Infrastructure for Institutional Digital Asset Adoption | European Blockchain Convention

foreign state we are officially standing between you all and a lot of alcohol and food outside so thank you for staying here my name is Mark tavner I work for a company called zeroff we provide an on off ramp for crypto but the two stars of this show are rocket scientists and startup veterans so let's get some energy in the room give us a big round of applause before we start thank you guys thank you thank you for being here so what we're going to cover in this panel is infrastructure for digital asset adoption and I'm going to propose to my two esteemed panelists that we cover three topics we're going to look at digital infrastructure from a regulatory perspective we're going to look at infrastructure as it relates to ecosystems and then we're going to come on to technology but first before we start I'm going to ask the gents to introduce themselves so if you could in two minutes and I'm watching the clock give us a short intro to you both please yes hello everyone my name is Chris Christian James I'm actually a bit of an anti-pattern to the last little panelists right so they all sort of big Banks now got the fintech bug and are now doing sort of the crypto I was a.com which shows how old I am and now I'm in a big bank so I look after hsbc's investment Banks markets investment into digital assets technology and trying to build platforms for HSBC that's where I fit in thank you very interesting yes I did work for European Space Agency for a while I did lunch some satellites to the Moon literally so I basically moved to to.com media and internet and now I'm in the crypto scene because I'm chasing the adventure I seek the risk that's who I am super thank you guys so the first topic I'm going to ask you to give your opinion on a regulatory Frameworks as infrastructure and I'd like Chris to start on this one if that's okay and what we're trying to have a little bit of discussion about here is whether there is sufficient regulatory clarity for Investments to flow to build Global offerings we heard earlier today in some of the other panels that there were different opinions on the Frameworks being deployed in the UAE and in Europe for example so the question is is the regulatory infrastructure good enough for Global adoption Chris I know you have a particular view from a stablecoin perspective on this from when we chatted before organization like mine the Arts is a simple no it's not okay it's just not mature enough yet for us to wade into the cryptocurrency space it's getting there on some of the other areas for example we've just done a product in Luxembourg and in Luxembourg you can actually do title transfer on a distributed Ledger and that but there are only a few of these starting to happen so for us to start using stable coins and that's something an area off the bank of my size would love to do we need to see much more regulatory Clarity and we need it to be common as much as possible around the world so we just one little jurisdiction is not going to help us so we're seeking and working and talking to The Regulators just as other people have been throughout this conference about how can you get as that regulatory Clarity so we can offer the class our clients the products they want and use that as an investment vehicle so it's not there yet it's coming we're seeing some green shoots some in the European Union in Hong Kong for example there's other bits in Singapore's quite of art but you don't have the Level Playing Field yet for us to truly operate on so just as a follow-up point on that one Chris from a global point of view HSBC is a global bank what sort of time frame do you think we're looking at before we get to a point where there is some Global coordination on these regulatory matters so I think although China is moving in its own Direction with its ecmy and what it's doing there I think that the timeline you're talking you are talking unfortunately in years you are not talking in months you're not talking by the end of 2023 but as I said there are green shoots out there so if cbdc's become something quite major which we think that they will and they're going to be driven by central banks that will drive a regulation again probably country specific or region specific and that might accelerate it so it's all around the products but for getting it all joined up across all types of digital assets you're looking at you're looking at years in my view okay uh Xavier to switch to you so you're working for a very well-known Swiss bank and you can provide a Swiss perspective I'm interested to see if you have any thoughts you could share about the recent hiccups that we saw with uh from a regulatory perspective and whether these were caused through different regulatory approaches between us and Swiss banks and you know particularly I'm talking about the crypto Focus banks that had a little bit of a hiccup in the US whereas we didn't particularly see too much of those hiccups in Europe thirds of all there's huge cultural difference within Europe and States okay a completely different way of organizing the the regulation okay so they tend to be more like oh yeah we have a problem we will regulate and here in Europe we do the other way around we sometimes put more regulation before we actually have the thing to actually do it okay which in this particular case in the fintech audio or the crypto area it actually benefited us I have the feeling because basically people was not understanding what are the were the implications of actually having a blockchain or the all the different distributed products and so and therefore for me the different regulatory Frameworks that there is in different countries for us at Cyber bank is an opportunity okay the more differences the more opportunities the more products we can tailor the more adaptation we can provide for that and the reality is that they're also copying each other each one of The Regulators okay so as my colleague said everyone is looking at what the U.S is doing there's some news on mistaking which is uh something I love to talk about okay but it's what it is I mean we we need to protect the consumer we want to to make sure that we do the best for for everyone and uh at the end of the day what we want is to help our people to manage their money their license way possible that's it super so I think a lot of disparities still from a regulatory perspective about where the standpoint at the start point is we're seeing the US uh you know lots of action being taken in the absence of a regulatory framework whereas in Europe we've built Mika for example I know there are other great Frameworks as well before The Regulators necessarily get involved in actions and I think it's going to be super interesting to see whether those two different approaches actually come together at any point absolutely I think one one of the differences that made a little bit Switzerland a little bit like a sweet spot on how to manage all these things is that we actually talk with a regulator to actually design in some cases how we actually frame it okay we teach them we explain them and we co-create what it could be and what it not could be and they say no no you cannot cross this border okay why because of this reason oh if we do this this way we will accept oh yeah yeah yeah yeah okay so this relationship of diplomacy that has the Swiss cultural approach that okay let's talk about it maybe it's not yes or no it's like let's negotiate a little bit that usually doesn't happen in most of the rest of the countries okay and I think it's one of the reasons we we need these regulations like Mica or the US this all we have the FTX now we have to regulate you know but if I could just start I think you know that the sandbox that was announced in the European Union and it was it was it yesterday um fantastic idea I mean those allow us to to push the boundaries have a regulatory envelope that everyone is comfortable to do real world transactions make real money move and real assets change hands and be able to develop a working relationship with a regulator so they understand quite what the technology means because I'm sure we will mention the word education at some point in our session but and and it helps both parties actually we know where the red lines are they know where the red lines and we can those sandboxes are really powerful tools and I would agree with you there I think sandbox is there's some people in the room the builders in the room the the younger people than us who are building like crazy at Breakneck speed probably look at sandboxes and think oh my God another two years of my life to waste but when you're talking about mass mass adoption at an infrastructure level then having the ability to push the boundaries in a safe environment where you know you won't be on the wrong side of the law I think it's really important that brings us a little on to the ecosystem part of the discussion I would like to both touch on and the question here is are there enough strong players with deep enough company education and knowledge to build compelling products and services uh and Chris I'd like you to kick off this one if you wouldn't mind because when we were talking a few weeks ago before this panel you gave a few examples I'm not sure if you want to set share them on stage so I'll set you up so that you don't have a chance but you gave some examples around education uh both internally and bringing staff in with sufficient levels of Education I think the example you use were gas fees yeah so so just to thank you for setting me up on that one yeah so it may not be obvious to um people who don't work at a large Bank like myself but actually paying the paying of a gas fee on ethereum is actually quite a complicated uh process from a regulatory and compliance and a sanctions perspective and that we've literally just launched a tokenized bond it was an 18 month project it's take it took us 18 months to also get the right level of comfort within my bank to pay the gas fees because you don't know who you're paying it's simple it's as simple as that and yes there are tools like channelysis and others out there you can use but just that level of why do you need to pay gas fee what does it do where does it go how can I make sure I'm not you know and so on and so forth from an ecosystem inside the bank I guess that's that's the education that we need to go through and I don't think my bank is any different by the way from on that particular point it's just got to be worth work through the senior levels of management so they understand and now we're there and now we're doing it but it really is quite a uh from an I guess from a skills and education um and you know the Two Worlds coming together of you know the crypto world and a bank wanting to use that technology to take friction out of its system which is where we come from primarily that's where those juices that's where those sometimes there's you know those two plates are up together so to keep on with your example of the the sandbox and staying through the looking through the lens of the ecosystem Xavier do you think there are enough enough strong ecosystem players to work in a sandbox so I know one of your particular topics of Interest around ecosystem is is stable coins and trust and so I'm wondering if you could talk a little bit to whether you think there are enough big players sufficiently stable players to build an ecosystem from a trust perspective can they be trusted do they have enough tenure enough time served enough experience to be trusted players to work in a sandbox and build Global Solutions very complicated question I'll say okay I think we we have to approach it in a slightly different way of point of view because we are changing how the thing works okay we are trying to make all more fluent faster and more optimized so that we could do better and more that we were doing with traditional Finance right that requires not just the traditional trust it requires also familiarity you you need to be familiar with it not because just you poorly understand the logic that is behind you need to be familiar with it you need to to to get you know that your mom and your grandfather actually knows about it and this is one of the particular key aspects that I love about the blockchain revolution is that I you know some some of the friends of my daughter actually have Bitcoin even officially over age okay therefore how the how is it possible that they are already thinking on investing trading all these things so when this younger generation will actually reach my age the financial literacy that these people will have will be huge now and these will change completely what we understand the familiarity with all these products and then this trust question will will not appear so from The Today point of view institutions are asking us huge list of requirements okay we do have to justify explain even some technologies that they don't understand at all okay and at cyberbank for example explaining them why that a specific actually works and the mic went down that's fine and to reduce these these uh you know anxiety I will not take this on trust I think they trust us I think they trust the smart contract they trust the different aspects but they are not familiar they are not familiar with it let's move on to technology and two questions here for you around technology the first one is uh and Chris maybe we could look at this from your perspective of a consumer of these Services is a security sufficiently well developed for you as a bank to have trust that you can use these technology providers that's the first part and the second part around technology is is it really able to be used at the moment because I've been in crypto since 2013 and I shudder every time I have to try and use a metamask wallet for example so okay so on the secure IST um where where we see the world as a consumer is we know that there's experts out there who are better than this we are becoming educated we have cyber police we have all the right departments but because we're not naturally dipping our toe into this water every day we're focusing maybe on other types of other types of cyber security I mean look what happened to ion only other week as an example so I think for Mars we realize we are strengthening ourselves we are happy to work with the best in that field because there can be no questions asked about about that so I think we're on a run a Learning Journey but we do have some experts as you I think on the on the other part shuddering well I guess why why is a bank like looking to use this tip if I look at it from a tech perspective rather than a product perspective it's because we want we want to use it to remove friction it also weirdly if you it forces and the business come to the table for discussion you start talking well let's try and do this on a DRT suddenly the business turn up and want to solve a problem that has been there a long time and it's sort of a catalyst it's an amazing catalyst so we're using as a catalyst we can see real world use cases where this Tech can solve long-standing problems within organizations like mine that has a little bit of Legacy around and it can help us remove that so I think we're on we're on that journey and we're keen to we're coming to here today you meet some great firms that can help us it's fantastic super thank you Xavier from your perspective it are things secure enough and are things user friendly enough at the moment Security will never free friendly user friendly okay I think what we need to understand when we say security is that because of the nature of that particular technology the traditional ways of thinking security doesn't apply okay we usually in the Enterprise world we were thinking oh we're gonna put more firewalls more firewalls and all these things but how they have how do you put a fireball on bitcoin you know it's outside your infrastructure okay so you need to change completely the way you approach security okay and that's why we are doing at seven we are spending actually Millions on some of the Securities that uh that we do there to analyze and the behavior of guys going on in the network with the different contracts Etc so that we we apply the logic that okay at some point we will be able to detect him and stop him but not after you know a specific firewall and we put like a super big firewall and that's it if I will they will be able to bypass it that's that's not the point anymore okay so security is very important I think the technology is there okay we we do provide I would say 100 security that uh uh in our bank we can have like a we even have our own small Banker inside the building where you can actually not even enter I cannot even enter myself on that Banker without the right for people authorization and the order from my client to actually get and retrieve some some things for example I mean there is what we call the air firewall literally okay so it's in many many ways and unhackable unless you collude with a lot of people and you know how it works Etc so it's never impossible for sure but the level of security we can provide with cold custody it's it's amazing okay there is a lot of solutions based on Computing NPC and so that we can offer also from the hot point of view with multi-signature is something that we are also quite uh working a lot quite a lot I think it makes a lot of sense to have this uh this capacity so again for me it's not the technology technology is there it's just that we are not familiar with it I remember one conversation with one nice auditor that was not you know understanding why we actually set up that security measures that we were doing it he was not understanding it you know so this was not even trust or non-trusted it's like even the logic was too complicated you know so that's why I said it's never going to be user friendly sorry education education so we're being flashed that to say that time is up here which means that your beer is getting warm bear with us just 30 seconds I'm going to ask Savvy and Chris to sum up in three words and they can't be education education education what are the three most important things in your opinion very briefly that need to change so that we can have the right infrastructure for the mass adoption of digital assets okay I for me skills in depth that are prepared to work at an organization like mine one um we talked about regulation and that's not a technology challenge but that needs to come and that will solve lots of problems for us and I think the third is um we've got I can't imagine education but a common parlance between between I.T the regulator and the business on this stuff super thank you Xavier it's hard I think my three words is be passion okay I think we just need time that this we get this familiarity you know on all the different people and then all the friction will actually disappear so everyone is saying oh we can get this much adoption how we can get this Mass adoption I I I'm not worried about it and really trust that with time you will get it so be passionate super thank you guys big round of applause for Chris and Xavier please and thank you all for staying go have some beers have some fun Network and Pat the organizers on the back they've done a great job today thank you guys