The Institutionalization of Crypto Markets - TOKEN2049 Singapore 2022

thank you and uh welcome everybody super excited to be hosting this panel the institutionalization of crypto markets I'm James Ellery responsible for um Global currencies and emerging markets at Goldman Sachs on the trading side as well as being CEO um of the Singapore office and uh and and run sort of I guess digits our wonderful digital asset steam reports to me in region um so I think a quick introduction to the panel um as already mentioned Tim McCourt Global head of equity and FX including cryptocurrencies at CME Group Darius sit um co-founder and CIO of qcp capital um Kavon puristani who is the head of institutional business at coinbase in APAC and Alex hopner chief executive office at bitmex I think today we're looking at sort of Deep dive into institutional participation infrastructure development and really the latest market trends in in crypto markets um maybe I'll start and turn maybe starting with Cayman and walk along the work along the row just a quick introduction about yourself your background and your business thank you James uh Kevon pyrastani as James said I look out for the institutional business for APAC based here in Singapore I've been with coinbase about five years and I've been investing in crypto since 2013. a little bit about what we do here so coinbase as everyone knows is best known for our retail consumer experience where we make it really easy for anyone to to buy and hold crypto well starting around five years ago when I joined coinbase we started to build a separate institutional business that had many of the same goals which is to onboard institutions particularly traditional institutions into the world of crypto and I'm happy to say that we've had a lot of success in that regard big institutions such as BlackRock third Point Pimco Millennium it's a very long list we've helped enter into the crypto space too in many cases make their very first investments into crypto and so that the sort of promotion of the institutional narrative is something that we're very proud of at coinbase thanks Kevin Tim McCourt with the CME Group I've been with the Simi just about 10 years and I look after our Equity foreign exchange and cryptocurrencies business in terms of what CME Group does we're leading derivatives exchange where we offer Futures and options on Futures on all the major investable asset classes including cryptocurrency we've been in the cryptocurrency business since about 2016 where we first introduced with our partners crypto facilities now known as CF benchmarks the Bitcoin reference rate which is you know the underlying reference rate to our futures at CME Group and we introduced Bitcoin Futures back in 2017 and since then have rolled out options products Futures products across Bitcoin and ether as well as about 12 other additional reference rates and our primary offering Still Remains Futures and options on Futures and we're a regulated U.S Futures exchange regulated by the cfdc thanks Tim thanks to him Alex CEO of bitmax I think I don't have to explain too much on for what bitmax is uh we expanded tremendously into spot with mobile app sport trading now FX products uh we're rebuilding the company um to all offering all services around the globe primarily for pro Traders still I'd say um and we have a lot in making uh they're still coming uh it's a big Heritage before that I was a buzzer shortcut which is a small Regional exchange probably nobody knows but was the first exchange to fully go into crypto with crypto trading in Germany and we have the German government supporting in the crypto custody law and with bitmax now as you know and maybe one quick thing I don't have any tickets for the Rave tonight so sorry for that one um yes we're here to come up with the next good products that are out there and Innovative products which we launched with the FX product uh trading 24 7 with USCG online which is pretty interesting also for institutional players Darius yeah I I'm Darius I'm the founder of qcp capital we are a full Suite crypto trading desk so we trade everything from spot to derivatives especially options uh we are global leaders in the crypto option space um besides trading we also do quite a bit of Investments uh including bear bit which is the thing on your seats uh but yeah um that's us in a nutshell thanks thank you um and Darius maybe we'll start with you I think jumping sort of straight into recent market price action um you know even in the context of the broader macro move um cryptocurrencies obviously being being tested curious and with an angle of institutional um you know is how does how does this what does this mean for institutional sort of participation I would say in the next 12 to 24 months and you know with that in mind is this time for people to sort of take breath and work out how they're going to get involved or become active or is it then more likely that people actually retreat that's interesting question I think um if you look at the crisis that we saw uh firstly it's a global price crisis right every almost every asset's price is down but for crypto specifically it was a credit crisis there was an implosion and credit so I think that part of the space is definitely uh going to take a while to recover um but the other parts of the space are doing well the exchanges are doing well settlements were fine and are still fine the options Market is very robust and in fact because of the high volatility and because the infrastructure was stable throughout I think it's become a lot more interesting for institutions right so we have seen a big influx of institutional participation in the derivatives and option space uh I was mentioning to you earlier that that one one single hedge fund you know was responsible for about a third of the size of ether options on their bit in the you know last month you know trading the merge narrative so we are seeing the space shift from very very retail driven to very institutional and very old school institutional you know good names being in the space so I think the space is uh you know at least on the trading side becoming very primed and prep for for institutional participation thanks Darius Alex took care to comment yeah I think it's actually it's an ideal time when you look for a classical Market participants they always move into new technologies or new products in beer markets because then you need to understand their governance nobody's expecting them to deliver let's say tremendous results in a month in a bull market everybody's complaining that you're not directly delivering double digit good results in a bear Market nobody expects that so bear markets are fantastic we've seen not a single institutional player dropping out because of the situation of the market so I we expect that a lot is happening in institutional Market next year especially as there is said from the classical Financial World everybody's talking about it and they will offer much more crypto products to retail investors too B2B follows b2c b2c is a little bit pulling back but B2B will push in now in this beer market yeah I mean I think from our standpoint um and maybe this is a good segue to Tim and kaybon from our standpoint certainly despite the sort of subsequent Fallout um and consolidation that we have seen certainly in the provider space in 2022. we're GS is seeing a lot more on the onboarding side you know a lot a lot more flow um from people looking for traditional counterparts um so Tim sort of curious how you see this either now or how is it you've sort of seen this at CME and then under the path forward yeah certainly so I think when you look at the the life cycle of institutional adoption of cryptocurrency it's something that we've seen uh always in pretty strong fashion at Simi even early days we had a lot of our traditional Market participants trading Bitcoin Futures at CME uh but I think there's two things to keep in mind one is what do we mean by institutional uh customer in the crypto space and I think it means both the traditional institutions that we're familiar with but you also have the Advent of an Institutional class within crypto so think about cryptonative hedge funds some of the crypto-focused businesses that are out there so you do have institutional flow even if it doesn't necessarily meet the definition of a traditional buy site asset manager or traditional hedge fund so we've seen continued Inc participation amongst those various personas on the institutional front open interest is growing in our markets uh volume is growing in our markets it's not necessarily just a us-based phenomenon we're seeing it in all three regions U.S Europe and APAC but the second point is when we look at those firms uh think banks for example asset managers pension plans these are firms that have been looking at taking those steps into crypto for years they trust the fact that CME and others are regulated institutions we're familiar they know what what we do when and how we do it the good news is though is that they've been looking at it for so long that when they first were looking at Bitcoin it was also 18 19 20 000.

and now here we are again a few years later so they're a little bit price agnostic I would say in terms of taking that that final step because they've been much more methodical much more prudent and they're looking to say how do I onward provide services in crypto in cryptocurrency to my existing customer base they're not necessarily looking to capitalize on the price movement it's more about how do I provide this service where things like Futures become a way for them to do that so I think that's changed a little bit it's not just a directional bet but it's really the provision of services from the institutional Community thank you Tim Kevin how do you say this yeah we've also a coinbase see uh seen institutional interests remain quite robust despite the downturn in the markets and the reduced trading volumes but I see two reasons for that the first is what I'll call a flight to Quality Trend and this was most pronounced in the wake of the UST Terra blow up where suddenly a lot of people woke up to the fact sort of a rude awakening as Darius alluded to for the very first time that there's really big credit risks in the world of crypto so people started to take a really close look at the types of products they were trading types of counterparties and platforms they were trading on and they came to the realization that these risks were mispriced and one of the the most interesting ways to sort of visualize that flight to Quality Dynamic I'm mentioning if you look at the relative market cap of tether versus the relative market cap of usdc shortly after the the blow up of the UST you see that billions of dollars very quickly flowed out of tether many of those billions of dollars flowed into usdc so you could actually see through this repricing of risk and the flight to Quality Dynamic happening in real time sort of before your rise which I thought was really interesting but what that means for coinbase is business is that a number of customers that maybe we hadn't talked talked to before or maybe we talked two years ago and it hadn't gone anywhere we're suddenly approaching us saying hey coinbase um we want to talk to you about custody maybe our existing provider isn't as safe as maybe we thought they were maybe their balance sheet isn't as strong as maybe we reckon it should be so we started to see some new business from that perspective which was really interesting the other angle that I think is driving this sort of robust institutional interest uh despite the down Market is the fact that the current price levels represent a really interesting entry point for those investors and I think Tim you lead to this those investors that have been looking at crypto for a really long time the larger asset managers the asset allocators folks who have permanent Capital at their disposal with very long investment Horizons but who also take a really long time to due diligence do their homework on the different platforms and they have a very long decision-making cycle we've seen those folks ask us to accelerate their onboarding or accelerate their conversations to activate more quickly so they can get in at what could be generational entry points into this new asset class thank you Kevin um maybe just to talk a little bit about volatility I think you know the start of the Year volatility was was was a bit more suppressed on the crypto side and really a couple of months back really starting with the UST de-pegging um followed by the broader macro move we've obviously seen this volatility pick up crypto currencies now continue to trade like Risk assets um what causes that to decouple um and start trading as its own uncorrelated asset class maybe I'll start with Darius yeah so interesting I mean we at the start of the year when uh implied volatility this option prices started to work towards the 30 40 handle we were worried we I think we are more scared of low volatility than high volatility so uh you know we were it's good that the volatility came back um but the correlation has been very high and and and reasonably so because uh you know I think again um you know crypto is around a Bitcoin and ether are starting to trade very similar to stocks right and it becomes a risk on risk of asset um the dislocations that we've been seeing and this is where I think the interesting the couplings are is uh it evolves and reads right so just mentioning to you earlier that you know last night uh vix made a high of 34. while uh crypto walls actually get lower right even the 14th October contract which is a CPI contract you have lower as well so you see that kind of interesting decoupling where maybe it's because there's a lot more the crypto space is a lot more flash with USD and people are expecting prices to sideline but you know you see a decoration in terms of the walls credit markets are also all over the place so I think you know while we see uh the headline prices correlate and I expect to continue for a while longer I think you see the couplings and decorations in in other parts of the space especially in derivatives thanks Darius Alex for your thoughts here yeah I think that a lot is besides what Jerry said a lot is happening also when when more it's a structurally more institutional players come into the market uh and provide a wider range um then you will have this always in let's say not so frequently traded cryptos um and for the big ones you'll see that this will move a little bit earlier but for me the really development comes with more institutional players pushing in and then offering that on a wide range and not so much sophisticated as we have it right now um and then you'll see it but in the macro environment that we have currently with all the stuff that goes around that I don't see it happen too fast actually because there's still some yeah exactly around what's happening on the global scale how much impact is that there's still especially on the retail side there's a lot of I mean Cash's King development going on and so there is every every single let's say signal that I get directly triggers some reaction to that one and so there's still as long as we are mainly driven by let's say human Traders this will still be a while okay um maybe we'll jump now to a recent piece of big news obviously the ethereum merge um this is probably set the stage somewhat for future upgrades um maybe we'll start with Cayman like how do you think that we're now going to see institutions continue to focus on bitcoin and ethereum or is it more of a shift to other tokens or layer ones how are you guys think about this at coinbase yeah it's a good question so at coinbase having been one of the earliest players to be onboarding clients into the world of crypto institutional clients in particular we've seen patterns emerge over the five six years that we've been doing this in terms of what those institutional adoption Trends look like and the patterns look something like this right when you're talking about an Institutional Investor and I'm not talking about a family office or a problem but I'm talking about money manager who's managing external capital is often regulated they are extremely attuned to the reputational risks the operational risks credit risk Etc of even touching this asset class let alone what particular coin it may be right and so you know typically when they make that first journey into direct crypto investing they pick the asset which has the least hair on it is least risky and so they typically mean something like Bitcoin and ethereum right they're liquid they have regulatory Clarity Etc so they'll pick Bitcoin or ethereum as their first sort of entry point into the space put the trade on put it in custody see the reporting the operational workflows sort of work work out and they get comfortable with holding that position over time and confident that everything is working properly but once once they crash that across that threshold of feeling comfortable owning some crypto it's been really interesting to observe that they quickly move up the risk curve and the complexity curve in ways that have been surprising to me where they'll say right okay I've got Bitcoin or ethereum what about Solana can you give me some size in Solana or maybe I want to do some lending or maybe I want to do some staking and so we find that Bitcoin and ethereum sort of ironically serve a little bit as the gateway drug into a pretty exciting world of crypto and that's what we're seeing now post ethereum merge the same patterns uh repeating themselves yeah I personally got catapulted very quickly to nfts from with uh starting with East so uh yeah I can relate to that Tim how would you see the future here yeah so I think one thing that was interesting about the merge is I think it also helped the market really understand how to use some of the tools out there we had a lot of interesting conversations with the clients particularly around options where there was an element of uncertainty about what would happen at the price now not necessarily with subscribing the merge would be a catalytic price event for ether but there was just in the market it was hard to ignore the fact that people disagreed on what might happen so the fact that options give you the ability to hedge at different points on that curve and conversely you could use both Futures and options term structure to figure out what the market was trying to tell you about price Direction so they was an educational element for for the crypto community in that space of this is probably one of the larger events uh probably since we launched the Futures I mean there's a lot of chatter when we first first launched about uh segment 2X and hard forks and things like that but I think this was a really meaningful uh conversation and around Futures and options and ether the second thing I think to kavan's point too is I think it was immensely powerful for people to understand that there are differences between the protocols right as simple as that sound but it really gave people the opportunity what it means to go from proof of work to proof of stake and how there are other ethereum-like offerings out there that have other different nuanced capabilities they scale differently they're more transaction friendly so I think it was a very watershed moment in terms of people thinking about how do I use some of this in my day-to-day so I don't know if that necessarily gets people to go beyond Bitcoin in either but I think the conversations changed or was getting much more nuanced about the differences of the various uh tokens and coins out there the various technologies that are out there and then it always circled back to well how do I manage the risk associated with this if I'm thinking about this from an organic kind of commercial standpoint how do I hedge some of this if I'm thinking about putting putting my projects or business cases onto the blockchain so it was very interesting from that regard and I will I do think in a few years time we'll see more and more Beyond Bitcoin and ether and I think we'll look back to the merge and say that was when people really started to understand some of the fundamental differences thank you Tim um I guess during this period of volatility um curious to know how it's impacted volumes volumes on the exchanges um and then I guess to go further how what do you think the next catalyst is for more participation so maybe Alex yeah I mean we've we've seen that the the market cap for certain currencies is going down and the price has gone down but when you look at volatility you add some let's say sideways movements starting this year then I picked up about a bit and now we are yeah up and down up and down but let's say trading volumes overall are not slowing down that much uh it now really depends on whether we see a longer instilled by maybe macro environment along a sideways development that will be negative for the exchanges naturally um but otherwise the volumes are still very good and for me coming back again to that one B2B follows B to C we have seen over the last couple of years a tremendous push of uh retail customers into the crypto space that made the classical financial institutions greedy to get hold of these new clients so they move into that space they use the beer market and then open up a totally new um that product Universe over a standardized for customer standardized way to address into new markets and to say oh existing classical financial markets and that's then for me the next step where already a lot of let's say regions are suggesting one to two percent cryptocurrency in their portfolio this will increase or even more over the time and with adding let's say um licensed derivatives which I see is a big thing for next year this will open up a totally new universe when you look at the volumes of classical derivatives to classical spot and you compare that to the crypto world you see we're just at the beginning of the volumes that we'll see and next year is a big year for that one so that's for me me the driver thank you thank you Alex Keva yeah so you know coinbase has the largest pool of regulated spot liquidity in the world of crypto so we're we've also observed a dramatic decrease in volumes over the preceding nine months and what's been interesting is that within that drop off in volumes we've seen that retail volumes have dropped off disproportionately compared to institutional volumes one of the reasons for that is the fact that you know if you look at these institutional adoption Trends you know you had way back in the day you had family offices profits market makers and then starting in 2020 2021 we finally started to penetrate the hedge fund segment particularly the macro hedge funds and they came in and built some large positions within late last year and early the earlier this year as a global macro picture started to turn those hedge funds got out pretty pretty quickly so those hedge fund flows are pro cyclical in the same way that retail flows tend to be Pro cyclical they fomo in they funnel out right and so that was sort of the story of institutional adoption of crypto up until earlier this year but one of the cool things we're seeing in this down Market as I alluded to earlier is larger Buy and Hold type institutions with much longer time Horizons like asset managers asset allocators Etc coming into the space making that first wave of initial allocations into this new asset class and that has driven institutional volumes higher than they might otherwise be so that's the sort of the the point about the volumes in terms of what could drive like renewed participation amongst retail or institutional I mean who really knows you know obviously the global macro picture needs to turn around I think increased regulatory Clarity in key markets like the US would really remove a lot of sort of overhang and uncertainty from this space um but but actually the more interesting thing and the thing that I love so much about crypto is we don't really know what's going to drive that next wave of adoption or enthusiasm but it's going to be something some piece of innovation that comes out of nowhere that's going to surprise us the way that defy did a few years ago the way the nfts did uh and you know this morning coinbase released a Blog talking about decentralized identity and the way that that could potentially pull thousands or millions of new users into crypto for use cases that are totally unrelated to speculation and trading right or maybe something else I don't know but that's the great thing about being in this space is you know you have open permissionless in Innovation and something is going to come to the fore IGN thank you Kevin maybe we'll jump now from to the corporates obviously we've seen a number of large corporates um buying crypto holding on their balance sheet or supporting crypto in some way shape or form um most of the most of the headline names anyway have been out of the U.S um sort of curious to think here where does Asia sit versus this so so what are some of the biggest difference in the local markets and is Asia corporate Market you know getting involved here Darius I think on the trading side um maybe not so not so much corporates but uh family officers funds I think they're less Buy and Hold types and more trading types right so they tend to be they tend to participate on a very narrative driven basis so I think this year when uh with the eve merch we saw a lot of interest in in Eve derivatives uh we saw each open interest for the first time flip BDC open interest um so it's very narrative driven right so the the the next big narrative in line is probably the Bitcoin halving in 2024 so the question that we all have is uh what was what was the next narrative in the the in between from now to 2024 so I think that's that's something that we should all look for and look forward to so you know yeah to answer your question I think the Hong Kong Singapore the Asian space tends to be a lot less Buy and Hold directional and a lot more volatility driven thanks Darius Alex yeah fully agree when you when you when you actually when you move around it's really the US is is for the for them it's also an asset to store to hold yeah and to hold also to say Europe is a bit in between and the companies are not talking about the Holdings that they have uh and Asia is all about trading yeah all the discussions you have is all about trading all the family offices whether it's Arts whether it's anything it's all about trading hey can we tokenize it can we trade it how often can we trade it and that's all the story it's it's maybe it's a mentality thing but you can really see it it's it's shifting when you travel around it's shifting by this and for here it's just about trading that's it thanks Alex and Kevin have you on that yeah I'll Echo a lot of what's already been said and I just want to maybe preface what I say uh in terms of you know corporates I see differently than institutions institutions asset managers hedge funds Etc are really for me the Ultimate Prize in what we're trying to do at coinbase and so when I sit down with my counterparts in the US or or in Europe and we sort of compare notes about institutional client activity across these different regions it's clear to me and this has been the case for a long time that the U.S institutional adoption is very much in the Vanguard right and that starts with the fact that the U.S pool of institutional capital is simply the biggest in the world there's so much more for them to do right that's combined with the fact the U.

S institutional investors and I I'll include Canada as they call it North America tend to be amongst the most sophisticated and Innovative in the world right if you look at previous institutional adoption trends of other asset classes like ETFs Commodities volatility as an asset class U.S hedge funds and asset managers were really leading those pushes and we're seeing the same thing happening in crypto today so it's it's amazing to see those patterns and then some Echoes of those those types of behavior happening in APAC but as Alex already said APAC is very different it's less about professionally managed pools of liquidity much more about you know self-directed retail investing you know I spent a lot of time in Tokyo and the cliche there is you know the Japanese housewife Watanabe San trading like Brazilian real leveraged FX in her spare time which is pretty crazy uh if you think about it but so APAC has less capital in terms of professionally managed money to deploy into crypto uh for for the start and I think also combined with the fact that APAC is not a single region as I also remind my U.S colleagues all the time it's actually more than a dozen different markets each with their own regulatory environments and cultural postures Etc and so you know to the extent that you know a money manager in APAC wants to do something in crypto there's a bunch of sort of regulatory hurdles and other things that they'll need to overcome to potentially make that happen thank you Kevin um now maybe we would go to Tim um from I guess from the institutional interest that we have seen at least at Goldman Sachs um and where we we're certainly seeing a pickup in interest is you know the product moving into derivatives options um institution investors like how do you see they want to see a product development map how do you sort of see that product development over time yeah I think what's interesting is when we look at cryptocurrency unlike other traditional asset classes it where they the other asset classes I think developed at the wholesale level and then it figured out how to be onward sold and packaged for retail for the masses we're actually seeing almost the opposite happen in cryptocurrency where it was almost a retail driven Market development and now the wholesalers the asset managers the banks are now trying to figure out how to fold that into their product offering so I see a continue we've already seen the last few years break I think it's going to accelerate over the next Maybe one or two years is that interrelatedness between the various liquidity pools and the various markets is only going to increase where you're going to have more Structured Products you're going to have things like forward you're going to have options you're going to have the banks come in and kind of do what they've done for all the other asset classes and we're already seeing it there's already a strong relationship between the spot Market the Futures Market we have Futures based ETFs in the US we have other ETFs outside of the US and they're all related they all are are moving in Tandem and Market participants are funging between the various liquidity pools so I think what it means for people like Banks is we're just going to see as they figure out how do they do that wholesale marketing how do they do that wholesale product offering to the traditional and non-traditional institutions you're going to see this stickiness I think increase I also think going back to your other question I think that's what helped with respect to some of the volumes and why we're seeing derivative volumes either slightly increasing or relatively flat for versus last year where that interrelatedness is here where it wasn't there the kind of the first crypto winter you didn't have that that non-speculative Dynamic of the market where now we have notwithstanding the the credit issues but you have financing businesses now in cryptocurrency you have ETFs you have etns you have OTC products developing ndfs you have Futures underpinning some of this as the Hedge at CME so they're all related so as a result regardless of what's happening with the price you're still having all this risk transfer between you know a lot of us on this stage so it's really that risk transfer that is almost price agnostic because people need to be hedged they need to still offer their services they're still getting inflows of money because the market you know there's a buyer for every seller on every downtick right so they're still seeing inflows so I think that interrelatedness is increasing which is buttressing some of the volumes and I think uh from the traditional institutional community and places like bank that service them I think we're going to see more and more come online with with very familiar looking products that just happened to track something unique as crypto thanks Tim you see darrish you're pretty active in this area what's your thoughts yeah I think it's uh you know the crypto space the derivative space is very quickly taking the Playbook of traditional markets right you know there is a whole product Suite already so anywhere from the breadth of you know uh options or not just Bitcoin ether but all the other coins uh we're seeing that pick up a lot uh We've also gone down the path of uh structures like you know spreads butterflies vanilla structures and we've started to see a lot of demand for Exotics as well so we started to price European digitals American barriers starting to see that those pick up as well um of course it's a it's quite a task to manage some of these things but uh you know we've seen the interests and and reasonably so as well so um I think you know we will quickly there is a Playbook already so you know the crypto Market will quickly quickly pick up and it will be uh people are starting to see it as same instrument different underlying right so uh and I think the most important part for this uh for you to really come together actually is the clearing settlement the prime layer right that's that's actually the missing piece to put all the pieces together and you know for counter parties to be able to innovate and and set up each other more in a more Consolidated manner but you know the playbook's already there thanks Darius um and maybe now if we jump to sort of private investment obviously continuing to see a huge amount of investment even if potentially a year on year um it is lower do you think um maybe start with Alex do you think we're going to see sort of a consolidation into a handful of the largest providers over the next year or 18 months or is it it um you know I don't know how do you see this playing out interesting I mean you just have to look at the classical financial industry and then you literally see what's going to happen in the next let's say the short time and medium time uh Whenever there is a new product or a new technology coming out you see especially when you don't have to care for legacy infrastructure you see an absolute fragmentation of the market so it's very easy it's cheap to set up a new exchange or company run your business give it a try and when then a beer market comes then you see which business models are sustainable where a really sustainable client basis build up are not depending on on too few client groups and then there's always a consolidation yeah is it already the time that we see this boiling down to maybe five six players probably not do we do you see uh let's say in Regional regular the time frames correction times absolutely again look at the classical financial industry they are more or less every two to five years years you have something new brings down again something new brings down again I mean we've seen that all the while and this will happen in the crypto space too where this was maybe maybe this is the first real one yeah that we've seen um and there will be Corrections and there will be more coming yeah and the more sustainable your business model the amount diverse your client group is uh and the more diverse your product universes and the better you are able to maneuver pricing points between your offerings so you're able to maneuver which pricings oh which which business models are working which are not working you can play with these and this gives you enough leeway then to survive these let's say sideways movements yes okay thank you Alex do I rest you agree with that yeah I actually I think in certain segments of the space the answer is opposite right there aren't enough players that have managing companies let me give you an example um let's say for uh options uh listed options thereabit is probably 80 90 of the uh of the option list option volume now I think there's space for actually more players to be you know the other the options audiobook main audiobook and the defective clearer there are opportunities for other exchanges and clearers to come in uh the prime the prime Market is at its infancy in crypto as well you know we've seen guys uh you know K1 is doing that as well uh but you know I think that there's space for more players to come in so certain segments actually is still you know still still Greenfield for for a lot of these things thanks Darius maybe we'll just you know jump now to regulation to cover sort of all topics um obviously sort of given the rapid development in this space I guess given what we've seen actually over the past few months in terms of Market moves um I'm interested to hear from a couple of you maybe start with cave and you know how do you see regulation developing from here particularly locally yeah um very top of mind question for us at coinbase so coinbase on the institutional side we serve institutional clients across more than a dozen different markets in the region and there's two challenges for us in doing that number one is to understand regulatory posture in each and every market and as I alluded to earlier it varies dramatically from you know China where it's it's obviously somewhat crypto averse to markets that are much more constructive like Australia Singapore and Hong Kong and so we have to really like have our finger on the pulse and make sure that we're serving clients in a way that's obviously always legal and compliant but in addition to understanding the regulatory picture in all these different markets make it even harder in each and every one of those markets it's constantly changing right and there's been a sort of a broader trend of you know crypto handling crypto whether it's trading custody or other things becoming a licensable activity whereas maybe previously it wasn't Japan's a great example of that Korea is another and there's there's many others so we have to like constantly sort of Monitor and make sure that we're constantly staying abreast of regulatory developments and our legal and compliance teams stay stay very busy doing that but the commitment that that we at coinbase make is by staying in front of all these developments we can ensure that our products and our business is always compliant we're always able to serve our customers in the best possible way as do you know how the regulation is going to shape up across these different markets I think at coinbase we don't really want to take a stand on speculating where it's going to go but as always we encourage Regulators to you know to uh to constructively you know protect investors whilst fostering Innovation and coinbase also often plays a role of engaging policy makers and Regulators most recently for example in Australia where there was a consultation process around crypto custody to really put our point of view forward in a way that I think represents the crypto industry very often in a way that's good for the industry and obviously good for the investor Tim yeah I agree with what came when I said I think uh from a regulate a regulatory standpoint one of our Prime focuses at CME is that early on we made the decision we wanted to operate as a regulated venue offering regulated products and that certainly is something that's resonated strongly with the institutional Community because they need that guarantee or that confidence of how to take those final steps into the industry and they prefer and some are required to have that regulatory framework in place for for products that they're trading holding on their balance sheet Etc I think the challenge though is that somehow in over the last few years has seen that regulatory uh oversight could be a bad thing and I think actually that the opposite holds true where if we did get further Clarity in more jurisdictions it would further increase the speed of innovation because there would be certainty there would be finality about some of these topics that are overhanging the industry so I'm not going to pretend necessarily be an expert on local regulatory uh matters I certainly have my hands full dealing with it back in the States but I think generally speaking the regulatory process must balance giving the marketplace that confidence and that certainty with allowing Innovation to still happen and the Pendulum can't swing too far one way or another so I think just that balanced approach of how do you move quickly on the regulatory front how do you let some of the Innovation still happen naturally but giving the institution community and the community more broadly the confidence and Trust they need in the system balancing all those things is critically important and I think it's gone well in the U.S I think we've done well as a regulated venue but it's still still certain we still have our own challenges and looking for further certainty from The Regulators so hopefully we'll get it in the next few months awesome and then just and this one's open to any one of you I guess anything we haven't mentioned today um that may or may not be on people's Radars that that could be the key catalysts um you know for the development of institutional markets is there anything we haven't covered yeah as I want to build something that that area said I think especially in derivatives and they are for me the the biggest products um and and the biggest natural crack on the on the classical side we are just at the beginning yeah uh at the small Regional exchange I was responsible for we had 1.7 million structured derivatives uh we have what nothing in comparison to that we were trading 5 600 regular on a daily basis at a high volume yeah so this potential and that was all retail investors this potential had we gradually tapped into and I think that as as Kevin and Jim said The Regulators that are regulating function and our technology they're technology agnostic and the next big thing is derivatives licensing and Regulation and we will see a big step in that direction you see the US is moving Mika regime is coming so is more and more coming and Sport brokerage custody is already relatively regulated the next big thing is derivatives where that falls the whole bucket of volume is all of a sudden available over the crypto space with the efficiency of not having to care for post trade that's it thank you Alex unfortunately out of time um really enjoyed the last 40 minutes thank you Kevin Tim Alex Darius thank you guys uh have an awesome day thank you [Applause]