's worth mentioning is as you as we build our workforces especially those of us who came from the traditional world you can't think the way you did in the traditional world you now have to think about having some gray hairs for people who've seen it the booms in the bust and know kind of how to deal with a large organization and and etc etc and the journey of building a company but you need the youth because there's a different mindset you know our best traders are our youngest traders because they understand the the the complex web of projects and defy you know sort of connectivity out there and that's just something that a lot of us that are more older just can't get ahead around we're not we're not built that way so you need you need a bit of a combination of all of the above and that's kind of exciting i know that's something that novo gets really excited about it's like the fact that we've got all these young brilliant people in our company mixing with the with the traditional fight trad fire guys and the tech guys like we need tech dna which is why we bought bitco it's fascinating 100 well there is something to be said for traditional instruments or bringing traditional like instruments into into crypto one of the great flaws we've had is we simply didn't have the infrastructure you talked about custodians actually both of you talked about security and there's a reason why hacks happened multi-sig wallets for instance were like nearly impossible to find and even to install a gnosis wallet for ethereum was very complicated and remains to be the case as an example and that was pretty much the way someone would secure ethereum but it also comes down to trading products for instance how would one know what price should be so charlie you know you've been building here in the uk and an organization that is trying to help transform the way we understand bitcoin for instance can you talk a little bit about the journey for for your organization so far and what what does that mean in the context of london and the tech scene here yeah um well i'll do the london bit first i think you know this is a european panel so how does how much um blockchain data is absorbed by europe compared to other parts of the world well the usa is number one according to the bit nodes um the bit nodes map with 1800 nodes downloaded and then germany comes in second at 1700. and then you've got um france then amsterdam canada and london comes in fifth but uh london makes up for in other ways with trading infrastructure uh as a centre of capital so a lot of projects are born here because it's a money hub let's face it um but coming back to the data side of it you know my background was a multi-asset fund manager and i used to be a big fan of things like gold as alternative assets emerging markets you know in the pre-2008 years and the commodities these sorts of things also different hedge fund strategies now it's all about trying to find a good sharper issue so it's all about trying to make money for your client without lots of risk and you could do that in portfolios by having lots and lots of exposure to low-risk assets and and some exposure to high-risk assets or you can do it um by having low you know negative correlation and so the search for negative correlation has always been a big thing um in the in the asset management space and bitcoin wasn't exactly that but it was certainly something you could put a small amount in a portfolio and it had great optionality it could really go to the moon and it and it did um over the years and they continued to do so over the long term um but i wanted to be able to measure it because i think if you've got fiducial responsibility and you're making investment decisions on behalf of institutional investors you've got to be able to say i've looked at this i've kicked the tires you can't say i went on twitter and there's a good story about el salvador you know it's got to be more to it than that and so i was looking for measurables and and to my mind it was it was the the the you know what is it what does bitcoin do what's its job it's the opportunity to transfer value and so therefore if it transfers a lot of value then it's done its job well it's valuable and if it doesn't transfer any value then it's not doing its job and it's not very valuable and so we measure that um and and please by the way come to our booth by trees booth at the uh the far right after the thing we'll show you okay all right what what's let's say they're showing till the end yes i'm sorry i'm sorry but yes so but you've been building this in in london and so you've been building a team out here um do you recruit people from here from traditional finance how do you constitute your team we've got a small team but i tell you we've got an intern who's flown through ppe at oxbridge um and then then came out on top of law school's impeccable cv and and he wants to work for us 22 years old he wants to come to crypto i'm saying get a real job with a real firm no no i want to be in crypto well so that's the thing we're transforming that right now these are the real firms today um and let's let's go a little bit we'll talk about regulation i think marcus you mentioned that earlier it's quite important one of the challenges perhaps in europe is that it's so multi-jurisdictional um of course there's the the web of different organizations whether the eu and the uk which is not eu any longer what does that mean for your organizations do you have to keep on top and have like live intelligence on kind of regulation and policy you know across europe is is that something that you're paying a lot of attention to marketing yeah unquestionably i mean one of the you know core tenants for for coinbase is trust you know trust in um and the two hours kind of means that you know your assets are secure and that we engage constructively with regulators and have done from from our very early days um which is you know necessarily common across the crypto industry or certainly wasn't i think it increasingly is um what's happening in europe right now is interesting i mean i i think because the european union obviously has many harmonized sets of sets of rules and we have kind of mika coming down the track we can expect that to be a kind of harmonized framework for most of most most of europe and obviously the uk is kind of pursuing its own path now what we've seen prior to these these regimes coming in is a number of consultations in the uk the fca hmt and so on have started to think about you know what's the framework that we need to build out and i you know i think sooner sooner rather than later would be my sense you know it would be good to have some kind of at least initial framework so do you think that we will have some clarity i think we will i think we will i think there's been a number of consultations it'd be great to see those translate now into more kind of direct action and i don't think we should try and solve for you know having everything resolved on day one this is a very fast evolving space and i think you know categorization of different types of assets you know interest high rock is an important starting point to my mind so you mean like for instance in switzerland there's the there's securities there's utility tokens which exist there right um there are different frameworks essentially and categories do you think that's something that we might actually see standardized across europe yeah i mean it'd be nice to see that i think across the european union we will under media there will be you know e-money tokens for example how do you handle stable coins as a you know perpetual question it is globally and you know this concept of e-money token has come in now and under me which i think is interesting so it's not e-money but it's not the same as bitcoin so i think that kind of categorization is critical as a starting point um finmer was a pioneer in that area you know they started out with this category years ago now i remember when i first came in it was it was the categorization i was reading to familiarize myself um obviously things have moved on the industry has changed the types of assets have changed in the intervening period um so i think having that categorization is helpful and then you know what are the frameworks what are you thinking about well you know aml issues and kyc is really critical um for the industry security of assets and so on you know i don't think we should try and solve for every every problem um but we can start with a framework and then build on it and of course germany has decided to do that um with its with its crypto kind of regulatory regime kind of going ahead of mika to bring something in straight away and many countries now brought in kind of registration regimes and these registration regimes require you to kind of go through a pretty rigorous process actually um you know looking at your looking at your business and i think regulators across europe are using that as a bit of a kind of fact-finding mission to understand crypto businesses crypto exchanges and so on and as a business leader are you finding that helpful to have a type of clarity to know that what you're doing is within some guard rails that let you be creative within that yeah i think having certainty is always is always good for a business um it also raises the bar to entry right so so ideally you have you know you know reputable players you know operating within kind of the guard rails that have been set so i think that's a positive for the industry um and of course you know absent that you've only really got existing kind of securities laws um you've got e-money and payment services rules there is a big gap there where crypto doesn't neatly fit in most instances into those rules um so i think we'll see this move very quickly um the bin developments already in singapore and japan where they're already kind of regimes that have been in place now for a little bit of time um obviously the us is a lot more uncertain with federal versus state and so on it's a much more complex landscape there certainly and with a lot less clarity than we're seeing anywhere in europe so tim i mean you've spent we've talked about securities there marcus um you spent a lot of time understanding the digital securities space security tokens for instance um and we've seen that bureaucracy has kind of slowed that down to to a greater extent perhaps than was imagined back in 2016 2017. do you think that there is going to be a burgeoning digital security scene in europe i think it's going to be global uh you know i guess this the statement people come out with is there's nothing more certain in life than death and taxes it should probably add regulation onto it as well and rightly so and look we're we're long regulation we believe in it we think it's important uh we there's no point trying to get around it but there is there is a point in trying to get it right it's all very well talking about it in non-securities terms but the you know there are 700 trillion dollars of of securitized assets right out there that's the holy grail for defy and i think we i think intuitively most of us know that but it's much more it's much harder to make that happen and it's partly bureaucracy but frankly you know i say this unashamedly having been in tradfoy the the current incumbents in trad fire who really control the regulated securities business have every incentive to be defensive of course they do and they get they're not going to dive into this and it's partly because they just don't even understand it and that's that you know i've talked to a number of boards of the biggest banks in europe and it's usually one or two of the board members who get it and most of them don't that's not a i'm not reflecting badly on them it's just sort of a reality and they tend to be older as novo said yesterday i think you know most people over 50 don't understand fa nfts that's true of sort of many elements of the space so there's a there's a sort of defensive posture but you know i just spent the last year and a half running sdx i'm glad to see that sdx got its final licenses to be a regulated exchange and csv for regulated natively issued digital securities that's a big deal i wish them well and hopefully we can we can all work with them in the future but that's the beginning of what i think within a few years will be a movement you know i talk about this with michael ash our head of investment banking we're doing so much business today in investment banking we can't hire fast enough because there's so many players in the space who need advice but it's actually traditional advice we're not using anything digital when we advise how they raise money and what they do the next frontier is advising them to raise equity and debt instruments in regulated digital securities and it's only a matter of time the problem is you need more infrastructure you need more regulation you can't you can't jump ahead of that one because you'll just go to jail it's that simple but but the spoils are massive when that whole complex of equity and debt and real estate structured products instruments go digital it's going to be a an extraordinary boom and and it's going to be it's generally democratizing which is the exciting outcome we're looking for and so that's also going to for that to happen the counterparties in every trade right are going to also need to be on board with technology and so have we seen the beginnings of that type of mass adoption that's required the institutional level have you seen that in your conversations currently like are you are you having substantive conversations that are going to eventually lead into digital transformation effect like web 3 type digital transformation um at these large organizations well yes and and and i'll i can give you the the timeline you know when i uh i started in this space at r3 you know with very much enterprise blockchain focused but but owned by banks and and talking to banks and we were talking to banks back in 2015-16 about whether bonds would go on the blockchain and whether equities would go on the blockchain and here we are six years later we're still talking about it and it still hasn't happened but underneath the the understanding the pieces of infrastructure the regulation has moved forward like we are materially closer to that than we were six years ago every single big institutional financial services player on the planet has some sort of blockchain digital asset interest but it's just that's just a fact nowadays and if you don't you're you're going to be a dinosaur pretty quickly like they're all leaning into this uh so so that alone gives us you know comfort that this is going to happen but that's where we you know we kind of have this dichotomy of it's exciting that we've had so much progress but there's so much more to do so so it looks promising but i think to be fair the digital regulated digital securities is still a little way to go and so part part of your business actually let's talk about m a you mentioned m a advisory um it's also something that coinbase engages in other organizations too obviously without talking about even your own organization have you seen a flurry of mma activity in the european crypto scene um do you expect that that's going to lessen or increase over time marcus yeah i think the industry is still relatively nascent and i think inevitably we'll see some consolidation there are a lot of smaller companies out there that will probably get snapped up by by larger companies um i think the amount of innovation that's happening is just extraordinary at the moment um that's part of one of one of the most exciting things about the space is this constant you know almost every week there's there's some new idea being created so i think we can see consolidation the reality is also you know organic versus inorganic growth you have to look at both options you know when you're looking to kind of scale any business um and it's just impossible to kind of build fast enough sometimes in in crypto in any other industry um the other side of it which is quite interesting is that you know we have a ventures arm that takes kind of positions and a number of different businesses in the crypto space that's something that i think has been really successful i think others are followed the same path um so i i think you know the innovation will continue it's impossible for any one player to be able to to cover all bases in their business so i do think we'll see that kind of consolidation if you also look at the more kind of traditional space as well you know you know as things mature you tend to get that kind of consolidation happening so i think it's quite it's quite natural for for that to happen um but again i still think we're such such early days at the moment it's it's hard to predict anything in this industry okay well so let's talk about the venture side and we've heard earlier that nfts perhaps aren't well understood by people under the over the age of 50. but nfts are something that and i can say this we were very fortunate to help launch nfts in the first place as a concept that most people didn't know what they were until this year and suddenly we had this the people sale for instance i think was kind of the breakout moment right where suddenly the front page of the new york times in the wall street journal and the ft we're talking about nfts right do you find that i mean your none of your businesses are primarily nft focused businesses but are you finding that the air cover from nft is becoming mainstream is that benefiting your organizations um what what do you think impact do you think that's going to have on on the european market actually charlie we'll start with you i think we're all becoming much more open-minded about the possibilities of where this is all going i think this space is not determined by the price of bitcoin it goes beyond that you you said human capital going into the space i think that's a very good way to describe it human capital ideas more networks more things more utilities more applications and and so i think that's that's really fascinating also um the benchmark of you know the relationship between the old world of finance the new world of finance it used to be the arbiter was the ft the tone of the tone of the conversation the ft which has been hahahahaha for the last eight years um led by the the alphaville you know that let's let's not speak ill of the ft yeah i mean i've been an ft reader for years and it's just been frustrating watching this please can you get here and in 2021 you kind of feel they're coming on board and there's some decent comment and content coming through and yes it's a good newspaper in other areas but come on ft get with the program and um this you know so i think that a friend of mine recently said trying to keep up with this space is like trying to drink through a fire hose there's just so much happening and so many new projects you can't possibly stay on top of it we're trying to cover it and it's hard enough you know and that's all we do so i can't imagine what people are doing who is not all that they do um it is it is it is moving very quickly and i think that you know in terms of mainstream finance i always had the view that somehow or another this space will be the arbiter of the future of of of how everything's done how business is done how government bonds are done how how money works i really hope we don't see uh central bank digital currencies in in civilized countries um or countries that want to remain free if whatever freedom means these days um but i hope we see lots and lots of digital it's a hot take right there everyone someone anti-cbdcs actually just personal opinions do you have personal opinions on cbdc's should they exist because by the way just to put a point on it many countries in europe um of course are experimenting with this many many of these quite publicly yeah i mean my take is in the digital asset space you can have different types of assets that can co-exist and i you know i think to say that you kind of cbdc's will never go anywhere and they'll never do anything i mean you know looking at some of the disadvantages of kind of fiat currencies today you know exposure to monetary policy and inflation and all these other things you know that kind of decentralized nature of assets like bitcoin you know present benefits that arguably you don't get with cbdc's but is there a space you know in the ecosystem for many different types of digital assets performing different functions i think so um you know just as i don't think you know crypto will kind of totally do away with the traditional finance world i think the two will coexist but it's you know for me a revolution in how we're thinking about things you know how blockchain power technologies and so on and there's there's enormous benefits to simply having an on-chain asset right it's it's it allows for much more efficient and efficacious transfer of value so tim what's your stance on cbc's so i have a reasonably unique take on this so many of you who've been in the space might remember project jasper which i think was probably the og cbdc project uh which bank was project jasper does anybody remember canada bank of canada so so i remember january 2016 being up at the bank of canada with the big four canadian banks since we started that project so that was one of the very first project uben everybody knows that because it's still alive um that was started because i was talking with deputy prime minister of singapore and ravi menon the head of mas i remember the conversation and i it was actually 30-second conversation that turned into project uben uh if anybody knows why it's called project uben i'll give you a big prize there's not many people who know why it's called that and then i've there were a few more projects innova on project lion rock that came out of r3 came out my lab and then more recently i was running project helvetia which is the swiss national bank and then we did project euro which was the swiss national bank in france so uh suffice to say i've talked to just about every central bank over the last six years about this and i think the point you made is the right one cbdc is too broad at a category there are retail there are wholesale there are many different flavors of of of on chain stable coin uh you know fiat currency it's just it's it is an incredible sort of uh diaspora of different different types of things so it's dangerous to say cbdc is one thing so bucketing them is the issue but yeah do you but obviously you must see benefits here otherwise and having seen that evolution uh through the years and the kind of the the quality of the analysis the the deepening understanding of the underlying tech the evolution of the underlying tech now it's the point i think it's inevitable that we'll see these different flavors of of of money and i think we need them and i think there's a space for them and some of them will be you know and here's where here's where we flip it a bit on its head it's going to be driven by us at the end of the day it's going to be driven by us the consumers and what we want to do and how we want to do it and that's what's exciting about this space right like we will define where the capital goes and what kind of capabilities finally get built but i do think it's inevitable i think for instance the swiss national bank is is going to do it they're going to do a wholesale cbdc which allows banking institutions to engage and do uh atomic or near atomic settlement which then reduces settlement times and it's just that alone unlocks working capital etc which is which is an incredible like that's the stuff that on the ground we don't really understand as sort of you know the man and woman on the street but if you understand the plumbing of financial services that should in theory flow down to the final product that we buy and it should be better for us as consumers so actually let's talk a lot about that coinbase is well known as uh perhaps one of the most popular wallets in the world for the wallet function so many people around the world in europe and beyond have coinbase wallets on their phone on their desktop um are you finding and and through that they're using for instance maybe buying bitcoin for the first time 200 worth back in 2015 they're using that as the accelerate the catalyst to learning a lot more so two questions for you marcus first is um are you seeing um continued growth um at coinbase and on the on the wallet side are you seeing more and more people take it up and then also what are you doing as an organization to kind of further catalyze uh the growth of this are you investing in education yeah so i think just in terms of growth i think you look at the whole industry it's just only going one way in terms of growth it's it's incredible how you know as i say that kind of first stepping stone for many people which historically i think would always have been you know buying bitcoin because someone said it was a great idea to do it i think there's a whole bunch of reasons now why people might get interested in different assets we've really focused on trying to demystify the space and just as we touched on the ft and the broader narrative i think actually people often have that kind of fear that i don't understand this this is too complicated um it's not for me and we focus massively on educational kind of campaigns so we have an earned product where you can go onto the onto the app or the website and you can earn some free crypto for learning about a particular asset what we find a lot of people doing is they do how great is that by the way you're getting paid to learn about crypto but it's very addictive and you get on that rabbit hole it's like wow you know you earn five dollars or whatever it might be but actually it's that knowledge that you've gained and i didn't realize that you know that particular asset could power this incredible new application so i think these kind of things you know draw people into the ecosystem and then it's you know and it's again it's a stepping stone towards that kind of utility phase where crypto is that underlying fuel powering a range of really interesting applications and so i think the more we can we can educate people the more we can bring people in and that includes regulators and governments and so on i think everyone's going on that learning journey you know when we all went into the space you know i'll be honest i knew very little you know i had knew a little bit about bitcoin and you knew a little bit about blockchain then all of a sudden you realize that people's knowledge is like okay now we start to see that actually there's a broad range of use cases here this is not a one-trick pony um i think that's where we take things yeah that's where the next billion users come from is from is from that kind of demystifying the space well actually it ties together the point we make about nfts um there's there's something uh very abstract about lots of the stuff we do in this space that that is not sort of intuitive but nfts makes it something you can understand i was shocked a few months ago uh it was around the people time i was sitting at the kitchen table with the kids and i was mentioning nfts and and you know daddy what's an nft this is nine two boys nine and eight what's an nft and i thought all right this is going to be uh it's going to be interesting how am i going to get this one across you know what it took 30 seconds because they play fortnite and this this innate notion of digital assets that you can sort of buy and sell using digital assets that you earn in different ways is innate to that generation so it's exciting and therefore that that's one of the big reasons why nft has been so useful because it's like oh i can get my head around something that i would want to own which is art everybody understands that art has value because people want it then you start to think about how it would look in digital form then you put you sort of you then the the transition into video games isn't that tricky now we're into the metaverse that wasn't that hard to explain what the metaverse is then then you can start talking about economics and the complexities of global finance and how everybody raises capital but like nft is the best thing that happened to us i think yeah so well certainly actually we could talk a little bit about media right now because media certainly have been covering nfts like crazy it seems like every day there's a new celebrity selling some new collectible version of themselves right um how has have you found that the media has shifted over time in its perception of the crypto industry tim let's start with you and then we'll go around the horn um i think you you alluded to it before you know the at the ft shift i was equally you know i'm a big ft fan uh versus the um overly verbose wall street journal you know the ft just says it how it is and i've always appreciated that but boy oh boy did they just lose touch of this space so it's great to see them you know get there and see things like articles on ethereum about what that means and what that could do article there's an article that keeps coming up on my ft app about ownership and the sort of how how ownership changes in this new world like now we're talking about things that matter and we're not getting into the sensationalism of things that can and have happened in this space um and and and that's what i think we're starting to see we're talking about real world apps that's why nfts that's why they've grabbed on to it because it's something everyone can understand like oh i see uh now now even in the last sort of few weeks that i've got you on my ft app i've got a sort of blockchain and crypto thing and you hit those to get anything that's got that word in it and for many months you sort of the last thing that was there was two months old now it's never more than a day or two since you've had someone mention something about this space and then you drill in and it's it's it's starting to get into into meaty goodness about what this is going to do so that's a fantastic shift which might be a reflection of their audience that right newspapers have to write for their audiences um so marcus what about you you've been of course uh deep in this space for the last several years how have you seen media shift over time yeah and obviously i have a lot of conversations with the media you know every every week we're talking about what's going on in the industry i think um you know look city am had a kind of cryptoam column going you know for years now when you know really we're pioneers in that space i think the ft as you say daily coverage now and then broader mainstream media um and not just focusing on you know the unfortunate things that happen sometimes like hacks and scams you know the scams in every industry you know we've got to do as much as we can to try and prevent them but unfortunately people sometimes do lose money um so again what's the narrative what steps are we taking to educate people you know to to to to to help them navigate the space without exposing themselves to risk i think that's an important part um but on the positive side yeah all those interesting use cases now starting to be fleshed out um you know i think one other aspect is you look at many countries around the world developing countries you've got mobile phone penetration at 80 90 but most people have no access at all to financial services and i find that that often kind of captures people's minds the possibility that just by an app on your phone you know many of these phones are running older versions of android you know but a simple low data usage app can literally empower someone to start a business to be able to save money um that that kind of thing you know those are the kind of messages we need to drive as you know as an industry is that and do you think the reporters are are asking questions about that today are they are they when they talk to you are they asking good questions now that might perhaps eventually lead to a feature piece on something like international remittances this example yeah no i think i think they're always asking good questions yeah i mean i think it's easy to kind of get caught up in the sensationless narrative sometimes of hacks or whatever it might be um but but no i consistently find you know across the across the broad spread they're always asking very intelligent questions very sharp questions and that's continued to be the case you know the knowledge base has increased over time so they're much more nuanced and sophisticated questions that are coming through now and again again i think that's just we need to be realistic you know as the industry we need to make the case for why they should be interested in this firstly and what the broader kind of story is here you know what is the narrative where is this going um and you know that's a step-by-step process but i feel really encouraged in the conversations that i'm having but they're certainly also talking about price all the time i mean at the end of the day i know we just talked about nfts we talked about life-changing uses of technology but right now a lot of the conversation is what happened yesterday in the bitcoin market and charlie this is something that your company's tracking quite closely and i imagine you're consulted all the time by media for determining you know what exactly occurred and precisely why um i'm changing topics we only have a few minutes here but um i saw an interesting statistic at your booth which was you your organization believes that the fair price of bitcoin is less than the current price of bitcoin there's a substantial premium and that's been the case for a number of months now so i understand we're going outside the cryptos uh in europe scene but this is an important topic do you think bitcoin's overpriced yes why because the level of traffic approximately halved from the january to april period when china was heavily involved and elon musk was the mem of the moment and the traffic has collapsed since then and there's disagreements on by different data providers around the world and by trees data um agrees with the the um uh the data from coinbase um blockchain.

com my bigger partner not coinbase and um and some other competitors have got data that could be you know famous data that can be 35 times overstated or five times overstated depending on the firm but you but you but the point is you do believe and you have some factual evidence or reason why you think that bitcoin is currently overpriced yeah but that's pretty valuable oh but it's still it's still a thing and it's still you know not saying it's worth nothing it's just it's just the price is out of kills with events we haven't seen an on-chain recovery okay you can see that by low fees low transaction count low transaction value um also if you look at the velocity and things like stable coins that inter interact with bitcoin that's also down so there's no there are no data points that say there's more activity in the blockchain today than pre-may well that's on the bitcoin blockchain there's also been extraordinary growth in other chains that we've seen over time yeah and the the advent of d5 is one of those things you guys are both right working and running very large organizations and i'm going to call it centralized finance although you're no doubt making investments in d5 marcus what do you think about d5 personally do you believe that there's real innovation happening there do you think it's a threat to consumers do you think that it's a boon potentially yeah that's a fantastic question so it's it's it's clearly an exciting space there's a lot of innovation going on you know things are shifting every single day i think touching back on the topic we covered earlier regulation i think you'll find that regulators are you know going to be concerned about how do we get a handle on this you know otherwise you know going to financial services just simply moves into this ether that we can't control um and of course there are no easy answers to how do you regulate something which is totally decentralized you know how do you regulate a smart contract you know how do you even get your hands around that so i think those are going to be the big questions that need to be answered i think you know undoubtedly there's a lot of innovation going on there um and you know it's a space that everybody is watching and i think there's a lot more visibility now on what's happening in deep d5 you know something that's being covered more regularly so i think the key question for me is how how will regulators governments get their arms around this um you know and and how will i think there'll always be a place for centralized um institutions i think the coinbases and the galaxies of the world you know are there because people want that trusted way into the ecosystem and you know someone to help them navigate that provide advice and so on um so i i think there will always be a place where trusted centralized parties will will have a role um where defy lands is is anyone's guess but i do think the key issue is you know how how will that be regulated how will that be managed by kind of governments and regulators worth noting that coinbase definitely ventures sometimes invest in d5 related organizations it's worth noting that you're playing on on both sides very intelligently i might add galaxy doing the same definitely um i've said this a few times publicly like will the real d5 please stand up before i answer it like yeah i'm a mass i'm long d5 we are long e5 we think that's where the exciting movement is it's where the innovation is happening it's where the new products and services for consumers for corporations for governments will arrive in the next few years it's super exciting some stuff will fail sometimes we'll do well it's the it's what we it's what we should see and more people should invest in it because then we'll get more innovation however will the real d5 please stand up defy as a as a as a as an end in itself is not the point sir as you rightly said c5 has its place bitcoin if anything proved to all of us that the defy thing was was a myth because so many centralized elements had to be built for to get more people into it uh but defy has a place and cfi has a place the real answer is democratization and you can maybe use other words but it's it's decentralized yeah i think the real defies democratize finance which is going to leverage big elements of defy and big elements of c5 and regulation and and freedom but ultimately what are we all doing this for it's a faster better cheaper more effective way of living our lives that's what that's what's at stake here and that's why this is such an exciting space because we all see it we all know it and we all think the 20th century model sucks we all think that the capital you know the the friedman capitalism of the 60s and 70s which created shareholder primacy model which got us to the point where facebook's getting hauled over the coals right now for being very naughty boys like that sucks that's a 20th century construct that we need to get away from let's get to a future where it's faster better cheaper safer more controlled more ownership defy as it's currently called is going to help that but the real defy should stand up is democratize finance and we need all of the above well so that's honestly inspirational and i really agree with you michael anderson from framework ventures calls it open source finance but i think democratized finance might even be a more holistic term to describe it so um what are you most excited about charlie um we only have a few minutes left in the panel what are you most excited about in terms of crypto today what do you think is the highest potential the excitement of the unknown but but i would i want to come back to a to a comment earlier about media you know also uk is a leader in english language media and um i think that the crypto media is not nearly as strong in this country as it should be because because the regulator has basically banned a crypto for mainstream investment portfolios so any uk citizen who has um a portfolio pension fund whatever has no crypto in it and the reason for that is because it has been banned it hasn't been banned at the bitterness the business level this is the thriving ecosystem for business to business and so you know you were saying that the newspapers write what their readers want to read but if you don't earn crypto then you're not going to write the stories so i think that um if that ban was unwound by the fca then um this this the the quality of the mainstream media globally uh would massively improve well charlie appreciate that marcus last take here what do you what are you most excited about when it comes to crypto i think it's the pace of innovation the pace of change the fact that this is mainstream now you know this is as you say three years ago would have been a very different story um and i think it's been catapulted into mainstream consciousness and we should embrace nfts and any other use cases that help to you know demystify and explain this to people um you know it's not going away you know this is just going to grow and grow so i'm really excited about the possibilities fantastic well today on this panel we learned that it seems like a central bank inevitably will be coming out with a cbdc we learned that innovation is at the very beginning we're in the early innings so to speak um when it comes to the crypto journey we've learned that there's a lot of money going into bitcoin funds overnight and that that sting is picking up we learned that m a activity is accelerating um and we learned that europe is uh the hub of crypto activity today so thank you extraordinary panelists for for this wonderful conversation and thank you audience and the organizers for putting us all together thank you