EN | TradFi + DeFi Building Institutional Grade Products | MERGE São Paulo

Uh please welcome to stage Aaron Stanley from Promonade Advisory. Uh Stephen Dreyer and Richard Meng. Uh nice to be here. Uh so my name is Aaron Stanley. I'll be your moderator today.

I'm joined by Stephen Dreyer and Richard Meng. So we're going to have a good conversation today talking about institutional DeFi great products, standards, infrastructure, and some other good stuff. So we've got a good good section here for you teed up. So appreciate everyone's attention and thanks for being here everybody. Um so my name is Aaron Stanley.

I'll be your moderator. I'm the host of a podcast called Brazil Crypto Report, which is an English language podcast that's been exploring digital asset adoption in the region here both in Brazil and Latin America more generally but primarily focused on Brazil really with the goal of trying to give a bit more visibility into some of the what's been happening in this part of the world. And we've been doing lots of long form interviews. There's also a newsletter that's been summarizing and really trying to help elucidate what's been happening in the Brazil market here. It's really been one of the leaders globally in a lot of ways on the regulatory front, on some of the institutional adoption front as well as retail user adoption.

Um Brazil's been a world leader in a lot of ways and we've been trying to really promote that. So it's an honor to be a part of the Merge conference here. Really want to thank the Merge team for putting this event together, putting together uh in this beautiful facility here. I think Brazil really needed an event like of this caliber. Um so really just kind of bring together everybody and really touch on this this institutional Web3 and co-mingling.

So Uh with that being said, I would like to introduce our panelists today. So we have Stephen of the Association of National Numbering Agencies and he's going to tell you what that is and then we also have Richard who is the co-founder of Cregis. And we're going to be talking a bit today about infrastructure, some D5 products and we'll also be talking about some of the standards that that Stefan's been working on his team that is going to really help unlock a lot of these products for broader customer bases and audiences. So really excited for this. So maybe I'll turn it to you Stefan.

Would love for you to maybe give yourself an introduction. Tell us a bit about your work. Yeah, so happy to be here everyone. Stefan Dreyer as Aaron said is the Association of National Numbering Agencies. We like to call it Anna.

So we are global trade association member association 125 members globally working on the promotion of the adoption and implementation of standards within the capital markets. And so one of the key things obviously with the introduction of DLT into the the world that technology, we had to take a closer look at what the implications for the work that we do in standardization meant. And so the last couple years we've been looking at ISIN which is the primary globally accepted identifier for the last 40 years for financial and referential instruments and understanding what that meant for issuances that are native on the chain so the crypto side of the world. And we have introduced and expanded the scope of coverage together with our partners at the Digital Token Identifier Foundation so that we have ISIN coverage for the crypto asset world. Then coupling on the work that they're doing where we have tokenized financial instruments, there is a newer ISO standard called the Digital Token Identifier which we have been marrying with the ISIN in a complementary way.

So you can think about it as the ISIN being that identifier of the asset that's being referenced and then the DTI being the digital representation of that asset multiple times potentially on chain. Um and so really giving that complete picture, we also work with other standards bodies such as the Global Legal Entity Identifier Foundation, which does identification of the entity issuer level. And so there you're giving the market really a clear picture um and transparency into um an asset and its deployment on chain and who's behind it. Amazing. And uh we're going to dig into some of that uh as we proceed through this conversation.

It's really interesting stuff that uh is really important for really unlocking these markets and and and making some of these products and these and these structures um really uh you know, palatable and legitimate in the eyes of you know, the traditional uh traditional markets. So uh Richard, would love for you to introduce uh yourself and tell us about Crejo's. Holy crap. I I run. So for us it's uh very simple.

Crejo's was founded in 2017 from China mainland. In 2017, China mainland what happened is that time is the crypto exchange is booming. A lot of crypto exchange is coming out like Binance. Binance was founded in 2017. And 2015 and 16, OKX was also there.

So that time in China mainland what happened is so many of the people want to crypto crypto exchange business. So they want to launch their crypto exchange in 1 week or 2 week or maximum 1 1 month. But what if they want to develop their own system, it will be very slow and then on security because that time is like a a lot of a hack is coming coming for the crypto exchange. So this happened the business so that time what we do is we help the crypto exchange to build their security digital asset system within a week. Everything is set up.

We only give them API. They can build their crypto exchange. 1 week, 2 week, they can launch their product, their crypto exchange. So, that time is this business in China was very good. So, we provided this kind of crypto exchange, this kind of custody, digital asset, uh security system in that time.

But coming to this business in in year 2021, China mainland banned crypto. So, all the even Binance, even us as a tech provider, we shifted to Hong Kong, Singapore, Dubai. So, China mainland is uh stopped this kind of business. So, we shifted and rebranding us like Cregis. So, now we are in head office in Hong Kong.

Also, '23, we go to Singapore. '24 and '25, we even go to uh Dubai manor region. Now, in Dubai, we also set up our manor region office, also processing the viral license for custody. And until this year, we think like the Latin market we are ready for Latin market. So, this year we set up our office in uh San Paulo to expanding our business to uh Latin market.

So, our main business or what we do is very simple. We providing the custody technology or crypto payment solution or like MPC wallet service for crypto exchange, for OTC firms, for banks, for any of the institutions who want to crypto business. We providing them the technology infrastructure. Amazing. So, so just kind of double clicking into that.

So, your your your primary your primary customers, your primary uh you know, ICPs at this point are like banks, neo banks, asset managers, anybody who's involved in doing payments or stablecoins, etc. Any of these types of entities could kind of take this uh module, these modules that you have created and kind of plug that into their tech stacks. And And is that kind of the idea? Yes, it it depends. From the year on, every year is different.

Originally from China mainland, that time is crypto exchange and there's a mining company, the platform is our main business in 2027, 8, 9 that time. But in the recent years, I'm coming to the Asia with the payment providers. A lot of payment companies, they want to do the stable coin payment. We provided the technology for them. And then last 2 years when we go to Manor region in Dubai, there's a lot of brokers, forex brokers.

You know, first the Bybit. Bybit is the founder is from a forex brokers. You know, Bybit also can do the safety trading for the stock, for the commodities. So the in Dubai, there's a lot of forex brokers. Now they also adoption crypto.

So we give the solution for brokers to let the brokers to have ability to actually accept the crypto and payout crypto. But then now we coming to Latin market in San Paulo. In the merge event, this is our first event. We have a booth there. So here we discuss a lot of companies.

And we found out that Brazil it will be a little bit different. Here a lot of like the banks is also one of the target. They are very open for digital asset. And also it's like here we found a lot of payment companies. Payment company cross-border payment companies.

Because in Latin market, a lot of people, you know, one of the scenarios is they purchase the product like example from China. China a lot of factories. They purchase the electronic or the clothes or whatever product. Previously, all the the traders in in in in Latin market, they purchase this product in China, they pay by dollar. But recently, a lot of people want to pay by stable coin, stable coin.

But in China, the factories, the main the factories do not accept for stable coin payment. Mhm. So between the factory and the traders in Latin, there's a lot of cross-border payment companies. They help the Latin the merchant to receive the USDT and payment to the factories dollar in Hong Kong or China. So we found a lot of those kind of companies using here near the like technology or like infrastructure.

So, here this one I think like the payment here OTC on-ramp programs here will be a big opportunity. Got it. Okay. Yeah, I wanted to I want to dive into that a bit a bit deep more deeply as well cuz that's really one of the the major use cases of crypto we've been seeing in Latin America over the years is what you just described there and then and having that infrastructure kind of end-to-end is very uh is very important. So, I want to want to kind of double click on that.

Uh before we do that, I do want to go back to Stefan here um and maybe talk a bit about just like when we're this this question of of standardization. I mean, this this is something that has existed for a long time in traditional markets, right? And I don't I think you kind of your agency and and yourself you started looking at this around like 2021 or so and you so you've been there's been kind of this movement around standards for about, you know, 4 or 5 years now uh in your circles. And maybe talk a bit about like how how have you seen, you know, the development or at least the the the process of developing some of these standards for for digital asset products? How has this maybe caused the the um the maturation of this industry in a in some sense or how has this maybe changed the um the way that institutional investors perhaps perceiving this industry?

Does this give like a more of an aura of legitimacy that uh or or does this make does this make this industry look you know, appear to be more comfortable in the in the eyes of of these types of investors? Yeah, I think um so when we started looking at it was actually a little bit before that. Um so it's been probably a good 5 or 6 years um really focused on this topic and I think there has absolutely been a a shift. I think the the shift on the one side is it was very segregated. On this side you had crypto and on this side you had, you know, TradFi and we have this TradFi DeFi thing and we saw an opportunity to leverage things that already existed and worked for a lot of the same reasons that you need on the on the crypto side.

So, reporting, risk management, compliance, all these different things that we're going to evolve with regulation um and leveraging that and moving it over and showing how we can bridge those those things. And we see that intersection. I think you've also got a lot of um institutional shift um the uptake of crypto by uh incumbent uh traditional financial uh institutions. But, I think you then on the more of the technology side um the uh shift into tokenization of real-world assets. And so, we have this convergence of things and that's where kind of the thread, the standards that we work on, which are on the one side identification standards, but also the reference data that goes with that um and classification standards.

And admittedly, we still have some work to do there, but I think having that does give it a little bit more legitimacy. Um it helps you understand what is the thing that you're talking about, whether you're coming from an issuer perspective, um settlement, uh whatever it is that you're looking what your role in that is, um really being able to understand are we talking about the same asset. Um because without that structure, you've got fragmentation. Um but, having that structure in there, you've got interoperability. And interoperability was always one of those things cited as kind of a key necessity for this ecosystem to evolve.

And then on that point, um I mean, this is this is this is something that we've experienced a lot in kind of the crypto native circles where there's you you you have lots of different, you know, L1 chains, you have lots of different L2 chains, and there's there's fragmented liquidity, there's fragmented assets. So, if if we're talking about, say, um you know, I could I could go to my Robinhood account, I could buy a uh a share of regular Apple stock, or I could buy a share of tokenized Apple stock. And that maybe that tokenized Apple stock uh lives on multiple different chains. There's a version of that on Solana, there's a version version on base, and there's a version on uh you know, Polkadot or something. Like does it kind of feels like maybe we're you know, there's a unique set of problems here.

A unique set you need cuz it's all the same asset, but it's all it's living in different places. It's supposed to represent the same thing, but it's like like how are you guys kind of thinking through some of those those wonkier questions and and maybe like how can you guarantee that or you know, the user know the investor knows that like okay, if I'm buying a tokenized share of Apple stock on Solana, that's actually the same thing in theory as just buying a regular untokenized share of that stock. Does that make sense? Yeah, absolutely. And it's very um current topic for us, something that we've been delving through um within kind of our working group uh community um which has representatives from all over the globe.

So, you've got different kinds of use cases, and I think it the equity tokenization of equities has been a very unique thing cuz a lot of people don't realize um and we kind of had to figure out, you know, how do you put these things into different categories, different buckets. You've got issuer-sponsored equity, which is basically the D stock, the issuer, Apple in your example, taking the stock and putting it on chain. And it's the same thing, you've got the same rights, same legal obligations. As an investor, you're going to get the same dividends, you get the same risks. Um and that is a pretty straightforward case, right?

So, whether you're buying you know, Apple on a traditional exchange or the tokenized version of it, it's the same asset, so it's going to be um identified the same way. But, you have a technology component on the tokenization that you want to identify which chain that's on or chains and differentiate between that cuz you've got different technology risks. The second category is the third-party sponsored, where you've got exchange issuers, crypto exchanges taking a stock, they might buy some of it, put it as collateral, and then create a digital representation of it. But, you have a different obligor, you have a different risk structure, um you don't have the same rights as an investor, um as somebody holding the actual Apple stock. Um and so that differentiation is also important.

And those things can also exist across multiple chains. Then you've got even a third variation, which is kind of the derivative component, where somebody is taking the underlying and and creating some type of a wrapper around it. Your risk and your price are linked to the stock, but certainly none of the obligations, cuz it's really a smart contract derivative that you're buying. And so the the ability to differentiate that and understand if I need to aggregate my risk exposure, if I have limits on what I'm able to invest in, um if something goes belly up and I need to go and chase my money, um being able to identify what is that thing that that I actually hold. Um is uh critical.

Got it, got it. And and then and even if you're looking at something like, you know, you you have it it maybe translating this into like a more of a crypto-native language, like okay, you can have Bitcoin and you can have wrapped Bitcoin, which is ostensibly the same thing, but it does you can do different things with it. Um and you can you know, you can put that locked bit or that wrapped Bitcoin into a smart contract on an Ethereum-compatible chain or Ethereum EVM chain, you can earn you know, yield on that by by staking it or whatever. Um like does that present any new kind of frictions as far as standard? Cuz like there's there's things you can do with these assets that you couldn't maybe necessarily do or maybe you couldn't do it as easily as you could you could it's easier to do now with in a crypto-native environment than it would have been in maybe the you know, traditional kind of non-crypto setting.

Does that make sense? Like what the what types of new challenges frictions does this stuff present? Absolutely, but I think the the key and one of the principles that we use is is a what we call the fungibility principle. Can those things be exchanged one for one? Unproblematically.

And in most cases, they can't because they're not the exact same thing. And when you have that scenario, you have to look at the fact that you have virtually different assets and and different representation token representations of those assets. And so, having an understanding of that, really what do you want to do? What is your use case? I think is important that differentiation.

Got it. Got it. And then, Richard, let's turn back to you here and maybe let's kind of double click a bit more on you mentioned like this is maybe your first real activation in the LATAM region. You've you've been activating in Asia and in Middle East and in in in other parts of the world, but this is your first time really kind of activating here in Latin America. You mentioned some specific use cases you guys have kind of honed in on and and maybe, you know, help us mean I think you can't have a conversation here at Merge without somebody mentioning uh you know, cross-border stablecoin payments, right?

But like seems like what you guys have built is really the infrastructure to be able to you know, kind of end-to-end from merchant to receiver to fab factory back in China or whatever it might be um to really effectuate these types of payments. And maybe kind of just walk us through like you know what is like the actual tech stack here that's required to effectuate uh these types of payments. So, say from you know somebody who's placing the order for a product here in you know, in São Paulo and they they want to pay directly to the factory in China for whatever goods they're ordering and they want to do that all with with with a stablecoin rail. Maybe like talk a bit about how um you know, your tech stack can kind of facilitate that like end-to-end perhaps. Yeah, the process actually is very simple.

Like example, there's a lot of like cross-border payment company. They will help like like a example, you are the merchant, you are traders from a Latin market. You want to purchase the mobile phone from China market, China factory. So, I'm a China factory. You want to purchase this from China factory.

So, you will pay by stablecoin to a payment company. Like your payment company, you will open account here. You will give him like USDT. After USDT give, he will help like in Hong Kong payment of dollar in Hong Kong account. But, the factory in China or most of the uh factory in China, they export export factory.

They have a bank account in Hong Kong. So, Hong Kong is a financial center can accept for dollars. So, and uh the payment company here, the USDT how to get it? Maybe you as a merchant or you are the buyer here in the Brazil money, maybe you you already have the local OTC firms can exchange exchange from the local money to USDT. So, this is a scenario.

I think it's not uh so complex. Uh Got it. Got it. And then and then as you're looking at these these these payment firms, these OTC desks, and you're kind of eyeing your potential clients here in the region, like what do what do you see as maybe um maybe what's maybe a niche that you guys you you see that like wow, we can we can really help out in this particular area uh in this whole in this whole uh payment chain? I think so.

For us, it's a quite easy. Right now, uh people even before the election were saying like right now Bitcoin is dropping that the business is not good. But, for our perspective is actually the business is keep on growing. The growing is not because of Bitcoin dropping or not. This kind of things is about the trading.

For stablecoin, now it's not that it's like from Africa to the Southeast Asia, from Latin. Stablecoin from payment, the the the the the business is growing bigger and bigger. More and more like companies and now adoption for stablecoin. But, this one is really help the global trading of global payment more efficiency and fast. So this one is like uh here we come here like a still a lot of like traditional fintech.

You know, for us is uh we are crypto native from 2017. That time is we are only do business in blockchain industry. Most of the client is like crypto exchange or maybe like the mining platform mining. The business very small that time. But in the recent 12 3 years we found out the business keep on growing.

Now we we are going to a lot of a fintech in the fintech like like exhibition. Now in like talking 49 or like consensus now we only take us around the 20% of our marketing investment. Most of our exhibition we are going to fintech like money 2020 for payment industry or Singapore fintech festival it's all fintech. So there's a lot of payment company traditional payment. They don't and ever doing stable coin before.

Now those kind of payment company now they want adoption for stable coin payment. But they don't have idea how security how to the process. So we give this this kind of solution for them. We also give them the education and we also give them the user case of how other people in Asia in many region in other people how they doing the process. Got it.

Got it. So it's really providing some easy way for these types of companies to to be able to just plug in these these stable coin modules again into their existing stacks they can begin you know, pay ins and pay accepting pay ins and pay outs uh etc. Without having to kind of rebuild everything from the ground up. They can just kind of it's like an add-on just plug it in and and and you can begin accepting sending receiving etc. Uh without having to rewire everything internally.

Yeah. Yeah.

Um and then um and Stefan maybe going back to you here um I'd like your thoughts on you know, as we we see the Brazilian market uh as we've talked about a lot last couple days here, like there's we've we've hit this point of maturation where we have vast regulation coming into place. Kind of the rules of the game are fairly clear now. We see a lot more institutional involvement. I think the now that the rules are in place or coming into place, you have banks and institutions and all these the tradfi folks coming into the game here. And we're hitting this point now where it's kind of like you know, escape velocity, I guess.

Where this industry is really going to start blossoming. And I guess from your perspective, like what would be the message that you'd want to leave with this industry here as it's just beginning to really kind of come into its own, you know, based on the work that you've been doing and what we've we've just been discussing. You know, what would you you know, kind of from your purview on the standards front, like what would you want to kind of leave with the the local industry here? What what should they be taking away from from this conversation? Um It's a good point because I think that regulatory clarity, we've seen examples of that in Europe and then in the US once the the legislation kicked off where it it actually does start blossoming.

And it's you know, the conversation before used to be about adoption and are we getting the what is missing? And I think there's still elements of that there that innovation thing, but I think it's important to understand that there's a lot that doesn't have to be reinvented. And all of this is going to converge. The the success is when we actually don't talk and differentiate anymore. Crypto is a regular part of the capital markets, another asset class with the other asset classes, and we have an ecosystem and infrastructure around that which allows that interoperability.

You've got, you know, funds being issued on crypto, you have tokenized funds. So you have all these different variations of different asset classes and instruments. And so, you know, things like standards are a thread in there. And when when I don't have to talk about them, when they just exist and work, that means that the that the real success is there and you don't have to preface everything with tokenize this or tokenize that. Um it is what it is um and uh yeah.

Yeah, so that means you've done your job, right? If we get to the point we're not talking about this and you know, you stop getting invited to conferences, it means you you've done your job, right? The conferences change because in the capital markets, I mean, there's always going to be work to do, right? There's no finish line. There's there's a constant evolution um and the topics start changing and there will be other components, you know, you already start seeing a lot of these things, you know, AI, the real kind of things there.

You've had the sustainability elements. You've got markets where they're doing um not only tokenize digital issuance, but sustainable tokenize digital issuance. Tokenize carbon credits. Um all of these things come together. So, the I think the topics will change and evolve.

The conferences won't go away, but it won't be as focused on what do we need to do, but kind of what's the next step.

Yeah, that's a great point. Like there really isn't a finish line. It's like there's always going to be some new innovation. Like okay, once we figure out just you know, uh you know, tokenization, it's like well, this tokenization is going to have a multiplicity of different specific uh you know, silos and use cases and buckets and and and those are all going to have their own uh requirements and specificities and whatnot. So, there's all Yeah, there's never any finish line with this type of stuff.

It's always uh an iterative process as the innovation continues and as as more more and more folks start using these things. Um Well, that does it for our our panel today. We appreciate everybody uh uh taking time to to listen to this conversation and hope you enjoyed it. Um really want to thank our panelists. We have Richard, Meng, Prejas, and Stefan from I almost had to I I had to look up here like what's the name of Association of National Numbering Agencies, ANNA.

Yeah, like very easy to say ANNA. But uh but really interesting conversation. Uh appreciate both of you guys uh making time to be with us today. Thank you.

Okay, thank you. Thank you.