EN | What Comes After Crypto Adoption in Banks The Next Institutional Use Cases | MERGE São Paulo

Please welcome to the merge stage Sori Onorato, journalist and portal dubichcoin.

Um, so thank you so much for being here with us today. Um, Lucas is here.

Uh,

hey guys.

Okay, welcome.

Finally, I tell you.

Yeah. So we have a great group of speakers here to talk about what comes next after the crypto adoption by banks. Um I think that today the conversation is no longer if banks will adopt crypto but more how they're doing it and how this will reshape finance in the coming years. So guys uh can you briefly introduce yourselves and tell us a bit about your work? Uh can you start with you?

lending. Investment Wonderful. Nice to be with all of you guys here. My name is Allesandra. I'm heading markets at crypto finance at Deutsche Borsa Group.

We effectively do two main activities. On one hand, we're providing liquidity to the institutional space mainly to banks out of Europe and also more recently here in Latin America and in Brazil. Uh and then we provide custodial services. So once again, we make sure that the assets remain safe and we facilitate the entry into the crypto space, the digital asset space as well as on the tokenization and stable coin space for financial institutions.

My name is Eric. Just make sure should I do it in English or

it's English, please.

Okay, no problem. So my name is Eric Kafim. I'm in charge of the crypto market at itu and also for traditional finance such as derivatives uh fax market. So I mix a little bit of tra traditional finance with defy which is part of the the joy of working in a bank like it. I've been in a bank for 20 years and have several several things to discuss with you guys today.

It's a pleasure to be here.

Great. Also hi everyone. Good morning also from my side. My name is Lucas Antoer. I'm the CEO of Bit Panda.

Bit Panda is Europe's largest crypto company. We on the one side have more than 7 million retail customers um investing in with more than 700 assets um across the European markets in Germany, in Austria, in France, in Italy, in the UK. On the other side, uh we operate a B2B business where we are supporting major European financial institutions um in actually offering crypto to their end customers. N26 for example, European Neo Bank, also Deutsche Bank. and we're working closely together with the colleagues from Deutsche Bers actually um also in regards of institutional uh trading u customer of them.

Awesome. So guys let's start from the big picture here. Uh crypto was created as an alternative for the banking system but now uh more than a decade after bitcoin was created uh banks are becoming such a major players in the crypto space. So can we start talking about what changed in the recent years to that to happen and do you think is this adoption of crypto by banks is something like inevitable like we saw in the past banking resisting to new technologies innovations but eventually they end up adopting them u can we start with you

yeah I must say that it's funny hearing yourself in [laughter]

I'm going to switch to English So I'm not the the different on the panel. Um so yes definitely I think that crypto for the banks has became a when question not an if question. Uh and it's a tendency that has been replicated all through the region and in Europe itself. I mean here we have one of the biggest exponents in the area. I think that banks began to pay attention to crypto in general once [clears throat] they understood that part of their processes were either replaced or became more efficient uh some in a different way.

For instance, the moment that uh FX swaps, remittances as I as I mentioned before or even the technology stack that they were using for some of their products proved to be more efficient in a different way. Banks are all about the business and it's not a bad I mean they are not in favor or against crypto particularly they are in favor of making their business more efficient. So once they realize that and on top of that once that certain fintexs or competitors start scratching their market share because let's be honest it's that it's not replacing yet. of course they will start to pay attention and in when banks enter into the play regulation comes because now you're playing in the in the big kids playground not no not longer in the sandbox so I believe it's a natural course it's already there it's going to be even deepened uh as we continue to evolve in the ecosystem and I believe it's something good we can discuss certain topics like we're going to do now like with the license here in Brazil and all the requisites that are being asked here. I believe that's not particularly good, but the trend is there and I'm actually in favor of it.

If uh if I may add as well, a bit of a different perspective, especially in the market that we started in Switzerland already in 2021, um it was regulated. So with the DT act, the service, the ability of providing trading and custody services already were in scope. And the first few banks that we started coming into the market were mainly driven from two things. On the private banking side, uh there was a need to start offering and participating in the economics which were the ones of an exotic market um an exotic asset class which often times ETPs which might have been on the shelf did not offer. Uh but in general more broadly you had outflows which were starting to go towards crypto exchanges which in terms of the notional value were never really threatening to some of these banks but from a competitive standpoint uh you know imagine as a private bank losing those assets to a competitive private bank all of a sudden they were starting to expose themselves to losing real estate assets deposit assets private equity etc etc.

So I think a lot of it was also um outflow protection and of course participating in an asset class which had high remunerative potential. I say this uh because some of the topics that were mentioned um by my colleague here uh are not as relevant in some geographical areas. The European Union obviously is a lot less fragmented than say uh South America and the rails that allow for the move movement of assets uh such as SIPA instant uh allow for efficiencies which other areas don't have. So I think the angle also was different uh and more investment focused.

Yeah. Eric, can you share like how this change of mentality around crypto happened in Italy?

Yes, definitely. It it's starting 2016 I think when we start to see Bitcoin come to the desk of the investors and the discussions were were were being brought from the clients to the bank and we start to understand better how we as a bank could help our clients. So when we saw the friction that the clients has with on that stage the bad experience on the crypto exchange and all those things we we understand that we need to help the clients. So we start to build our own custodia we start to build an experience for the clients building up with all the security that a bank system has and it has as well and we start to understand more about the technology of blockchain. So all the advantage that you have with settlement and start to put that in different products and not see crypto as one single product or one single opportunity but and as a almost a whole a whole system ecosystem that could help us to change to transform the infrastructure that we have in the bank and therefore on the market as well.

So I think we are going to talk more about this but it's more like a a change in the infrastructure and all the benefits that comes together with that embedding crypto the technology in other products that already exists then to see crypto as a single product even though we have been looking to distribution of Bitcoin as one product because it what what our clients demand but we want to see and we like to see that more more broadly. Sure. Uh Lucas, you as you mentioned, you're CEO of the largest crypto exchange in Europe. Like how do you see the banks coming to the sector like uh is the competition reaching another level? How you deal with that?

Sure. So I think first of all we all need to agree on that currently we speak about digital assets meaning about assets being digitized meaning tokenized and putting on a blockchain. I'm a huge believer that in the future we will just speak about assets again because everything will be digital, right? And as I said before, it's not just about crypto. I think crypto is one asset class, a use case built on top of blockchain, but it's also about other asset class and other use cases in the financial service industry.

And if you look especially in Europe in the landscape of how cryptonative players and um traditional financial service providers are working together, uh actually a it's a very very close collaboration. Why? Because um for more than 10 years banks needed to ignore crypto and blockchain technology due to no licenses being available, regulation and compliance being not clear and as you all know if the regulator actually is not clear about how you can and should run that as a bank you better do not run it because otherwise you have certain risk and I think we suddenly are um in Europe beyond the point where we have ke regulation now in the US hopefully with the clarity act coming soon and I think here in Brazil where We also reached a point where uh regulation makes it much more clearer suddenly about how financial institutions can behave and can interact with not just blockchain technology but the use cases built on top of it. One of them is crypto, one of them is stable coins and payments and I think that is really what we see uh as this whole um yeah two worlds are now merging together in the end. Right.

Yeah. And you mentioned the clarity act in the US and I think this is a good discussion for us to have here. um the banks and the cryptonative companies they're kind of uh in this tension about the the crypto legislation um from one side banks uh the CEO of JP Morgan said that if crypto companies want to offer uh services that bank do they should be regulated has one uh and then in the other side the community the crypto community said that banks are trying to protect their monopoly so that's why they are resisting so much about this um This is happening in the US but I think is a conversation going to see a lot of countries. Uh where do you guys stand on this? Do you think uh there's like this right side and the wrong side or everybody has valid points?

Mhm.

You want to take this?

I I I can jump in. Um I think there's a lot of different dynamics. On one hand, uh the retail market which has driven the vast majority of the crypto space up until today is has been historically in the hands of exchanges uh and that's because they were the path of least resistance. They were able to get into the market. Banks instead are only now coming into the space.

But if you look at the value chain and the distribution, there's still a very large untapped market which are those retail customers with the banks which have not come into crypto just yet. So I think you're going to see a bit two dynamics. You're going to see some exchanges have less and less of a role in servicing directly the retail customer and instead will position themselves farther up in the value chain and try to capture the flow which they're going to receive from servicing some banking institutions. And instead you're going to have some of the traditional business and the traditional audiences that historically have been with banks instead move more and more towards exchanges. And for an obvious reason, exchanges are no longer just cryp exchanges, but they're starting to introduce all sorts of different uh asset classes and products which um resemble the ones that historically only the banks have offered.

So, you're going to see this convergence. I think they're going to be not necessarily mutually exclusive. They're going to be a coexistence and depending on the individual needs of the customer, one or the other will be a better one. And some exchanges to conclude have also now become banks. You know, obviously in the [snorts] US there's a couple cases.

I agree with that and I think that something that is being fractured and the ones that as mentioned that we come from the crypto community not from the banking side we have to accept is that crypto is no longer a concept that we own because we have like this kind of ethos like hey we are the community we are the crypto we represent the values of Satoshi in a way which don't get me wrong I still do I have my Bitcoin cold wallet I won't have them in it's I have fiat in it and some other stable coin. H but that being said, it's no longer of our property.

It's something that like think of this. Banks enter the savings system, the savings business, the investment business, the payment business, the teching business in a way, why they why wouldn't they not enter the crypto business? Why? Of course they will. And I believe it's positive that they do because they will bring certainty.

they will bring mass adoption. I mean we as the crypto community again we must admit that we are not capable to bring crypto mass adoption really like real mass adoption. My first meetings in the crypto community in Buenosirus were in a McDonald's and we were 12 back in 2013. 12 years later and if I go to a crypto meet in Buenosirus we are 200. We are not 200,000.

Yeah. Yeah. So we need to let go you know now it's a very trendy phrase like let go uh the crypto community we need to let go the ownership of the concept and understand that the enter entrance of new players it's also positive for the OGs because they will bring again more adoption more products more use to our cryptos

yeah Lucas do you agree with that that it's a beneficial thing for the market that banks are in it now

sure so first of all for sure I think adoption I said can only come where we distribution distribution on the one side was created by crypton native players exchanges and crypto brokers um and I think what we see in the data and probably that's something interesting to share we are working with more than 20 different banks and institutions who offer exactly uh crypto to their end customers meaning their retail clients their corporate clients their theme clients and the interesting fact are two data points one is more than 50% of the retail customers actually um investing into crypto um have not invested into capital markets before that's in Europe definitely the case and it just showcases that crypto is very appealing because low entry barrier you can start already with one euro very fractional uh trading possible and so on. So I think that that is just something where where that is possible. And the second one is that when a bank is suddenly offering crypto next uh to the bank account actually this can be investment into bitcoin this can be stable coin services and others. What we also definitely see is that uh customers who before have not engaged with crypto at all and block technology suddenly are doing it because they are trusting their bank for sure just due to history in legends is so much more than um any investment or trading platform or crypto player um and therefore once their bank is offering that we also see much more increased adoption which directly fits to uh what you just said before of the crypto industry needs to understand that it's not their thing or the thing of someone In the end, it's adoption of blockchain technology across financial services. Uh, which is cool and great to be honest.

Yeah. Great. Do you want to comment? Uh,

oh, I think that the adoption of the institutional market, not just the banks is very important. So, it it can make crypto world grow and embedded in the day by day for everybody. So, the banks are there. There's a reason the discussion among if the stable coin can pay interest rate or tokenization of the deposit and how the money goes to the bank so they can finance the system is more a risk management perspective and how the macroeconomy works then a specific discussion about this if it is the community or not. It's something much more complex and and bigger than than we are starting to to see in the market.

Yeah. So let's move the conversation to more practical side about like what is actually being built today. Um but first of all like when we talk about crypto adoption is very vague, right? Uh what are we actually referring to? Is this the offer of like bitcoin and ethereum to customers or is the use of blockchain to um make the operations more efficiently more efficient and create new products?

How is the uh the use cases happening now? Uh EDIC, can you start like explain to us like what DTO is building and where you guys are seeing like real value in the crypto technology?

Yeah, sure. Brazilians are early adopters of technologies. So maybe maybe this is one of the reasons that we are using stable coins and crypto uh a lot of times here in Brazil. And in it we are offering as I said crypto for clients. We also offer stable coin for those who wants to look that as an investment.

We are not doing uh for retail payment solutions with a stable coin. But for corporates we are doing that. So crossber payments we already have a product that can helps the client who are receiving stable coin to to switch that to feed currency in realis compliant with the regulation in Brazilian central bank. Uh so this is one of the products that we are working on. We also have tokenization of real world assets which is very very important thing in my view that's going to help and as as you said I I I see ourselves here discussing the not the tokenization of the market in five years but I see us discussing assets as a whole because everything's going to be tokenized and so we are studying that but we I think in Brazil in general but it is maybe one of the leaders on that we are not seeing more experimentations.

We are putting things in place in as a execution. So we already have uh tokenized real world assets. We are working with Ambima as Curtney has said on the previous panel here uh on the on the a network that could help everybody on Brazil to have a nice thunder and a single place to tokenize it all the debt capital market. So we are not going to face the interoperability problem that in United States and Europe are said to be the most challenged thing to to be done and it's a it's a network that's built on the ambimma which is an association of the banks and assets. So it's agnostic of the player.

It's not a play for it or something there. It's a play for or or even some assets. So I think that tokenization of reward assets is something that's going to take place. It is working on that. Um distribution of bitcoin something that even though you don't want to put your your your

crypto in ital there's a yet there's a lot of people that want to do that. So they are going to avoid any sort of problem. So this is something that we are seeing as important also an investment fund ETFs thing like this treasury can do some arbitrage trades to to earn money on that staking it's arbitrage also with funding there's several things that we we can do and we already doing

and just uh curiosity you mentioned that it is kind of like working on a a blockchain with ambimma what what is this

amimma is it's association in Brazil and this associ ation is saw a problem in Brazil that there was different solutions, different initiatives in Brazil using different technologies and different business propositions that would bring us in a place with different uh liquidity pools and the spread between buy and buy and sell would increase. This is very bad for the market. to beimma with CVM which is our local SAC and Brazilian central bank is piloting during this year uh this initiative of tokenized the bentries and tokenized funds

that's going to help all the market to use that as guarantee to do a better settlement and things like this. So everybody we there are 10 to 20 projects that are going to be uh selected on the next month and through 6 months they're going to be using as a as a as a pilot not real transaction. So there's no sandbox here. There's no demand

from the beginning to change the regulation but on the end of the project maybe we're going to see changes on the regulation that's going to be demand for CV. So this is a pilot that's going to build infrastructure for the market for the digital tokenized DCM market in Brazil that everybody could use.

Yeah, that's very interesting. Uh so Leo and Alessandro, you guys were helping business to enter the crypto space, right? And when you have this conversations, uh where are their most uh interested in when we talk about like user cases uh with crypto?

Yeah. So at the beginning uh I'll take this first um tapping a little bit on your prior question because it gives me the the entry to this one. I believe that adopt we're going to stop talking about adoption when it's no longer an issue when it's already adopted in a way like what uh Eric was just explaining and that's part of what we're already seeing when we help either a bank or a financial institution or or a traditional business enter into the space we shifted at least this is our approach in poison we shifted tech explaining to use case or solution like what pain are we solving them and What are we using the technology for? Couple of years ago, we had to dedicate a lot of time and effort to explain the technology fundamentals. Why is it safe?

Why you are not entering into unnecessary risks? Why it's better than the the traditional or the incumbent alternative? Now that's already a given and I think that we have you guys to thank for that because the moment that institutional players tap into the market there's like a like a validation mantra that becomes over the tech and you start discussing okay now what do we solve with this uh and I believe that's the that's the right approach by the way you should lead the conversations with your customers or with your partners to hey how do we make this easier for your end users or for So

I mean if I take what Eric mentioned and Leo as well and I look at the setup with which these things are achieved, you start seeing some very specific trends in the US, in Europe and also I think Latin America after having spent some time here. Generally speaking the rails today through which crypto is accessed are pure execution. And one of the reason is reputational. A lot of these players we're discussing that are coming into the space, they're not showcasing crypto and flaunting crypto the way they have other products that they've already been more familiar with for many years. If you look at the number of banks which are offering advisory or discretionary mandates with crypto in them, there's not many.

They probably fit in one hand in Europe and I would say a hand with few fingers too. So I think there's going to be a cultural transition which is going to go from execution only to more advisor discretionary which then increases the amount of education that is effectively done. Now today the banking space almost always in a closed loop environment. It's buy, sell, hold. Get familiar with crypto without over complicating compliance topics, travel rule topics.

Now the regulation comes in and starts forcing also more open loops at least in European Union when it comes to moving assets out. Um another thing that's worth keeping in mind and this is one of the conversations we have. How is the uh training actually achieved Brazil as an early adopter is and some of the banks here are incredibly advanced in insourcing the flows and offering it as a principle. So you start seeing crypto on the balance sheet of some of these banks as opposed to most European banks which are a little bit more conservative. They act as an agent and they will rely on a broker or on an exchange providing that liquidity behind the scenes.

So I think there's all these different approaches. There's some clear setups which are I think very uh relevant today with also their advantages and disadvantages and uh more and more you're going to see different models around the globe kind of converging in a way that ultimately will be best off for the end customer as well.

And Lucas, you guys also work in the B2B business, right? Uh being a crypto exchange help you to offer like better products. are you more focused on helping traditional uh financial institutions to enter crypto uh more than competing with them?

Sure. So, first of all, I think it's important to understand that Bit Panda is not a crypto exchange. It's a crypto broker, meaning we have a smart order routed to more than 20 different liquidity venues and the exchanges out there. So, we always ensure that the best price is actually given to the end customer. But uh back to the topic of um how um is it for for for us when we work together with banks in the end the complexity is not so much the liquidity right there are exchanges out there there are liquidity venues out there where you can plug yourself in the complexity is also not so much custody I think 10 years ago it was everybody needed to to build it on his or her own nowadays you can get either just a technology or a licensed custodian um on institutional grade also solvable the real complexity is the integration layer in between Right?

Because I always say um the including also the last mile to the customer, right? How do you as a bank integrate Bitcoin trading in the end, application wise, reporting wise, compliance, risk-wise uh in the whole journey um of your banking life cycle, customer life cycle in the end. And I think that complexity is the really interesting one because either you need to touch a lot of systems which most of the time cost a lot of money or you build a digital asset solution outside of the existing banking landscape similar to from my understanding also how how how the banks in Brazil have done it so far because it's the faster way to to see is the even adoption and is even a use case for the end customer behind it and traction right

yeah um one use case I wanted to talk more about is the tokenization of real uh word assets Um do you guys agree with this um the everything will be tokenized in the future or is specific things that tokenization will make sense? Which assets do you think will be moved on chain first?

I mean if I can give it a first stab

I think everything used to be paperbacked and then it got digitized. Okay. And I think the digitization journey will also flow into blockchain rails, hence tokenization. It could also be the DLT. So I think what is important to always keep in mind is there are specific areas for improvement that specific real world assets require uh financial products require debt markets generally are less uh efficient than equity markets.

Hence a lot of tokenization of debt not so much tokenization of equities. So I think it will happen. One thing that is important though and this is probably where the 2025 narrative is is how do you tokenize a product without bringing the cash on chain. That is something that I think has ultimately held the tokenization market in a standstill for the past 5 years because it's been going on and on and on and generally when the market in crypto goes down tokenization efforts go up as well. Um and I think that's where the stable coin topic or the tokenized deposits or tokenized cash in general topic comes into play.

But I'll stop here cuz I see we're a bit short. So

Oh, we still have like 10 minutes.

We still have Okay, wonderful.

So just remove that.

Yeah, it's just more 10 minutes.

Maybe just a quick uh a quick remark. Um which I think also makes for some different viewpoints between Luke's myself and the gentleman here is often times the tokenized car cash is seen as uh stable coins. The problem is the markets generally do not want to embrace a a a token or a means of moving value around which is um worse off than what they currently have. What's an example? Cash today generates interest.

Okay, you leave it in a bank, it generates interest. Stable coins obviously have the advantage on top of cash that can be moved around on a 24/7 basis. But if you happen to be in the European Union, the stable coin cannot be yield bearing for the holder. So all of a sudden there's a general reluctance to forego that 2% on euro interest or 4% on dollar interest. And that's where tokenized deposits maybe become better off or money market funds.

I know it's different here in in Brazil. Uh I'm not sure if it's different in the US under the Genius Act if they can or cannot be yield bearing. That's a gap that I have. But I think this is ultimately a very interesting topic to see how the market is actually going to tokenize the cash to enable for the securities to also be tokenized.

And about this um they say that um some analysis said that uh as stable coins become more popular, they can u drain the deposits in banks. Uh do you guys see this as a risk? Eric, you're our bank guy here. So

no, but this is the point that I make on beginner on the beginning. This is a very complex issues that comes from macroeconomy and

I don't see the deposit is going away from the bank because of stable coin but I think that it's going to have a different solution that the bank are going to the banks are going to find a product similar to stable coin or they're going to be able to use stable coin pay interest rate as well and then they're going to compete in eco space of the other companies the importance that we need clarity, we need similarity on the roots regarding risk management. So regulatory issues, it's something that is very important and not to hold a monopoly of the bank, but to to to protect the client, the investor, the holder of this that stable coin. It's very important. being 20 years on the market, I've seen a lot of things even regulators, even companies that are regulated uh with problems. So with no regulation, we're definitely going to see a problem.

So this this is the point that has to be discussed and and I think the United States, they're having a big discussion. In Brazil mainly, we are still discussing the regulation of issuance of a stable coin and this is something that is definitely going to be in place. Uh but regarding the first question reward asset I I think that everything's going to be tokenized it's too much things.

Yeah

but uh you gave a wonderful answer and I I'll give an example for crossber payments. Stable coin plays a huge benefit brings a huge benefit for this market but swift is playing their job is doing their job to trying to evolve their solutions. uh there are other rails of payments that doesn't use blockchain and are very efficient as well. So I think we're going to have different rails of payments and stable coin is going to be one of them

and and also real world assets is the same thing. Not everything is going to be tokenized but stable but DCM and active probably it's going to be

yeah guys our time is up. Um so Leo and Lucas do you have any comment? I'll be real brief for me joining on what Eric was saying tokenization contrary to crypto as in digital assets exchange I believe that tokenization is going to be very heavily guided by regulation like let me give you two examples and by the way you have them here in the conference El Salvador tokenization framework you can tokenize a security from scratch like if you have the license you present the the opportunity you get approved token Argentina, if you want to tokenize, you can only tokenize existing securities. So depending on what regulatory framework you are operating with, different assets will have a different incentive to be tokenized. In El Salvador, any asset could be tokenized.

In Argentina, tokenization is more on an efficient settlement layer, if you want to see it that way, rather than providing an incentive to tokenize or to securitize new assets that were not on the market before. So that's my two cents on the topic.

I think 2026 is a super interesting year. Why? Because we are building infrastructure in our whole industry and the traditional financial services industry for exactly that for tokenization and tokenized assets. So I'm super hyped about that. Uh what's further going to come because now we're putting it on real rails and that's cool.

Awesome. Thank you guys so much for the discussion. It was great. Thank you guys for being here with us.

Thank you. Thank you.