Hedging Bets? Hear from the Experts on What's Next

[Music] how do you want to yeah I think that's good hi hello everyone good morning and thank you for joining us on this fine morning at Abu Dhabi Finance week I'm sure you've been to a lot of insightful panels and I can promise you this one is going to be a very insight F panel we're going to be discussing how crypto-based Innovations can apply to traditional businesses how the world's assets are being digitized and what Bitcoin is really worth now our lovely MC already mentioned this but Jonathan Levan here of chainalysis was just named as CEO of the company so we'd like to give a round of applause for Jonathan for this and of course chalis yeah of course chain analysis is a blockchain platform helping government agencies and financial institutions to engage confidently with cryptocurrency so um jumping off of that announcement Jonathan my first question is to you so speaking of crypto-based Innovations being applied to traditional uh businesses we started to see more Institutional Investor participation this year why do you think that is and what is uh what does institutional participation mean for the crypto industry yeah it's great to be here and what we've seen over the last few years that in the industry is that Regulators are finally building regulatory Frameworks that allow for all types of investors to access cryptocurrencies natively through retail platforms but you've also seen actually Regulators build Frameworks so that people can offer Structured Products on top of crypto assets and what we have seen is that actually the The Regulators have enabled there to be less crime in cryptocurrencies um using chain analysis and what that means is that there's greater confidence in people being able to store value for longer um all the platforms to be regulated by Regulators like adgm and that gives the confidence that institutions like Black Rock like Fidelity like Bank of New York melon um and banks in the region here actually the confidence that they can offer products and services to their customers that they can do their existing jobs that they were serving for their customers in other markets and they can Port that over to digital assets Anthony speaking of black rock that was just mentioned we've seen large institutions like them like Franklin Templeton uh go deep into crypto uh in recent years what might encourage greater participation from institutions in the crypto space in your opinion uh you know I I think it's stuff that Jeremy and Richard were actually talking about I think if you get us stable coin regulation and then concominant with that if you can get a custody uh legislation and why is that important uh you won't get a Microsoft or an Amazon to put Bitcoin or other cryptocurrencies on their balance sheet unless they can custy it at a major Money Center bank and you can't do that right now uh but if that comes to pass and I predict it will in the next Congressional term then you will see a big opening for lots of Institutions to buy the stuff outright or to buy it through the ETF of a black rock or a Franklin Templeton and John you've worked with institutions like these as well exactly I mean we've worked with black rock and Franklin Templeton they've both launched their money market assets on Avalanche so we support the growth and Adoption of the Avalanche blockchain and we've seen these Titans and the institutional side jump in we've also worked with Tio and Wellington and wisdom tree and many others um and to to Jonathan's point we're seeing them more engaged because they're able to work with the confines that exist we at Avalanche support this by giving the builders the institutions the Enterprises or anyone for that matter a flexible architecture to build blockchain technology to support their needs right for the longest time I think the industry has been uh trying to fit a square peg through a round hole with the flexibility that we give institutions love that they're able to build what suits them um so it's exciting so not to interrup me what he has and the reason why we're an investor in his chain it's it's effectively a a Swiss army knife and so depending on the company he's going into he can pull out the right tools for them and so I think this is going to be a very very big part of our future as we move to tokenization yeah we were just speaking of it and it's very interesting and we also John just backstage you sp spoke also about scaling so how do you see blockchain scaling to meet all this growing demand across all the numerous sectors and across numerous and new asset classes as well absolutely and I think you know um for those that are technologists I I recommend going back and reading the white paper that Avalanche wrote 5 years ago speaking about this exact Vision the problem that we have currently I think in blockchains is that for the most part these layer one blockchains are general purpose you're trying to put regulated assets Enterprises payments identity all on a single Ledger these things always sometimes don't mix right and different jurisdictions need it so Avalanche at least does this in a different way we do it through horizontal scaling by allowing anybody to deploy their own blockchain kind of like WordPress made websites uh grow we allow for purpose-built blockchains by jurisdiction by asset class by asset type by compliance needs by scaling needs so we are horizontally scaling like a highway that just adds more Lanes based on the use case the jurisdiction we recently launched a chain in the Kingdom of Saudi Arabia called amla that runs all of its nodes in the Kingdom because that was a requirement we're working with companies here in the UAE as well Enterprises institutions who have that regulatory requirement as well so again thanks Anthony for that the Swiss army knife you can customize a technology to service your need in your business more so than the inverse which has been the norm yeah we're going to speak about the growing need for this in the region as well but Jonathan I wanted to get back to you we have to speak about this being a whirlwind of a year uh in uh in crypto what caught your attention the most and what did you feel were the game changers uh for the industry this year yeah I think what we've seen is that there's been a huge interest in both cryptocurrencies the asset class with the emergence of the ETFs as Anthony spoke about um but we've also seen stable coins actually take off for real payments you know chain analysis what we do is we track all of the different activity that happens on the blockchain we know which entities are transacting what which transactions are they responsible for and that's why people rely on us for investigations and compliance and we've just seen an explosion in the amount of stable coins used used as the key infrastructure to power loads of different types of payment applications remittances and crypto trading and really that has poised everyone to think about cryptocurrencies as infrastructure for financial services more broadly and what we are seeing today is that you know there is the ability to actually have the visibility and trust that people need in those pipes in order for real world assets to be moved on to it to allow for real world people to send money home and actually you know it's through you know the transparency of the blockchain that actually regulators and Enterprises are having the confidence to actually move in that direction Anthony back to you here so it's a huge growth in the crypto scene do you think this growth is sustainable and we have to say the United States about to experience its first crypto-friendly Administration how do you see this impacting adoption and innovation in the US and globally well I mean it's it's it's very meaningful because remember uh the way the United States works from a regulatory perspective you need help from treasury you need help from the SEC you're eventually going to need help from the FED particularly if the major Banks Money Center banks are going to be involved and so the new Administration is putting pieces in place where each of those areas of the administration are pro crypto uh but what I would say to everybody in this room is that the prices that we're experiencing now are really 2022 uh prices and just hear me out for a second Had Gary Gensler just abided to admin American administrative law he would have approved a cash or spot Bitcoin ETF sometime in the first quarter of 2022 so his delay and then the subsequent victory in the lawsuit uh delayed these prices and so when people say to me well it shot up a lot very very quickly is that sustainable not only is it sustainable uh it was being suppressed by arbitrary and capricious us regulation and hopefully that's ending now and why do you think that is well the the real reason and even scotet the incoming uh Secretary of Treasury has said this is that both Gensler and Elizabeth Warren were very close to Sam bankman Freed's parents and they were on the cusp of giving Sam margin approval in the United States before he declared bankruptcy and a result of which those two Poli iCal figures decided to go very hard arbitrarily and indiscriminately at the industry to eclipse the media exposure that they had on that issue with f FTX and so that's the real reason and uh you know people in whether it's Tom emmer Scott bent people people know that they did that they went after the industry very unfairly well times are changing now most definitely um John back to you here and I wanted to talk about tokenization what role do you envision to tokenization playing and reshaping Global markets over uh the next few years so when we use the word tokenization I mean people usually think of equities or or things of that and and the industry uses a terrible term called real world assets I would take tokenization to in a different way I would say most assets that we see traditionally used to be analog and then they were electronic and we kind of live in a digital age but tokenization just means putting a digital wrapper around something and and therefore it's a token but you can tokenize anything of value so your attention can be tokenized your identity could be tokenized uh your your bank accounts whatever assets you have so tokenizing or digitizing assets across various classes whether it's Commodities equities uh foreign currencies real estate whatever it may be allows these things to trade to move to be more fungible and more liquid across the globe 24/7 365 so I think it really opens up the pipe cuz for the most part the financial world runs on t+ 1 2 3 4 making these things instantaneous by putting a digital wrapper around them also you can build in the compliance and all the back office functions to Trad to traditionally slow down operations by just opening it up completely um I'm going to give this question to you Jonathan but feel free all of you to comment on this we want to look regionally now where does the UAE stand in the global crypto landscape and how have adoption Trends evolved here in your view and chysis has just opened its first office here this year is is that right yeah so we we opened our Dubai office in in February of this year and you know we've been in the region a long time working on really helping Regulators build regulatory Frameworks for the entire industry and when you think about the regulation that we've seen there's two parts of it there's literally writing the laws and you know adgm and Vara up in by uh have been at the Forefront of actually drafting regulation giving guidance giving licenses out um and doing that but really you know what I think is super exciting about the region is that it's not just the words it's also the action and the investment in the technology and what I've seen you know from this region in particular is that adgm takes technology incredibly seriously and that they can invest in being able to actually put P the operations of regulate regulatory authorities to use technology to enforce regulatory guidance and to give licenses and oversee the market in a much more sustainable way and so when I think about global setting of s of Standards it's not just a drafting process it's actually demonstrating that you can operate at scale with the largest exchanges in the world with the largest businesses and have the technology inhouse to be able to you know oversee that market safely give the right feedback to the licenses and make sure that you know Capital markets are are willing to put Capital here so that's what's been super exciting and why we're you know continuing to invest in the region Anthony where do you see the UAE and the region in the crypto landscape now and years to come well you know I I think leading the region I just spoke to the chairman about the the papers that they're putting out um I would compliment adgm in the following way they depoliticize the regulation and so they're not looking at hard left regulation or hard right leg regulation like we sometimes do in the United States they're really just looking for what's right or wrong for the industry what's right or wrong for the customer uh and so you're at the right intersection here in Abu Dhabi how do you make the customer safe how do you make the investment products transparent and how do you increase the opportun for commercial activity and so that's that's the best that you can ask for from a regulatory body and John you were just telling me backstage that you just hired a head of um operations in the Middle East yeah so look we I'm in the technology business right and technology is global but business is still local and for us different markets matter we have uh different Market leaders in APAC and for us and for me personally the Middle East is very important so we have a head of Middle East that's uh that's joined a few months ago and we are looking to have our base for the Middle East in Abu Dhabi here at adgm as well because I think what Abu Dhabi has focused on in a in a great way is marrying both the technology and the institutional appetite it's a great jumping off place for not just Abu Dhabi and the Emirates but the broader Middle East in general and to Anthony's point right there's great regulation it's very welcoming uh there's great incubators and accelerators of course like hub71 that help Builders not just from the region but from around the world come here and get the support they need the capital and everything else so we're really excited to it's not about the price right John it's about the technology I don't know what you're talking about I just want to make sure all right and um for my last question for all of our panelist here starting with you Jonathan I want to know what we should be looking ahead to and more specifically what are some new innovations that we should be paying attention to in this space yeah I think that look it's not out of the ordinary to sort of mention new technologies that are coming online and I think that for chain analysis we've built a business for 10 years studying exactly how and why people are using cryptocurrencies one of the things that we're very excited about is using that labeled data set and applying AI technology on top of that to actually enable much better Insight much lower barriers to entry for everyone who's starting to engage with the technology and I think that what you'll see over the next two years within the industry is that you will see AI agents actually use using cryptocurrency to pay other agents when I first got into cryptocurrency 12 years ago I wrote some of the earliest work on the security behind Bitcoin and people started telling me about machine to machine payments that hasn't happened but what we will see is AI agents paying other AI agents um which will happen over the next 12 to 24 months Jonathan you don't look old enough to be in this industry for 12 years should look like you're like 500 years old and Anthony new Innovations what we can expect or look forward to this you listen there's not much for me to add I know we're running out of time from what Jonathan said but but the the future is right if we can get the regulation right and so just think of it that way uh we have the technology to eliminate $7 trillion of transaction verification fees around the world and think about what that could unleash in terms of further economic Innovation John I will just say I'm excited for the future that that shows new applications Innovative applications that are happening that are being built that are being built with blockchain technology on the background to enable this innovation without the cryptocurrency side being in the front right we often times hear crypto first but in truth the blockchain layer and something that we provide allows that Innovation to thrive and I think we're going to see that ladies and gentlemen give it up for our panelists on this very exciting discussion great job [Music]