Has Crypto Really Found Product-market Fit? Why Is the Adoption So Slow? | EBC10

[Music] so hello and good morning there um as you can see here we're only three because uh our colleague guil from craen could not make it you probably have heard of it uh we had some issues with flying from Germany to uh Barcelona I myself am also from Germany I'm from Frankfurt so I had the luck that I didn't uh had to cancel my flight but guilt from Craig could unfortunately not come here uh so I can ask uh questions not to him but I can at least answer maybe on his behalf because I have some insights we can which I can share with you uh how craen is entering the European market right now so as I already started talking so I'm Ali Raza I'm the moderator of this panel uh I'm a german-based lawyer um some of you know me others don't I'm here already for the third or fourth time and I have the pleasure today to talk uh to gentlemen next to me who introduce themselves uh we're going to talk about product product fit and uh why it is uh so slow um I mean I can tell you right now I don't think it's slow but let's talk about this and I will give over to you L and please introduce yourself all right thank you so much uh so my name is yel oasi uh deputy director at the consumer Choice Center or a consumer advocacy group I normally work on policy lobbying writing legislation talking to legislators and I'm also a visiting fellow at the Bitcoin policy Institute in the US so I've worked a lot on bitcoin policies at US state level European level and international seen a lot of these uh products come and go companies come and go and always trying to stand up for the consumer who actually uses this stuff and wants to empower their own lives hi everyone I'm vugar I'm the chief operating officer at bitkit we are a centralized exchange with more than 45 million customer facilitating $10 billion transactions and we also have decentralized wallet which is bitet wallet uh it also has around 25 million users and facilitate around $10 billion transactions compared to these two gentlemen I'm not a lawyer I'm an economist but I'm here happy to challenge on the topic of is the adaption fast or slow thank you uh I'm happy that we don't have too many lawyers because lawyers seems to be boring and that's why we have you and unfortunately Gils couldn't make it he's also a non-lawyer um so when we talk about products crypto products I mean you all know it we have crypto currencies we have security token we have real world assets tokenization on the horizon I would rather say there is uh at least one exchange one European exchange which going to list very shortly an Austrian exchange very shortly uh a coin which is connected to real world asset uh Others May follow but what else do we have uh what what is there I mean um maybe starting with bitg because I know I mean bitg you're I would say you you're rather a hidden Champion not that many in Europe know you even though you have cooperation agreements with Juventus and with the football club of an and also we just signed La Liga Spanish premier league yes we are sponsoring all teams in Spanish premier league so probably then in Germany you're still missing um but I know I know for a fact uh that you have couple of products which are interesting which are not that uh yeah not not that common I would say for typical exchanges maybe you uh evaluate a little bit on that I think like when we talk about products there's like two levels one as you mentioned like real world assets tokenization decentralized infrastructure all these projects we just list as an exchange to be able to trade but when it comes on a product level that users actually interact or like a retail users mainly interact or institutional users mainly interact then it becomes typically complicated for example in Europe after the new rules and laws you'll be not able to you you you will need to get a different license for derivative trades or the spot Market trade which is a different product but also there are other products that are Beyond trading because whenever you talk about crypto it was always this narrative you invest $100 you become a millionaire over the night some token becomes I don't know uh pumps up super fast but we need to move beyond that uh and as I mentioned on the backstage for us is more interesting not only how people earn but how they're going to spend it and how they can earn earn beyond that trading for example we recently launched several earn products where you can uh kind of let's say put your tokens on a hold a similar rate traditional Banks do either exchange for the same token like a staking works but also you can change to the new project tokens whether if you have Bitcoin ethereum usdt that you are not planning to tge in next week or 10 days you can lock it up to get new project tokens and this way you are able to risk free earn more tokens and you can discover the new gems and new tokens also as a centralized exchange we usually say when tokens end up in centralized exchange they no more do 10x or 20x therefore we have pre-market product you can start investing into the startups in a guarantee that they will come and be listed on the market therefore product opportunities are there and there are too many of them also we recently launched a pitet card where you can transact on based on a Visa and MasterCard uh infrastructure without building our own infrastructure therefore when we talk about the product we should kind of a divide it in what kind of a product are we talking are we talking about institutional facing which is a whole new industry yes you said something very interesting you said you have a uh Masa card-backed uh crypto payment card which I think is very interesting for two reasons one reason is looking at the regulation in Europe the markets and crypto assets regulation which actually um I would say not really enforces but at least gives the way way for stable coins eone token asset reference token and we also heard that the um the yeah the European Central Bank is not going to issue uh uh cbdc retail cbdc on the blockchain I think this paths the way for um payment products uh which could be like introduced with MasterCard but we also heard it of Ferrari Ferrari in Europe they are accepting payments in crypto and you don't need it to do it with your MasterCard um and with this said um looking over to you y you're from you're like now living in Austria and you also have the consumer Focus um what do you you say what what is right now maybe this year maybe next year the product which a retail or consumer needs is it like an investment asset is it like a security token like a real world asset token like steel coin or something in that direction or would you say as we see it in Germany with trade Republic and others the payment product is something which the people right now need I I mean what do people need um it's interesting I I got into this as a journalist in 2013 for ideological reasons I thought Bitcoin was the greatest thing that had happened it was a complete meshing of philosophical ideas of economics and technology and I thought it was great and over the years it's been sometimes heartening but sometimes saddening to see how that has led there have been many pumps and dumps many different scams many different projects that have burned and failed a lot lot of very good entrepreneurs who've tried very hard but if I just look at my day today so I got my haircut two three weeks ago in Vienna my barber accepts Bitcoin so I send him a Bitcoin payment he's takes that puts that in his self- custody wallet and maybe he sends it to his family in Iran or elsewhere maybe he uses it to go to the store whatever it might be there are also bars and restaurants where I'm able to use Bitcoin I just renewed an AI subscription there's venice. is a great product I paid with Bitcoin for that there are servers that I run I'm using Bitcoin I think there's a lot of of different products that exist and there's a lot of focus on these sort of different uses that are more B2B that I think consumers are just not interested in we want to have good ux we want to have good self- custody and we want to have the ability to own our crypto currency to actually own it and I think that's something that is not emphasized enough the reason why Bitcoin its crypto Offspring is a revolution is because it's Sovereign money you can own it it cannot be seized by the bank it cannot be seized by legal order if you had your seed phase you are protected you have that you can carry it across borders so I would love to see a lot more of that consumer facing good ux good apps and also for merchants because that's the other part is you know I have I look at a an app called BTC map here in Barcelona where can I spend my Bitcoin next to bill there's a couple businesses maybe a guy who sells CBD maybe I can use it there that's about it where are all the other businesses it should be part of the ordinary payment mechanism that every company offers so I think it's on it come it upon merchants and also the entrepreneurs who are in this room or elsewhere to offer those tools to Merchants so they can make it easy make a payment system that's right there on the spot not some guy in the back who might have a wallet on his phone integrated into the business cuz I want to use it I believe it's a sovereign money it's a transportable money I don't have to go to the ATM I don't have to give everyone my documents it's something that we can use I'd love to see a lot more of that can I challenge you on that because I was thinking about this a lot and now because it happened to me now your Barber knows your wallet and he knows how much you earn and where you spend it and everyone else and imagine you want to travel I use lightning so now he didn't you want to travel you want to do banking because it happens a lot right it's all traceable and I think with the current technology we are not fully there to have it like as an independent payment service and I think that's the one of the great things when you build on an existing system that you still get the privacy of the bank transfers and it's very important and I think more and more technology should be developed to make it viable and more private at least you should not only have a fully custody but you should also have the right of your information and I think that's one of the biggest issues I agree I agree and I fought for that that and I've pushed back against regulations that aim to do that in the US Canada or in Europe I'd also invite you to my GitHub page I got plenty of different projects that I fork to people who are working on this there's all kinds of great protocols uh different apps different wallets things that are getting launched by open source developers all the time that are really exciting and I love to see that I think the Privacy aspect Financial privacy is a very important deal we should definitely focus a lot more on that whole other conversation uh but I do think being able to use good sexy products and Merchants really being willing to step up and say hey we'll accept this it's the most fungible asset ever we can convert this however we want send it around the world pay whomever pay our lawyer if we want to I think that's a good thing I mean I like your idea and I know where you're going to with the peer-to-peer payment and I I I might myself think that payment with crypto is important and it's coming but what we see right now and you see different service providers at least in Europe I think also outside of Europe so sortos in the Middle East like NAA or also known as go go to crypto or go crypto which have built up the plane B in the Lugano and Switzerland and also now in Europe doing a lot with opit and others you have seen probably on LinkedIn uh where you can go if your if you your obit or if your Naka or let's say nimic or whatever card and you pay it the merchant but it's not a peer-to-peer payment what really happens in the back is that you take your crypto asset even if you want to take Bitcoin it is getting swapped in a back by market maker to stable in the end of the day it's getting then again swapped to Fiat and the merchant is getting Fiat on its account and I think that 99% of the merchants uh they don't really care what to get in the end of the day uh they they're they're happy if they don't have to pay that many that much fees that they get the money guaranteed on their account don't have any tax or other issues uh and therefore I think this is the way forward with this model which Naka has built up uh and uh if you follow the market you know that the Teta Foundation has put in a big stake into Naka and Naka is now using the Teta USD UCD for for their swaps uh many thought okay uh teda has left European market no it's the opposite side they do it in a different way in a legally compliant way in entering the European market and now I'm coming to my point so when we look at products we're now talking about payment products and it's I think it's very difficult to elaborate on what a crypto product in the end of the day is to make an example also for the audience what is Bitcoin in your opinion is Bitcoin as a white paper ass say a peer-to-peer payment instrument or is it rather what I would say I would never pay with my Bitcoin an investment asset which you keep and I don't know maybe at some point swap it maybe at some point cash out what what do you say what do I say I think it is the same that happened with gold I don't know 200 years 100 years it was a payment peer-to-peer payment but today it is more of a investment asset and more of a on like it exist in a different forms rather than actual therefore I think Bitcoin is going there but all the other crypto tokens especially the stable coins I think are the one for the peer-to-peer payment because especially I think Bitcoin is like really expensive to do a day-to-day transaction because of the transaction fee unless you are doing some large transactions uh therefore I'm not sure but I believe it's more of an investment asset and I never spend my Bitcoin either well we we have plenty of liquidity on Lightning which is Bitcoin second layer uh fees minimal again for me Bitcoin is a decentralized censorship proof way that we can actually value assets and it's a protocol that is essentially representing the separation of money and state and this is why it's very difficult usually to talk about this in developed countries in the US or in the EU is our payments are pretty good everyone's got a Visa card they use PayPass they're able to just tap it uh now in London or you go to Amsterdam you can just go on the bus and tap your card and you got your ticket all is good but the problem is the money that's underlying that the US dollar the Euro there are so many political and financial crises that await us that are always there we've already seen it in Lebanon we see it in Turkey there's all these different currencies and that's why people are moving to stable coin Co or Alternatives like Bitcoin so it's very difficult because we do need to segment our message people in developed countries you can't make the payment fee argument too much because we're talking about small percentages people outside developed World know very much what it means to have bad money inflating money to have money that can be confiscated or like in India with this black money all of a sudden taken off the street so it's sort of a dual argument there's the human rights Financial sovereignty argument that we need to have in many developing countries and then we just need to have also a sovereign money approach in our countries as well in developed ones because at the end of the day do I want to put all of my retirement my assets what I'll give to my kids one day at the stake of whatever the US government says the dollar will be or whatever the European uh Central Bank is going to say the euro is going to be I don't think so and I don't think the trends have been very good I'm a pessimist on Fiat money that's why I'm into Bitcoin and cryptocurrency so I want to talk about the elephant in the room which is regulation um when we talk about regulation most probably of the developers and those who are into crypto would say regulation is is a showstopper so regulation is killing the crypto business so when we look from a more um yeah abstract way on regulation not just in Europe also at the US in Asia maybe India Russia I mean you have also experience with India um would you say that regulation is is a showstopper or how do you see regulation I think when you use the word of Regulation it's definitely regulating something it means it kills the creativity and puts a boundary if we put another term like a compliance it makes a much more better acceptance as a centralized crypto exchange we are very keen on compliance and being compliant and since I took over last one year I hired like 15 people on our compliance team because it's very important especially if want to enter to Market or exist in the market we've been regulated with the vas and now we are looking into micro regulations but also when we look at Europe it's not only killing the centralized like a white paper examples but it also introduces non kyc uh transfers above €3,000 will not be possible living on centralized exchanges and so on which is in my opinion very absur because compliance is very expensive and you don't have so many lawyers and professions that who can actually come and do uh reality check and I've been talking to Turkish government recently they also introduced a regulation and they don't have enough lawyers even go through the regulatory applications they don't have enough judges if you go and do I don't know a court case how they're going to took this process and that's one of the biggest process uh problems and processes that countries should go through they need to educate your uh legis legislators on on the matter therefore in my opinion it will kill the creativity kill it will kill a lot of startups because as a startup you don't have enough money to hire three or four compliance person which is almost the minimum requirement you should get and on the other end you have for example midlist example where things are much Clear things protecting both the startup and the end user but much much in a very very easy way rather than having this mic and with M my biggest problem is that I know I'm sure we all know what happened with gdpr now we end up with a mobile phones where half of the screen is blacked out we just accept whatever we accept without knowing what is going on and that's it right I think it will become the next gdpr where we will be accepting blindly without understanding or reading that 100 paper what the our rights say and probably what we're going to do not not use any service because now they have terms and conditions absolutely I mean from an Austrian perspective and also your experience outside of Austria uh would you confirm that I mean I'm fully with you with the gdpr thing I think it's it's it as as it's now applied it's nonsense uh but what would you say also from consumer protection view would you say that we need this kind of Regulation is it risk-based approach as you have it right now so when I was writing about some of the crypto exchanges in the US in 20122 we had already seen a lot of uh people who were questioning liquidity on things things like FTX and I was writing about it at the time and could kind kind of understand to see the money Trail what was happening some of the people on the boards the amount that SBF was present almost at every conference and event and then meeting with Bill Clinton and all of these people it's like man there's some money that's sosing around something a bit crazy somewhere and in the end when it went bust and we finally understand what's happening and now SPF will be sharing a jail cell with P Diddy by the way I just read that uh but what we have now is this system to where many different Regulators are saying we're going to protect the consumers and here's how we're going to do it I think there are simple ways to do it you should not have institutions gambling with customer money very easy in the US we we can't really talk about that because we got rid of glass steagle in the 1990s so we don't even have that for the private investing side so I do think we haven't really helped consumers there there are private initiatives there are proof of reserves that I know that some companies and exchanges have taken on so that consumers are more aware I think we know a lot more of that because if you're going to be selling crypto tokens cryptocurrencies to the public you should at least have reasonable disclosures not that we need to see your entire treasury how much you get paid how much you pay your employees but do you have what you have on the books if anyone has been following black rocks ETF they have this custody agreement with coinbase and they amended their agreement just recently in the last week to say hey we want proof that you actually have the coins that we're offering our consumers we want proof on Shain that you actually have these in your custody that I think does more for Consumer Protection than anything Elizabeth Warren or anyone else could ever invent from some Senate Office or Bureau so I think that is really what innovators should uh really put all their efforts into creating offer those tools it's again an Innovative solution not one that'll necessarily come from government I'm generally pessimistic on most of the rules I think Ma is the ugliest thing in the room but it's something that we can identify we can work with and many companies will be paying many lawyers and compliance officers to figure it out that's kind of what we have to do for now I I hope we can evolve beyond that uh to really allow entrepreneurs to actually offer those products to Consumers but again it's a cumbent as well upon innovators to come up with good Solutions so that The Regulators don't have to come in after the fact and try to crack everything open honestly I'm truly pessimistic about government regulation and protecting the users we saw our banks collap in us we saw what happened in uh Greece during the recession Bank stopped just paying people and no one said anything while for example as a centralized exchange every month they put our proof of reserves a document with all the wallets showing what we have and also we have user protection fund which is 6,500 Bitcoins available on chain you can just go check make sure that it's on that wallet therefore I think when we talk about liquidity and having assets it's the easiest way to control or check if they really exist or not rather than the Central Bank do they even have that money or not or do they have that reserves or not and the problem is like a digital assets are very easy to control but all these gold ETFs and silver ETFs because you have usually the custodians and they also can resell because they only have to hold 10% of it the same with the US dollar based asset say you need only have around 10% of it in order to send 100% therefore I think banks are much dangerous and they have less liquidity as a crypto exchange you have to have 100% liquidity we can't tell you we have 10 Bitcoins but we are selling 100 Bitcoins right but central banks or like all Central Bank license Banks do that one other thing I wanted to add is we have custodial tools and non-custodial tools I think we need to have legal Clarity that non-custodial tools should never ever have to follow the same rules as custodial institutions that is code and code is speech and when we have situations like people who are developing wallets anonymously offering non-custodial Solutions who then are dinged by government officers saying that they broke some State money transmission rule as is happening with Samurai wallet these are the things that do chill Innovation and we need to have Clarity people need to understand the difference between custodial Solutions and non-custodial Solutions self- custody is the Innovation that came to cryptocurrencies in Bitcoin and that has to be protected by law it has to be understood as far as I understand the fathers of ma the people who discuss it in the European Union they understand that there have been exemptions for self- custody we need to have much more of that we need to have much more articulation on it particularly from International authorities because I think that is where we'll actually gain the freedom that Bitcoin and crypto have promised us and we're not going to you know bogged down with different things of compliance if you're just using code to send transactions back and forth that that was the signal for me to take off my jacket because as you just said non-custodial is also very important noncustodial products uh I I want also to challenge a little bit the the the exchanges I think exchanges are very very essential very needed but as you just said non-custom product I think are as much needed you have crypto investors who are more sophisticated who are more into the business why shouldn't they have products or um access to the the defi industry to the Dex industry um would would you say in the future there is a possibility that and sex and de are cooperating working together is there something in in view is could you say that could I say that maybe shall I say that not because uh when we talk about the centralized world it's pretty complicated it's very hard for institutions to get in and also as a centralized exchange for example if you are buying a Bitcoin from us it means we have kyc and AML we can have a full trace of where they come from if you buy a Bitcoin from a decentralized exchange and what if it is coming from a stained wallet some scammer did something and as an institution next day I don't know the authority will come and tell you give that Bitcoins back they are staining they got through scamming someone and you have to give them back therefore as an instit ution or large client you preferably would want to work with a centralized exchange because of that all the process but in parallel if you are into you have a big risk appetite or you want to go work with a decentralized exchange because for example bitet we have decentralized wallet where we have 20,000 tokens and in bitet centralized exchange we have only 800 tokens and usually early stage investors people who are more into taking risk and investing in very early stage products they prefer going to the dexes Unis Swap and all the others while if you are more into traditional way of trading or maybe crypto is like 5 10% of your portfolio you definitely come to the centralized exchange can you swap between definitely but also not all centralized exchanges are able to accept all sorts of different products and chains I see your shirt and I know you are leading that question there therefore centralized exchange are playing a different role than decentralized exchanges another important way even today let's say you have usdt on ethereum but you want to do transaction on the or I don't know Solana you need to come to the centralized exchange one way or another because you need to swap them and unfortunately there isn't much product to do that multi-chain Swap and I'm just talking the same currency in different changes but like if you want to do every anything else definitely you one way or another have to come across I mean we we absolutely on same page I think we all agree that a certain amount of um kyc ml uh CFT is needed uh none of us wants what happened to Alexa freedom to Alexa happening to any other protocol developer and so on uh but I I think my my in my opinion that there is the future of of combining this Two Worlds the the Dex and the sex industry I think this is what consumers need they need to have the freedom of choice what they want to do without an a nonrisk balanced uh regulation I'm absolutely with you that the rules we have for custodial servic should not apply to non-custodial Services um especially what we have on U transfer of funds regulation and travel Rule and stuff like that which is most of it is nonsense um and but but I think from the consumer protection and as you said if the gdpr all these clicks they're nonsense if if you you would have thought like back in FDX times s SPF times everyone every investor who has a little bit of understanding can read between the lines would have seen that there's something wrong yeah and in the end of the day you have to give the freedom of choice to an adult person to do what they want to do and protect them from scammers that's it full stop but yeah what you say and there has to be a lot more education because again if you have scammers that are out on the prow and they're attacking exchanges it does matter if you hold your own keys and you run your own Noe you're completely separated from that you are not at risk and I think that's a lot more on Educators who are in the crypto space to continue to harp on and I understand that there are a lot of great custodial Solutions there's a lot of great code that people have developed that allow people to custody things at certain places but look you're not going to be protected if you're giving your coins to someone else that's a risk we do it with the banks we understand that there's government protection and you know up to however many million Euros or thousands of dollars but the reason that you are into cryptocurrency or you should be into cryptocurrency is because you can own it sovereignly and I think there has to be a lot more on education as well so that people understand this we understand not every grandma or in the world is going to own some of these wallets but that's why we have Uncle Jim models and we have ways that we can do it in the family and there are great Innovations I've heard about just here where people can hold things in their family or with loved ones or with trusted lawyers so I like that but also like I think banks were around for so many years and scammers were around so many years and government failed to even prevent Basics like a fishing method and so on therefore it's more about education and more about educating people how to find a good project to invest I don't know good token to buy and diversify their portfolio rather than focusing on solid to product and developer and developer you shouldn't put all the risk on a developer thank you I think there was These are nice uh end words we need great products nice user experience and education I think that's a key and a little bit less regulation thank you for being with us and have a nice day thank you