The Institutional Adoption: What Has Actually Changed, and What Hasn't | EBC12

OK. Hello everyone. What a wonderful acquaintance. Thank you very much. It felt like we were at a rugby match.

Come on. Um, cool. Good morning everyone. Thank you for coming and joining our panel. My name is Ariane Murphy, m-m, and I am, m-m Ariane Murphy, m-m, and I am, m-m , the Head of Strategy and Operations at Stanwich Crypto International, which is a civic movement that fights for pro- cryptocurrency policies.

Today, um, the goal of this panel is to go beyond the headlines and understand where we are in terms of institutional implementation, what has actually changed, what hasn't, and where, um, there's still friction. So, before we begin, I'd like to we begin, I'd like to , um, allow you a few introductions. Um a few introductions. Um , if you can explain your, um, role, um, your name, and also your perspective on the implementation story, whether you're going to look at it more from the investment side, um, or the tokenization side, or maybe both. Martha maybe both.

Martha ? Of course, thank you. Um, it's nice to be here today. So, I'm Marta Reyes. I lead research for Fidelity Digital Assets here in Europe.

At Fidelity Digital Assets, we provide custody and trading services, primarily for institutions, although another very important role we play is play is internal. So we are enabling the ETPs that have been launched in the US and also here in Europe. Another aspect of our business that is less well known here in Europe is that we also provide these storage services to retail customers in the US. We have over 40 million brokerage accounts in the US that can trade digital assets, and we provide these services. So my role is largely in the research team, and also in doing thematic and educational research and of course in helping institutions just stay on top of things, they may not be following the situation every day, but they need regular updates on the topic.

That's one part of it, but another very important part very important part is just being on the front lines, if you will, talking face-to-face or in groups with very traditional institutional investors. I'm talking about large asset managers, pension funds, and increasingly, insurance companies. So, it helps them understand, but it's not just about reaching out to them, but also getting feedback from them on their issues. So I'll leave it at that . Perfectly.

Perfectly. Michael, just introduce yourself really quickly. Thank you. Good morning and very warm greetings from me. My name is Michael Howe.

I am the Head of Strategy at Bitwise in Europe. Bitwise has about 13 billion in client assets. This applies to a number of US ETFs, European ETPs, separately managed accounts, private funds, as well as staking and vaults. Bitwise was founded in 2017, so we have a relatively long experience in the industry. Part of my role is to develop new products and launch them.

So, that certainly involves understanding the existing product suite that we have, but also looking ahead, understanding what trends are going to be interesting so that we can develop the next generation of products to meet the needs of those investors on their crypto journey. And I'll leave it at that. Diana? Warm greetings. Warm greetings from me too.

My name is Diana and I am the head of digital assets at UBS asset management. We manage over $2 trillion in assets under management across all asset classes, from active to passive, offering investment opportunities. So, a wide range of investment opportunities for the benefit of our clients. Now our clients. Now , in terms of the focus of my role, one of the key areas is tokenization, tokenization of funds, and we have a real use case use case , a real tokenized fund offering tokenized fund offering , and the first strategy that we deployed was a money market fund strategy.

I'm really happy to be here today, and yes, I'll hand it over to Pedro. Thank you very much. Good morning everyone. I am Pedro or Peter. Peter is the official name, Pedro is the name, Pedro is the nickname.

I hope to head the Digital Asset Solutions department at Zurich Cantonalbank. Zurich Cantonalbank is the second largest bank in Switzerland, with a huge gap ahead of UBS. We are a state-owned bank with an AAA rating and the second safest bank in the world. What makes us special is that we are one of the few banks, traditional banks in Switzerland, to offer crypto services to our clients. So, for both B2B and B2C customers.

In my position, I am responsible for the cryptocurrency offering, as well as the various initiatives in which we participate. For example, we issued the first digital bond backed by wholesale CBDCs as part of the Helvetia project. We are part of the Swiss Franc stablecoin sandbox and have recently joined the Agora project. So, I'll pass on the word. Thank you everyone.

I'm Slayan, Head of Digital Asset Growth at Sygnum. My experience is more related to traditional finance, financial services, and capital markets, and today I work at the intersection of financial infrastructure and digital assets. At Sygnum, we enable financial institutions to issue and manage digital assets, conduct transactions, and mobilize collateral. So, everything is in a very regulated environment. We are a BaFin licensed cryptocurrency security registrar.

In addition, we are an infrastructure partner and technical partner for the regulated first layer of the new blockchain. So, my perspective on this whole topic is more from the implementation side, that is, looking at what, um, institutions are implementing today, and what it really takes to, um, make digital assets part of the financial mainstream. Yes. Fantastically. Thank you.

Well, yes, you would notice that when we talk about institutional implementation, um, it seems like there are two sides to the story. And as we were preparing for this, um, panel, um, it became very apparent. And so, just to frame the conversation, there are two different stories when we talk about, um, implementation. The first story is institutions as investors, meaning institutions gain access to crypto assets through ETPs, ETFs, direct custody. And then the other side of the story is institutions as users of the infrastructure.

So, when we talk about tokenized bonds and tokenized various financial products and so on. We'll look at these two topics in turn, but I'd also like to understand your perspective on whether these stories are connected to each other, or whether they will largely develop independently in the future. So, to start, let's start with implementation story number one, institutions as investors. I would like Michael and Martha to talk about what has really changed in terms of institutional willingness to own crypto assets over the last few years. Yes, so I think these two things, to answer your first question, are very closely related .

So we're telling you that for a long time, the first few years, we were talking to investors. We spent most of this time just discussing Bitcoin discussing Bitcoin , didn't we? And the conversations became more diverse. So, you know, the next part of our journey was the introduction of stablecoins. It became a huge part of the narrative, and also, you know, we saw it in the data, it wasn't just a narrative wasn't just a narrative , you know, we saw it implemented.

And now the third wave is tokenization. In fact, we recently published something about tokenization and our views on how this slow evolution will happen. So, uh, there was diversification in the conversation, I would say, but it didn't necessarily lead to diversification in the distribution. So we're at a stage where even in the same room we can find investors who are still focused on Bitcoin, others who really just want to hear about tokenization but are not interested in Bitcoin distribution and everything in between and everything in between . So that sometimes makes conversations difficult.

You need to have , especially these initial conversations where people are just getting acquainted with the asset class. How do you manage this so they are n't overwhelmed and you get the key messages across? This is a very important part. But yes, there is more talk about stablecoins, more talk about tokenization, but there is still a very large gap or gap between that and the actual distribution. So investors, I was actually quite surprised that the situation had changed.

At our presentations, investors came up to me and said that tokenization was inevitable tokenization was inevitable . It will happen. So they are sort of sermons to those who have converted. But from that, um, to deciding on a distribution in ETH or SOL on a distribution in ETH or SOL , or, you know, pooling funds or any other middleware token , we're a long way from that. Bitcoin is a different matter.

Bitcoin, to some extent, is an easier, um, option because customers know the storage value argument, which has been proven by data, you know, over different time frames with risk-adjusted returns. So, in the macro environment as well, at the moment, equity allocation distributes assets at a historically high level – around 70%. This helps investors see, ahem, Bitcoin at least in a more favorable light. Do you know what we should do with this bond distribution? Bitcoin can fit into an alternative asset allocation.

Um, but with the others, I think we need to see scaling. We need to see, need to see, uh, operational efficiency and liquidity so they can take the third step–ask the question of where can we allocate the funds? This is related to tokenization. Sorry, I took too long. I'll give you my word, Michael.

Um, yeah, I wonder what the topic of the panel was–what changed and what didn't. Um, one theme, in my opinion, that hasn't changed is the extraordinary level of public debt in the Western world. Um, the extent to which it has changed is that the debt has increased. Um, what does that mean? Well, this means that there will be a demand for a solution to the problem of fiat currency depreciation.

And, of course, cryptocurrency will play a role here. This is probably what led me down the cryptocurrency rabbit hole many years ago. Perhaps the same is true for some of us in this room. Um, and you know room. Um, and you know , these institutional conversations, uh, will be driven to some extent by this.

And what we've noticed over the last few years is a fundamental shift in position. A few years ago, perhaps the question would have been: should we invest in cryptocurrency? Now the question is more the question is more how do we invest in cryptocurrency and to what extent? What should the distribution be? And this is really visible in some of the data.

So, the share of institutional ownership of cryptocurrency ETFs has increased from about 24% has increased from about 24% to about 36% in a year and a half to two years. So this is significant growth. Um, uh, and I think we can look at some of the factors related to that. Regulatory certainty is part of this. But again, I think the depreciation trade is fundamental to this, and we're seeing a significant impact on implementation.

Can I add one comment, considering we are here in Europe? For example, the data we have on ETPs in Europe, and a lot of it, I understand, will be retail, but this is an institutional grade product . We have seen 19 months of consistent inflows into these products. So this is a very encouraging sign even in a bear market. Hmm.

And are ETFs anything like the standard path for institutions? Do they approach you with that first option in mind? Hmm, and what do they lose or gain from direct storage? Yeah, I think so, but it depends on that because it's kind of simplicity versus control. There are trade-offs between them.

I can't speak directly about our ETP product, but in general, I would say the first gateway is Bitcoin. And then within that, it's typically an ETP, especially if it's a small tactical allocation. You want quick liquidity. You don't want to deal with the operational hurdles that can potentially arise from direct storage, but that's not always the case. We see clients, especially large, sophisticated clients, coming in and starting with ETPs, and then they want to diversify into storage.

Looking at them. And there was, I don't know if you saw the Institutional Investor survey this year, which showed that about 66%, I think it was because of ETPs, but there is overlap. 36% but there is overlap. 36% also have direct storage. So we at Fidelity understand that we want to provide, uh, access to many different tools for our clients.

Of course. And, uh, I'll call you Pedro, just because we're in Spain and it makes more sense. Uh, it was very, very interesting, uh, the number that you mentioned, uh, that was last year, correct me if I'm wrong, but last year you saw over 50 RFPs from institutions come to your desk. None of them mentioned crypto assets. What does this mean?

Please, firstly, correct me if I'm wrong about the number, but secondly, what does this mean to you in terms of where the gap is and why it's happening? And this, uh happening? And this, uh , applies specifically to Switzerland, right? That's true, yes. Hmm, indeed, we have participated in, let me say, many requests for proposals over the last, uh, 12 months.

Our storage team did that, and not one of them that, and not one of them , not one of them, and there was a question about the availability of our, uh availability of our, uh , crypto services or tokenization skills and so on. Not in either of them, and that's really quite disappointing. Hmm quite disappointing. Hmm , we see a similar situation with our crypto offering. So, uh, our crypto services are used by private clients, uh, from the private banking side, not from the institutional side.

It's interesting to see, uh, that our goal was to reach younger people from our bank. Uh, we completely failed here. So, I think younger people, this is my guess, prefer Bitpanda, Coinbase, etc., rather than going to a recognized bank or a traditional bank. Interesting.

Our average crypto investor is a crypto investor is a man between the ages of 30 and 50. So we were quite surprised by that. We reached an older target group than expected. But no institutions. And was that a surprise to you?

Uh , disappointment, yes. Disappointment, yes. Maybe it's because we, uh, were offering the wrong products wrong products , you know. Er, we've heard of ETP. Switzerland has not yet launched any ETF for Bitcoin or other coins.

Maybe this is the reason why we don't have the right product for institutional, uh, clients in Switzerland . Maybe I don't know. Maybe not. Hmm. Hmm.

And, uh, I'm going to ask you a question and then I'll step away for a bit. What, uh away for a bit. What, uh , you mentioned about potentially one blocker, which from a product perspective, is maybe the lack of, uh, the right product offerings . But are there any other blockers that we see that mean institutions are not accepting, uh, this asset? Uh, that's a really good question.

Uh, I see that maybe this is really a missing product, you know. Perhaps based on their rules and regulations, they are not allowed to make direct investments in cryptocurrencies and they lack a well- regulated product like an ETF in Switzerland. Perhaps. And, hmm, that's the only reason I can see. Honestly, our bank is more focused on tokenizing digital assets.

So we see our future more in this vein than in the cryptocurrency offering. So we are not a specific crypto bank. Hmm. Let's say this. So we are more supportive of the technology and the path to tokenization.

Michael, do you have any thoughts on the blockers you see? Yes, absolutely. So if I think about Bitwise and our European ETPs, they are MiFID II securities. You know, it's hard for me to imagine another investment vehicle that's, you know, more accessible than this one. Um, then you're thinking about what the obstacles might be .

And from our conversations, which are generally very promising, uh, and we're seeing an increase in adoption, you still note, you know, the latest kind of lies or reasons, uh lies or reasons, uh , to resist the adoption of cryptocurrencies. Maybe if you go back far enough, it would be Mount Gox. Hmm, maybe in the 2021-22 cycle, governments would take a negative stance on cryptocurrencies, and China would ban Bitcoin, for example. Or maybe today it's something to do with the threats of quantum computing. But all you really need is one or two people on the committee at the distributor who grab onto one of these things, and before you know it, your cryptocurrency investment strategy is delayed by 6 months, a year, or however long you want.

So however long you want. So , I think that's part, um, part of the problem. Of course, over the past year we have also seen huge demand and interest in alternative investment avenues investment avenues . So, SpaceX's IPO was the largest in history. We will soon have an Anthropic IPO.

This is potentially of great interest. Yes. Good. Okay, great. Perfectly.

Um, so I'd like to now...Excuse me, do you have any thoughts on blockers? If not, I would like to... Very quickly, I'm thinking specifically about Great Britain. Er, we're just getting started...

just getting started... Remember, we're just starting to regulate in the UK, so the rules won't be fully developed and ready for implementation until next autumn . So, for example, it's very difficult for a pension fund to even consider distributing funds if the regulation isn't in place yet the regulation isn't in place yet , but I think we're much more receptive now than even 2 years ago. For example, investors come to me and ask, "How can I present this to my investment committee?" So, uh, we see it.

So I think see it. So I think this will fit well with the regulation that is already in place. And the infrastructure already exists. Customer storage. And there is much more.

There is a proliferation of institutions that advertise services. So I think it's the demand that's holding us back a little bit...It's a little behind the infrastructure and the capabilities. Mhm. Mhm.

And that brings me to the second side of the story, which includes our other two panelists. So, institutions may or may not buy crypto assets, um, right now. Um, but, um, institutions can actually change the way they, um, issue, settle, move, um, financial assets. So, the second side of the story is institutions as users of infrastructure. So I would like to start with you, Diana, and ask you, you mentioned briefly in the introduction about the projects you are working on at UBS.

But where are the pilots , um, or what are the examples of pilots that move beyond this stage and actually integrate into the day-to-day operating model of the institution? Of course. And before I get to that, I guess I just want to mention one thing. When we started looking at this back in 2020, right? Um, the question was about what can be tokenized and what are the theoretical benefits of tokenization.

However, further down the line, when we look at where the narrative is now, it has completely shifted towards real problems that we can solve through tokenization at an institutional level institutional level . So, obviously from a UBS perspective, as I mentioned, we launched our first tokenized money market fund at the end of 2024. We've done that back in Asia Asia Pacific , and then we're obviously looking at ways to scale that platform and potentially look at other asset classes where it makes sense. Because for me, tokenization is a solution to a real problem. I don't think it's enough to just add this tokenization or technology stack on top of the fund wrapper and existing processes without creating additional value.

So, questions like: does tokenization improve distribution? Are we reducing friction because we now deal with fewer intermediaries? Do we really have the ability to create access to liquidity that can be developed sustainably? So, all these questions are really relevant in order to justify your position. Otherwise, you're just tokenizing for the sake of tokenizing, and we want to avoid that.

We want tokenization to be a means of creating value, not a solution to a problem. So, it's clear that there are multiple asset classes in the market , and obviously money market funds are an obvious fund strategy that is on the tokenization rails. In that regard, you also see the expansion of other asset classes, and the previous panel obviously discussed private markets. Now private markets. Now , it will obviously be very interesting to see how the illiquidity and underlying asset issues in these strategies can be addressed, because one important observation here is that tokenization does not change the fundamental properties of the underlying asset class, especially in the case of case of wrapper funds.

If you have an illiquid asset that has no consistent demand from investors, is difficult to value, and is difficult to put on the blockchain, putting it on the blockchain won't solve many problems. And I would say that there is no such thing as magical liquidity. Hmm. So, can you say that this kind of tokenization, um, can be described as a kind of utility amplifier of the underlying asset? And so if you tokenize it, it essentially reflects the fundamental principles.

I think you're touching on an important concept here, which is the concept of utility, right? And I believe the promise of tokenization is not to make all products digital, but rather to expand what investors can do today. And this could be wider access to investment opportunities, such as easier exit or entry into investments, portability of assets, or the ability to use those assets more dynamically, such as in cases of collateral use in an increasingly digital financial ecosystem. So I would say this is about tokenization not as another technology layer, another shell, but rather as a means of creating value and utility. Hmm.

And Sladjan, I'm looking at you. What if we talked about use cases that benefit from tokenization, what would you say about them today? And maybe if you project yourself 5, 10 years out, what do you think will benefit the most from this technology? Hmm. Let me start with what changes can happen from this perspective, and then we'll move on to the use cases.

So, I'm looking at this topic from three different dimensions. The first is The first is technological. I think we can approve that we we can approve that we can tokenize assets, settle assets settle assets , combine cash and assets. So the evidence is confirmed, and these were also previous private pilot projects that showed whether it was possible to do this. Pilot projects are currently operating and testing the infrastructure.

Can we do this on a specific infrastructure? Now we have a second dimension, which is institutional. Institutions no longer ask questions like, are we legally allowed to do this ? They ask how we can participate in this. And where we are now is the question: where is the economic value?

So, of these things that we do, there's one use case use case where we can say, where we can say, okay, this makes sense, where there's a very quick return on investment, this is collateral management, right? Um, when we look at collateral management or collateral mobilization, um, we have not only operational advantages, but also advantages in time and cost of financing, right? Right now. So right? Right now.

So , what this means is that we have tokenized collateral, um, we can move ownership without being tied to the underlying assets, moving them between different infrastructures, um, um, storage locations or wherever. So immediately wherever. So immediately . Um, we can calculate the repo within a few minutes. So we can start changing our funding strategy at the exact moment we need the funds.

So, over a period of time, we can do this. We can start, I don't know, calculating, um, calculating, um, interest only over the period, um, I'm holding, um, um, duration of the financing, um, time. So this, and we're reducing the operational steps, and I think that's the closest use case. Um, and we see, honestly, um, we see it maybe looking at the US and Asian market and also maybe looking at brokerages because they're releasing the numbers. Um, in August 2026, if I'm not mistaken, the transaction volume was 350 billion per day.

So, 7.5 trillion per month. So, from my point of view, this is no longer a pilot project. This is the scale of the institution. So we have the first use case use case , which I think makes all the sense in the world, um, to jump on that relief line and support that.

And um and support that. And um , and in parallel, yeah, we have all these other things we have all these other things , um, where we have some, I think we'll talk about that. Some, some, some, some challenges to bring in all the other assets and make them useful, as they mentioned. Um, yes, we should work on this, they should happen more often than they do now. So, um, but the side effect but the side effect is a use case, I would say.

Good. And um, you touched on, obviously, achieving institutional scale is kind of the goal, um, for that. Um, what would you say, um, would help to do, because for some institutions, this is very much like an initiative, um, an innovation initiative, right? We're going to test the soil, we're going to dive into it and see what happens. What needs to happen for such a change in mentality to occur?

Yes, I would say that 50% of my time in education is spent on education. There is a difference between cryptoassets and this, or from the financial instruments side, because cryptoassets were something new. We started from scratch. Let's say this. Now we are touching on existing infrastructures that develop over time.

And now you come and say: “Okay, we don’t need this intermediary. We can just make it faster. Do you no longer need to go through this process? go through this process? "And this institution has to start to understand this, and this is always where I say, " always where I say, " Okay, success is not about compatibility between different chains.

This is compatibility between the digital world and heritage. So, and I think there's a lot we need to do at this point, and that's where institutions are, frankly, investing a lot as well. They try to implement it, um, in institutions, but, um, sometimes we tend to confuse them. So they start doing something. So then they realize , hey, uh, there are special wallets that you can earn interest on.

So, um, that's where the fear begins, right? Uh, and all that, okay, let's see where we are. And ultimately, the infrastructure, we're very fragmented, um, uh, so there's no liquidity because it's fragmented. But, and this is maybe the last sentence, um, what we see here, or what I always say, um, is this kind of revolution compared to other revolutions where you say, "I, I, if you do something on your own, you have a first-mover advantage." In this revolution, if you do something yourself, you have a first-mover advantage.

So you need a network, hmm, where we come together hmm, where we come together , hmm, where we create a platform where we can compete later on in the next stages. That's why I see Qvalis, we see the first tier regulated as Europe, European consortia, building this platform, and I think it's on the right track, um right track, um , to a scalable environment. And maybe I just want to add a few points, right? When it comes to what's missing now to achieve this industrial scale implementation, I always like to talk about it as if we're missing the connective tissue that would allow this full industrial scale implementation. And what do I mean by that?

Actually, I'd like to condense it down to a simple idea or a few gaps, about five of them. And I'll start with the cash lag. So, real- time tokenized securities can't really work if the cash portion is still there on T+2, right? So, whether through CBDCs, regulated stablecoins, or tokenized deposits, we really needed this secure, scalable tokenized money that could actually interact with our tokenized securities. And then, liquidity, I think you raised an important point, and again, there's no such thing as magic liquidity, and putting an asset on the blockchain won't necessarily create a functioning secondary market overnight.

And if you actually look at the volumes in the secondary markets for RWA, they are still quite limited at the moment. Then, I think you correctly mentioned digital infrastructure and standardization. So, the markets are still very fragmented. The market system is not yet fully integrated, and in order to achieve this industrial- scale implementation, you really need these end-to-end processes that connect issuers, digital custodians, digital transfer agents, fund administrators, distributors, etc. And last but not least , regulation, right?

Without a clear, harmonized regulatory framework, institutional implementation will be limited, despite the benefits of the technology. Hmm. Can I add something? Even though we at Fidelity Digital Assets do not offer tokenization services as such, many institutions are coming to us for advice, and it seems like there is some struggle going on right now. They understand that the penny has dropped and they need a tokenization strategy.

But many institutions don't even know where to start, and some of them ask, "Are we too early?" And some ask, "Are we too late?" So, is it something in between? And this really takes time. I'm not a plumbing expert, but if you look at it...

It's not a perfect analogy, but ETP, when they came out, it was back in 1993. And to scale them...I'm not saying it will take us the same amount of time because the technology waves have compressed a bit, but it took up to 15 years to reach a trillion assets under management. And then it took another 15 years to reach 20 trillion. And it's a product that has fewer hurdles and obstacles than tokenization, because it's just a wrapper because it's just a wrapper , and tokenization is much broader.

Yeah, I mean, one of the interesting things about working at Bitwise is that we are crypto asset management specialists, and that means we can sometimes work a little more on the edge than some others. And one area that we're really excited about is storage. And of course, there is an obvious interaction between tokenization and storage. So what you have with vaults is something that you could argue is simpler, faster, more transparent than alternative wrappers, even ETFs and ETPs. And if you look at the current number of assets in vaults today, we believe it's today, we believe it's around 20 billion.

Uh, and our CIO , Matt Hogan, talked about this. If you look at ETFs, it's more like 20 trillion, as you say. So, the scope for growth for storage is huge. You could argue that it's 1,000 times bigger if it were to match the size of an ET, er, ETF. And, essentially, if you think that repositories are simpler, cheaper, more transparent, then they will attract capital will attract capital , and that could also be a path for broader institutional adoption.

And, um, just touching on, um, double-clicking on certain regulatory clarity regulatory clarity , um, points. And I appreciate that, and I understand that it's very jurisdictional, but when you talk to institutions, um, and this will apply to both sides of the story, um, what kind of clarity do they want to see? Are there any fundamental features they require? Do they have what they need today? Hmm need today?

Hmm , where are they from the point of view of, hmm, the regulatory part regulatory part ? Who missed the question? I can, I can... Who wants to... I can start from my organization's perspective, I think it all comes down to the basic question, like what does this token represent?

Is this a property right? Is this a legal requirement? Will a token or tokenized ledger be authoritative on the blockchain? So ultimately, it's a legal consideration for the investor to understand what they're investing in and what this token represents. Is it just a digital twin, or is it a digital native security?

So ultimately, I think these legal ownership rights really need to be defined so that institutional investors feel comfortable accessing these kinds of instruments. Honestly, there is clarity in Switzerland. We are the country with the world's first distributed ledger (DLT) law. So it's more of a problem of lack of demand from our customers. I think this is due to a lack of knowledge among customers.

Therefore, we must introduce them to the new world. We see this especially now on the cash side. But getting back to the infrastructure issue, I think we all agree that the days of POC are over. So we need use cases that bring us revenue that we can monetize. And it seems that it is not that simple.

By the way, artificial intelligence in banking faces exactly the same problem. It sounds very fancy, it sounds good, but it's very difficult to monetize . I think that's what's still the problem at the moment. Collateral management is Collateral management is one of the very interesting cases. What I see in our bank is that we have tried to bring our customers to a level where they are interested in these new use cases.

And we understand that it's not that easy, because they are still far from it. So we decided to act as a role model for the bank. We're trying to optimize our core collateral management, optimize our liquidity management, and look at these use cases for ourselves first before we deploy them for a client. Maybe, if I may add, I think we have a good baseline on the regulator's side. So there's no reason not to start doing something.

So, some market participants are waiting, maybe the regulation will change in their favor, because, um, this tokenization, tokenization, um, but it also changes the rules in the market. So there's a lot of strategic thinking going on right now. But nevertheless, for a regular financial institution, there is no need to wait. So, um, they need to get started, they need to get familiar with the processes. Hmm, maybe there are restrictions on the volume of trade and where it takes place.

But they can start. So, um, start getting familiar with the process, what do I need to change in my, um, in my process infrastructure, um, to avoid the risk of falling behind someone at some point. So, um, and so on, and we in Europe, unfortunately, um, we are already very fragmented in terms of restrictions, right? And when we look at regulation and what's happening, especially with the Savings and Investment Union DLT pilot regime, I think there's a desire for it to be more, so to speak, working towards 28 states, so that everything is a little bit harmonized, and not only can a CSD be a trading asset, stocks can't be a quote if they're backed by traditional CSDs. So when we get those issues resolved, then I think issues resolved, then I think it opens the door for scaling.

And maybe the last thing I think we'll see from next week, starting on the 21st, Pontus goes on air. We see that central bank money will be available in both cases in the traditional way via RTGS settlements. So it helps institutions integrate this into their existing processes. So existing processes. So , they were very familiar with this process.

But there is also a cash token, which from my perspective would be more or less the ultimate goal in terms of central bank money. And they can start getting to know him. So, I would say that repos in euros will be possible from next week. So, at least we'll offer them. Good.

Good. To digress, I just wanted to come back to, and actually you touched on this briefly earlier, the issue of the bridge between the two implementation stories. Does tokenization strengthen the investment case for crypto assets? Because it seems like they can live separate lives. But my question to you is: can one reinforce the other?

Yes, and I've touched on this before. We certainly think so. Indeed, institutions see the real use case and effectiveness of 24/7 collateral management. Many of them, you know, quite highly, which is surprising, are convinced of this. It's just, you know, it's blockchain with one term, but it's actually two ambitions.

But again , this is exactly the point where sometimes these are completely different areas of management firms or financial institutions considering implementing technology rather than investing in liquid tokens. So we're trying to put all of that together put all of that together to take advantage of the interest that we see in tokenization and say, "By the way, again, Bitcoin, this is more of a proven use case." Regarding Bitcoin, it's more about the fact that we still have some investors who are really struggling to understand how we value Bitcoin in the first place? And with others there is a more realistic use case use case . And in the past, we've tried to model like ETH using DCF or looking at price- to-sales, price-to- earnings, but when you do that, you really run into the fact that this has happened to tech companies at very excessive multiples, which is entirely fair, but then it keeps changing because fees keep getting squeezed.

So I think everyone, including us, has moved away from this direct value capture to understanding what the cost implications are going to be for a global settlement level and ultimately monetizing that once you get the volumes, the scaling, and we now have a scaling roadmap, a multi-year process. So, there is execution risk here . Delays are quite possible, but there is a very ambitious goal – there is a very ambitious goal – to scale L1 to 10,000 TPS and L2 to 10 million TPS. So at least it's clear and in writing now, so that should be the focus for the next few years. And considering the possibility of tying the cash premium to instruments like ETH, based on this history of global settlements.

I would like to be a little more provocative and say that using rails does not necessarily mean investing in crypto assets. And it's possible that an institution could gain value from using the underlying blockchain infrastructure, but not necessarily making an investment thesis around cryptoassets, right ? However, as institutions become increasingly familiar with operational complexities, and what do I mean by that? If they have crypto storage capabilities, wallet capabilities, if they understand the basics of risk management and compliance functions, maybe eventually they can allocate funds to crypto assets, but I would say the investment thesis or the arguments in favor of crypto assets have to stand on their own . And I just want to add to that, because tokenization is still in the early stages, investors are seeing uncertainty because they're going back to what we saw with the internet, what we saw with e- commerce, where it wasn't initially obvious who was going to get that value.

Ultimately, it was the exchanges that captured this increase in liquidity, this overcoming of geographical barriers, but it wasn't so obvious at the time. So that's also a good point. Hmm, I think I support, I agree with Anna. Er, so it's largely independent of each other. So a financial institution tokenizes not because they want to create exposure to crypto assets, they do it because they want to achieve efficiency or other benefits, not because of exposure.

Therefore, as Anna said, there will be points of contact on the common infrastructure. Hmm, that's fine, but I think tokenization will accelerate the use of DLT technology much more than it will accelerate investment in crypto assets. So, my point of view... Hmm. Yeah, I mean, from my perspective, I think you could separate them if you forced the issue, but I don't know why you'd want to do that.

It seems to me that there is a high degree of symbiosis between them. They support each other. Um, the reasons why different institutions pursue one or the other, or both, really vary, depending on the goals of the organization, but I think there's more to be gained from bringing them together than from forcibly separating them. And, I hope, that's how institutions perceive it. Um, just jumping ahead as we wrap up the panel discussion.

Um, really quickly, I would like to, um, ask you in 5 years, if we had to focus on one metric, what would it be the single metric that would tell you that implementation is happening, and that's what we would want. I'll start with Martha. One indicator. One word. One word.

No, what an indicator. Yes No, what an indicator. Yes . I would say capital placed without permission. Good.

It works. I'm going to take 20 trillion in storage. Now you are focused on storage. I like it. So basically TVL, it was your magic or AUM.

Okay, same for me. Okay, TVL, okay. Honestly, my predictions over the past few years have been completely wrong. Oh, we won't trust you. But my hope for the next 5 years is infrastructure.

We see that the infrastructure is ready. We see Deutsche Börse, Euroclear, SIX in Switzerland, DTCC. And I hope that this movement forward with tokenization will really move forward. Should we also measure this in RFPs containing digital assets? I think it's worth it.

And Sledgehammer? I don't have a quantitative indicator, but I do have a qualitative one. So in 5, 6 years, I wish we weren't talking about this being a DLT transaction anymore. It was just a transaction. Transaction.

That's all. Of course. Okay, let's just really, really quickly, for the next 2 minutes, answer a few quick questions to make this dynamic for everyone. And we'll start...And that's a one- word answer, okay?

So, ETP or direct storage? Both. ETP. First ETP, then direct storage. Good.

ETFs. Oh, wait. Good. ETP. Good.

Bitcoin or tokenization? Again, both. Good. Bitcoin. Ooh.

Tokenization. Tokenization. Tokenization. Good. Uh, public chain, private chain, or both?

Public chain. Both. Both. Both. Both.

Good. The biggest blocker: regulation, liquidity or demand? It depends on what you're talking about, but in our particular case, I would say demand. Liquidity. Demand.

Liquidity and fragmentation. Good. Um, institutional implementation, ahead of schedule or behind schedule? Well, I'm not sure there was ever any schedule here. It's as if this moment is constantly being pushed aside.

I think pushed aside. I think , uh, probably the infrastructure is working according to plan, but the institutions are a little behind schedule. Yes, I agree with that. I think that's absolutely right. I agree, we are falling behind.

Yes, I completely agree. Yes. Me too. Good. And the last one in the last 40 seconds.

One word for the market in 2030. Convergence. To the Moon. The correct language of the original works, I like it. Always relevant.

Um, yeah, then it's probably still on this panel. I support "always relevant". Good. Thank you very much. Hmm, just to summarize, institutional implementation is not just one story.

Hmm, those are two, uh, stories. So, institutions as investors and as users of infrastructure. A lot is happening, a lot has changed. There are still a lot of obstacles, a lot of these channels that we still need to fix between the legacy systems, ahem, and the new technology that's being created. But yes, thank you very much.

I sincerely appreciate everyone and all of your thoughts and perspectives. Thank you for listening.