Blockchain Abu Dhabi Opening Address

Good morning sir. Good morning everyone. Thanks for being here bright and early. Um so I have uh one one nuance to mention here that uh in the previous funds that I that I'd run we were an OKX client. I have to say the execution ideas are free.

Ideas are cheap. execution is everything and OKX did a really really terrific job of uh of executing on on on everything that we were doing and I'm I mentioned that as a bias so this is going to be a little bit of a warm discussion because you guys did an excellent job for us but uh listen I really appreciate you being being here uh you're sharing your insights you you've done remarkable things with uh with OKX already that we'll touch on over the course of the conversation but I wanted to start off with look anytime you're starting a company anytime you're you're building for the future. You have some northstar vision. You have some longer term ideas to where you think things are headed for the future of finance and how you integrate into that. And I think it would be really really great to start there and just understand where you see things headed and where you see OKX's role in that direction.

Thank you, Marcel. And uh we'll give you some favorable fee for saying nice things about our platform. Uh I think it uh to to talk about the future, let's go back four or five years of OKX history. When I joined the firm, the world looked a little different. This was 2020 and arguably there were two types of crypto exchanges.

There were the primary exchanges coming out of United States or you know onshore US. These are Coinbase and the likes. And then there were exchanges that were being built in Asia and we found ourselves in a place where we started to define these two exchanges as offshore exchanges versus onshore exchanges. So when I joined OKX, one of the key things I wanted to do was globalize the company because I saw a lot of promises in infrastructure. when the markets uh went parabolic in 2017 or I think 2016 you might remember a lot of exchanges went down uh it happened during co it happened recently but during all those volatility periods OKX maintains its uptime and the reason is our founder is an engineer he's built a phenomenal infrastructure that can actually handle uh you know incredible volumes so we had to bring that engineering power to the world.

The last four years has been an obsession to globalize a company and there were a couple of components that we felt were important to bring our our engineering infrastructure to service people globally. One was we knew that we had to get licensed in different markets and this is even before the recent regulatory clarity we've started to see coming out of United States, Europe and even UAE. The second was that we knew we needed an interface that would be relevant to people around the world. Now look, we service a lot of uh you know younger people on the platform. They want to see a clean, easy, modern interface.

And I think these two components were really important. And then thirdly, we wanted millions and millions and millions of people to know that we exist. And I think that's been primarily the focus of the company over the last few years. You look at uh five years ago in 2020, we were called OKEx. There was another offshoot in in the United States called OKCoin.

So, one of the first things I wanted to do was clean up the house and call it OKX. There was a reason why we got rid of the E because we weren't just an exchange anymore. We had ambitions to be a crossplatform and we got rid of all the other subbrands. So, now it's just very clean. Uh it's OKX everywhere.

It's not OKX UAE or OKXUS. It's just an OKX brand. The same way you see it on Man City sleeves or you see it on the back of McLaren Tales or what have you.

Excellent. Uh let me pull on that thread a little bit. This idea of um kind of the the the everything component of what you describe. Um, OKX has migrated from not only an exchange but now being active in web 3, being active in decentralized finance. Um, the the idea of bringing everything on chain, something the SEC chair now thinks is going to happen within two years, very ambitious.

Um, how do you think about the evolution of OKX in that context and where does it fit into the to the global financial system on a future basis? So uh for us we see a world where maybe three five years from now people around the world are going to use blockchainbased financial products for pretty much everything related to finance. So we imagine a world where you are taking most of your value that you earn and putting it on an app like OKX and you have very easy discoverability of different D5 protocols. So say you put your value there, you know that you can spread it across three to five low-risk D5 protocols and earn a very favorable yield. Call it a savings account.

My compliance team probably won't let me do that, but I think that's the inherent value of those DeFi protocols is you put your money, you're earning yield. It's it's much more simpler than going in and out of a CD product where at least in my case in the United States, I have to call my financial adviser. I have to tell them what I intend to do. They'll then recommend a couple of CDs or other instruments and then I go put my value in there. But guess what?

It's really difficult for me to then deploy that value instantly into the markets. If I want to unlock the CD, there's a lock up period. I have penalties related to it. And when I want to go into say the markets, there's like a delay. I have to withdraw out of the CD, then deposit into my broker account.

By the time I do that, I've probably already lost the market opportunity. And I think on OKX, we're trying for that that experience to be very seamless. So, you put your value, it's earning, generating yield for you, but when you see the market opportunity, you're able to quickly go and deposit into your trading account and voila, you're able to go and get exposure to the markets. So it solves for the use case of your daily financial app where it's generating yield but also something where you can quickly deploy it into different investment opportunities. But then there are other services we're also envisioning.

Uh we have recently launched the OKX pay product. This is an onchain payment product globally that we're slowly rolling out. And the value there is it's built on top of a practical self-custody model. It uses pass key so you don't have to deal with the complexity of sa saving your you know your seed phrase or your backup uh phrases and you're able to use it for remittance globally and you're able to even do it on a on a group level. So, you know, when I was younger, I used to go out with friends and we'd use an app in the US called splitwise.

And that was our way to uh to split value. Say if we if we were at a dinner on OKX Pay, you can actually do that very very easily. And it's all onchain. So, you can see how we're using different building blocks in finance to make an everything blockchain finance app for people's daily life. And it's it tends to be more practical and you can deploy money from one experience to another experience.

So I would I if I were to do a sound bite on that programmable finance I mean that's the future. The fact that it's onchain allows it to be programmable but programmable finance is your future. Let me do a quick hit before I uh just a real quick hit. What do you in that context of what you describe what's more important to you? Is it the user experience or to get to gain mass adoption?

Is it the user experience that's going to gain us mass adoption or is it the techn technological foundation or the combination of the two? Because right now the user experience I I love everything you're describing and the user experience just seems a little lacking. Seems like a little extra effort to get a lot of these programmable forces forces at work.

I think they're very much connected with each other. I would argue that you do need the strong foundations before you can build a a great interface. So if you look at our web 3 experience, our wallet, we're chain agnostic. you can access pretty much any chain natively. You don't have to do bridging on our wallet which makes us quite unique.

But with that infrastructure now we're having to design a really cool interface. Uh I think those two things are very connected but you have to start with the foundation before you can address the interface.

Understood. Um follow up to that. What do you what do you think it'll take to get asset managers and CIOS and that like to jump into these markets and take advantage of the programmable finance that you're describing, the foundational layers that you have? Where where do you think we are in that stage? We have one out of 10 or we have four out of 10 and what do you think it takes to get get us moving?

I think we're probably halfway there. I would say probably five out of 10. And I probably peg a lot of that onboarding related to regulatory clarity in different markets. Now, US is seeing uh maturity in its regulations, but there's still work ahead of us. There's an anticipated market structure bill.

We're still waiting on how CFTC will define some of the rules. So, I think we're halfway there. Uh Europe, you have the MA, you know, infrastructure and UAE, it's a lot more mature arguably than a lot of other markets. So, I think um for asset managers to come in, they're probably going to need to be really comfortable that the the regulators have a very clear framework for exchanges to operate in those markets before they can really be riskone.

Got it. Uh I want to zoom in just just quickly on uh on the UAE. So you have a you've done really as an organization really uh quite incredible strides in the UAE uh local office, local licenses, employing more than 100 local people, local currency, payment uh rails. Uh tell me what h how does your how does the vision you've been describing integrate into into the Emirates and what are some positive surprises that you guys have experienced here? So today, OKX, I think if you reverse back a year ago, year or so ago, we were the first among the first exchanges to get licensed by VAR.

And I think we became one of the largest exchanges to have native bank partnerships. What that means is if you're in UAE, there's really easy fiat on and off ramps on a regulated platform, a regulated app. So what we've seen is a diversification of people who historically probably were questioning crypto are now looking at it with more seriousness and are experimenting with our app. The thing I love about UAE is if you look at the United States, there's a lot of diversity in the United States, but you can't compete with the diversity in UAE. I think in UAE in a 70,000 you know kilometer area you've got about 200 plus nationalities.

I don't think US even comes close to that sandbox. So we really love that because when we put products and services out there we really get a signal from you know many different parts of the world on how people are going to react with our services. So I think that's been a really surprising factor is while it's not a you know as big a market as Europe or or the United States the signals you get here are far more useful than you know perhaps just the isolation of United States or Europe.

Let's uh we're we're going to be tight on time here but I want to end on a fun note. Um, one way of one way of gaining recognition to a broader audience is to uh start sponsoring conventional things that that we're engaged in like Man City. He did an amazing job of uh of getting the brand with Man City that happens to be the the bre best football team within the Premier Premier League with a number of amazing Croats playing. Um, you've got McLaren which is now uh so it'd be really nice to know the next one you're going to do just so we can get get ahead of it. But talk a bit about what what you were what your thought thinking was along along the lines of bringing in some of these fund sponsorships into the into the fold.

I think we were the probably I'm pretty confident I think we were one of the last exchanges to probably begin doing big sports partnerships during that hype phase. I think we actually started doing our sports partnerships when everything started to crash. Uh this is I believe 2022. Markets weren't looking that great. The board was really questioning those decisions.

But I I guess I have to say if you're a CMO for a trading exchange, you got to have some good trades. And those were my two best trades.

All right. Awesome. Thank you for your time. Thank you for your clarity. Thank you for being here.

Thank you, Marcel.

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