25-03 ikigii Stage 10:30-11:10 Las Finanzas Tradicionales Están Adoptando Cripto y la Blockchain

Thank you everyone for being here and uh thank you to the Merge team for hosting this really incredible event. Really excited to be here. It's really an honor. Uh it's an honor to be on stage with this great panel here. We're going to be talking about um maybe the topic of the day perhaps which is how institutions uh trad folks are embracing crypto and blockchain right now in March April of 2025.

So my name is Aaron Stanley. I'm the founder and CEO of a publication called Brazil Crypto Report. It's a newsletter podcast focusing on uh English language, but focusing on on adoption, digital asset adoption in Brazil, and and expanding into doing more coverage of the rest of Latin America, primarily Brazil right now, but um former journalist for Coindesk, Financial Times, uh some other outlets. Um and I'm joined by uh May Mikl or I'll go left to right here. So, we have Cody Montever who's the head of blockchain at Banku Santandere.

We have my Mickelson from uh GK8 by Galaxy. We have Feder Rico of Meka uh local Argentine here and we also have Koshell from Block Damon who's the head of sales in the US. So, um why don't we go around the horn here really quick and just do maybe a quick like 30 second introduction. Uh Koti, why don't you tell us who you are and what you do with Santa? Sure.

Well, first of all, thank you for inviting me to this amazing conference in Buenosire. Um I'm Cot Monte Verde. I've been working in Santandere for almost 17 years and half of that I've been leading um the the blockchain projects execution. Um we set up the blockchain lab like nine years ago more or less and and right now well I'm focusing on helping all our banks around the world in engaging with digital assets. Hi everyone, May Michaelson.

I lead global sales for GK8. GK8 provide financial institutions everything they need to self-custody their own assets providing the full tech stack. Cold vault, impenetrable vault, MPC, highest insurance in the market, cold stake and cold tokenization and we are fully owned by Galaxy Digital. Happy to be here. Amazing.

Federico. Hi. Hello. I'm Federico. Glad to be this panel.

I'm the co-founder and CEO of MKA. We provide APIs for uh financial institutions and fintex to uh buy and sell crypto for their end users and run pon rampoff as well for web three companies or neia banks. Hey everyone, Koshett uh head up sales for uh Block Damon in the US. I've been with the company for almost four years now. Uh Block Damon is a blockchain infrastructure company.

So we provide uh fully onrem uh MPC wallet infrastructure, uh, staking infrastructure, and access to blockchain, uh, protocols via the nodes and RPC nodes that we operate. Awesome. Thank you all for being here. Real pleasure. Um, so to kick off here, we're going to be talking about kind of the big elephant in the room theme here, which in terms of narratives in crypto right now.

We've hit this point where um I think historically the um kind of the crypto retail crypto's always been kind of a retail driven thing, right? The crypto markets have really been propelled by retail by like Dgens on Twitter and kind of cartoon avatar guys on Twitter, right? That are really pushing their narratives. And we've hit this point now where that's it's kind of inverted. Now crypto is becoming much more of an institutional thing, right?

Where um if you go on X and you look on, you know, X on Twitter, a lot of folks are there's a lot of just sort of doom posting and people are kind of depressed and seems like the market's kind of out of gas. But then you look on the institutional side and people are really excited about allocating Bitcoin. They're really excited about digital assets, really excited about tokenization, stable coins, all this stuff. And it's a weird kind of inversion because up until now it's it's always sort of been the opposite of that, right? So um so both my and and Koshul you both were at the digital asset summit last week in New York which I think was this was a really interesting event because it really sort of put on display this narrative that that we're talking about here.

So, I was hoping we could start with you both and maybe just get some quick takeaways from like how are and digital asset summit for those of you aren't aware this is this is kind of the premier like institutional crypto conference like in New York City uh that happens each year by uh by block works and um I would love for you both to maybe just share a bit about like what were your big takeaways from this conference maybe my will start with you and then over to coach. Sure. I think the main takeaway was everybody down trying to get in. So Cotti has been leading Santandale for many years but the bank in the states were not active in the digital asset space and you see that trend is now changing. So every bank is really pushing to have a blockchain team to have an on-prem expertise of how to cater to better cater to their clients needs whether it's to offer crypto custody whether it's to create a tokenization project on different financial offerings and and you see that mainly after Trump was elected uh so subbed 121 was basically and now completely deleted and he's trying to push for regulation.

He was actually a surprise guest in the in the conference saying that they want the US to lead the market. They want the the US to be the financial hub to any digital assets initiative and you see the banks knowing that if they will not step in, if they will not cater to their clients need, they would just lose that engagement to other players in the market. I think that was the main takeaway. Everybody is now moving, everybody trying to push for initiatives um and trying to find the right partner to do it with. Over to you, Koshel.

Yeah, I I think um it was uh it was very exciting to to see the change uh last week at the conference versus prior years. Uh there's a lot of new entrance who have kind of entered into the crypto uh sphere and want to learn about what what a blockchain node is or what tokenization is or what is DeFi. And so um you know there were early entrance who who are moving rather fast and quickly um but there's a lot of new players now um traditional players that are you know quickly wanting to get up to speed. Amazing. And and I think um Ma you alluded to this but there's been a lot of interesting regulatory changes in the US just over the last six months that have really opened the door for a lot of banks to begin really exploring this a bit more actively.

um particularly with regard to some of the Trump administration's new initiatives and and rolling back some of the um some of the you know some of the enforcement actions and things that were being undertaken by the previous administration that had basically like banks were like it's just too risky to even touch this stuff right now and now it's it's sort of open for business right so uh everyone's kind of coming back in full force right now which is super interesting and um another interesting factor and the reason we're all talk we're talking about all this is because what happens in the US right now to some extent in Europe is going to have a spillover effect into every other market in the world. Crypto, especially Latin America, especially um you know, other parts of the Middle East, uh in Asia. Um so this is really why we really wanted to focus on this particular point because what's happening in the US right now is really going to have major spillover effects over the rest of the year. Uh but Cody, I want to turn it over to you and you're based in Europe obviously in Spain. Um and Europe actually just implemented um I guess Micah or MA dep's m to pronounce it I guess but um so this just came into effect in uh beginning of this year correct and this has had a stimulatory effect on it's basically opened you know opened the gates for for banks to start examining how can we have a crypto strategy what can we be doing how can we offering these assets love for you to tell us firsthand um what's this experience been like what are you kind of seeing from the ground in Spain right now and in your community yeah sure was well as you know Santandere is one of the largest banks in the Euro zone but we have also a strong presence here in Latin America and what we are seeing is that banks are engaging with digital assets more and more but influenced by different factors in the EU is obviously the regulatory environment with more regulatory clarity that means that that's removing the legal uncertainty that financial institutions had and I mean we all want to ignore innovate but in a safe way.

I mean we don't want to violate any any law and that's helping a lot and and banks are starting to to engage with digital assets on the institutional custody side. We see many banks in Germany that are already announcing that they are going to provide custody services. We also are seeing a shift in the issuance of stable coins because also Mika is providing clarity on how to issue and operate electronic money tokens and asset reference tokens. Um already sog general has issued their own euro stable coin and there's rumors in the market that banks are forming consortia to issue more stable coins. Um but I see that um on the brokerage and and trading side they're a little bit more cautious.

There hasn't been many major announcements. So in Europe we see that um that convergence of trafi and defy that it's been drived by the regulatory clarity. On the other side, um here in Latam, the driver has been something different. It has been the the demand of the of the customers and the market conditions. So, h there's many banks in Brazil for example that are already offering crypto trading for their clients.

um they are also engaging with the stable coins due to high inflation. So it's different reasons than in in Europe where adoption rates are lower than Latin America. And and we see that regulation is coming. So in the case of of Brazil, we expect it to be ready by June. Here in Argentina, it's it's some days life.

Uh so I see that there's um higher engagement of financial institutions in both regions but for different reasons. That's great. Thank you for that color. This is a good chance to kick it over to Feder Rico here. Would love your thoughts on kind of the state of like what are you seeing on the Argentine side here?

I know there's been some kind of regulatory back and forth here. I think there's some other panels on Argentina regulations. Maybe we don't have to go like super deep into that, but I'd love for you to give us kind of the state of play uh on the Argentina front right now. Yeah. So, uh, Argentina because of their infinite number of regulations in the last six years made a crypto heaven for for the users.

So, uh, we see mainly stable coins. I think stable coins were built for LATAM especially Argentine people. uh we found a way for uh saving for crossber payments um for payments local payments as well. Um I think we we have a an amazing industry due to all these regulations. Um, a few months ago, uh, there's a new registration to start in, uh, what is the Argentine SEC and, uh, a week ago, I think it was, there are new regulations coming into the market that we need to comply in order to keep offering services.

Um, so that's that's our current environment right now. And um I think it's great now for banks to uh enter at least for Argentine banks to enter into the market. Um a lot of users are now trading with uh exchanges even from outside exchanges as well. And uh there are some banks that started to offer services to to to us the crypto businesses. It was extremely difficult two or three years ago and now it's totally open and uh I think it's time for them to start offering the users at least bitcoin, ethereum and USDC USD and I can just add that I think many of the banks see the value of stable coins.

Um for example, we're taking part in uh Deutsche Bank asset management DWS euro stablecoin. We provide the full tax tag for that and and you see them really understanding the value of a bank launching a stable coin with a bank reputation with a bank trust not another crypto company there's many amazing one that launch stable coins but really backed by Deutsche Bank that's a different value or Santande or different trusted name in that industry so I think st we'll see many more stable coin use cases in the upcoming year yeah just to add I think that the the maturity of the industry. I mean we are now if we started let's say 2009 so we have more than 10 12 years um and I understand that banks needed to wait in order to have great custody and and and other great stuff. So uh definitely it's time for them to to enter the market. Well, and this is an interesting um I was going to ask this question later in the panel.

Maybe since we touched on it here, we'll we'll we'll we'll bring it to the front here. But I think when you're talking about bank like banks inherently have to have trust. They're tr have to be trusted by their customers, right? That's kind of like their their main value proposition essentially selling like okay crypto exchanges, crypto platforms like sometimes they get hacked, sometimes the money disappears, sometimes you get rugpulled, whatever. But like for a bank like there's zero tolerance for that.

Like if I'm custodying at Bankco Santandere and all of a suen my just disappear. That's bad, right? Um, so I'd love to maybe talk about like we have representatives from both banks and also, you know, folks who provide these types of services to banks here on this panel. So, I'd love to maybe talk about like like what's the difference in like in in maybe the level of quality, the level of the standard, you know, what's the delta between like okay, if you're if you're offering these services via bank or you're offering these services via just a regular crypto exchange, like what are the, you know, maybe the differences that we have to kind of account for in terms of the security and the safety and just really ensuring that like trust with the customer. I don't know who wants to wants to take that one first.

You want to go for that one? Okay, sure. Um I think the building block for any custody any any blockchain initiative is custody. Once you have custody you can build on top of it different financial offering once you're managing the assets once you build that relationship with your clients. So when it comes to the word of key management it's really divided to the way you're you're designing and managing it whether it's a so let me take it from this.

So the word of key management is divided into few main segments a warm and hot wallet which is usually the MPC multi-party computation where you take the private key split it into a three shards and then usually if two out of the three computer that involved in the signing ceremony sign on the transaction you have a signed transaction then you have the cold world solution I'm saying like this because uh I hate saying the word cold blockchain is a birectional protocol every time you create transaction you have to be in communication with the internet with the blockchain to receive some updated data. Once you create transaction in Bitcoin, you need to receive the most updated UTXO in Ethereum denounce and that's why those so-called cold solutions are called until you want to use them. And you have a different layer that we call it impenetrable layer which is GKA layer that does not need to request and receive that mandatory data. It knows how to generate everything internally. Uh that's how we can offer the highest insurance in the market.

So I'll say yes the building block for everything is custody. It's your risk appetite. How much asset you actually manage in a hot wallet? How much asset do you manage in the cold? How do you divide the two?

For example, by bit is a great example. They manage very large amount of treasury of their clients in a multi-stig environment. So from the risk appetite it was very risky. Banks cannot take that risk because as you said if Santandelle would ever be hacked that will be tragical. Santandelle cannot allow themselves to take upon themsel the risk.

So it's really about the financial institution understanding the risk involving key management and understanding the different solutions in the market and building the right policies and governance in place to have the holistic picture of offer start offering digital asset services. I think it's I think it's interesting because I've over the last probably like six months or so I've developed this thesis that people always talking about what's the impediment to crypto crypto adoption by the masses right and at this point I'm like I think the biggest impediment is just people worried about getting scammed and like losing I mean the amount of if you're in crypto like the amount of fishing attacks you're getting on a daily basis is insane like from email telegram like every all these and you only have to like click on one the wrong thing once and you're you're fried you know if you're self- custodying on your meta mask on your browser or You could be 99.99%, you know, safe and insecure and then all of a sudden you click on one wrong thing and boom, you're cooked, right? And I think, you know, the I think and now you're getting a lot more of these sophisticated like deep fake scams where you're on a Zoom call with somebody and you think it's an actual person that's a deep fake and they're like, "Oh, send me your coins. Let's complete this transaction."

Like this stuff is getting really really sophisticated, right? So even even crypto OG players are getting scammed and losing tons of money through these types of scams. And I think this increases the reason I'm saying all this is that it increases value proposition for like why institutions like traditional banks need to be in this space, right? Um because you know a lot of people are just at the point where like I just don't want to trust myself to self custody anymore. Like I understand the whole not your keys, not your coins thing, but like the risk of me getting scammed is a lot higher than the risk of you know the government censoring me or shutting down my bank account.

like that. So, I think this really underscores like why, you know, trady institutions and banks like need to be players in this space. Um, anyway, I'll I'll throw that out there if anybody wants to respond to that. That that wasn't like part of the planned uh remarks here, but you know, if anybody has thoughts on that, would love your take. Yeah, I mean I I just think um you know as a as an infrastructure player um and working with a Tradfi uh whether it's a bank, an asset manager, there's a very rigorous level of due diligence that's done uh by these institutions uh with partnering with the digital asset infrastructure player.

And so just having, you know, you know, crossing your tees, dotting your eyes, like being able to, I don't know, answer thousands and thousands of security questions, like that's very very important. And sometimes people don't see what's happening on the back end. And um yeah, you know, that's that's what's kind of allowed Block Damon to kind of uh be a um you know, prominent partner to a lot of institutions. Um we have three of the largest banks on our cap table and so we know what it takes to kind of provide those uh infrastructure needs to these institutions and um I know Cody you want to since you're the banker in the group here. I don't think that one thing is better than the other.

I think that there should be many options for the customers to choose from. So there will be techsavvy people that would prefer to hold their own keys but there will be I don't know old people that would trust more their bank or or just because I'm don't know I'm too lazy to take care about my ledger right so I think that there should be different options for for different erh flavors of people got it got it um and then switching gears s lately. Um, I want to talk a bit about just some other narratives that are really kind of hot on the institutional side right now. Um, especially kind of post DAS. I think at least I didn't go to DAS, but I was watching some of the content from it and just watching folks talking about on Twitter and whatnot.

And it seems like the main things that people are really interested right now is Bitcoin, stable coins, tokenization, kind of the three things. People aren't really interested in Ethereum anymore. Salana sort of scored an own goal with this Malay coin stuff which talk about that in Argentina probably but um and a lot of these al all coins are really struggling to find you know a product market fit so a lot of the narratives that were really hot around this time last year like deep pin and some of these other things have nobody's really talking about this much enthusiasm right now um so I'd love to maybe kind of go around the horn here a little bit and just get an idea of like okay what are the kind of the from your vantage point like what are the the the narratives that you're seeing that folks like really excited about? I mean, do you agree with my my thesis here? Is there something I'm missing?

Um maybe um Pedrico, maybe we'll turn it to you. Um and then we'll we can kind of go around the horn here. Yeah. Um if we ask probably people around Latime, I mean speaking the retail market, they will definitely talk you about stable coins because uh they are probably uh using it to uh either bring money from outside especially the US because we have a tons of freelancers all around LATAM working for abroad. So they found a way uh with stable coins to to bring them uh to their to their home country.

Um then in the in the bank side um I would say that uh the the main questions are regarding uh Bitcoin, Ethereum like the the big uh market cap coins because um I believe they understood that uh they are a way of investing as well as other stock and other traditional finance and uh they are looking into it. Obviously always the big question is custody for sure and then some other uh cyber security stuff but um that is what uh is happening at least from our point of view in in Latin Koshel you want to jump in there yeah I I agree with you it's uh bitcoin tokenization stable coins I would say you know to federico's point like custody is the mo one of the most important problems uh to solve And I think that's very much talked about. Um, Ethereum is still the backbone of DeFi and I think DeFi and tokenization will have a huge part um, you know, maybe this year, maybe next year. And so I would probably say that's another one as well. I have to add that I feel like when we're talking to financial institutions, central banks and other big players, the main question is also when it comes to stable coin or tokenization overall is how do you do that also in secure way?

Are you just creating a smart contract and then if you are who's managing the private key of that smart contract? How do you actually launch in a secure way where you know there's no back doors and this is also a very important conversation that we're experiencing that many of the financial institution want to join that game but just don't know how to do it in the most secure environment. So the private key of the smart contract who can actually mint how do we do a quorum of approvals for every minting request and if we are how do we limit to which address it can actually mint who can burn so that's also another very big topic with the financial institutions to to build in a way that will protect their reputation that they will never be hacked from that as well. And then Cody, I want to turn over to you here and talk a bit about what you have been building at Santandere because you've been um Santandere's been probably one of the earliest banks that was really you know in the blockchain game even you know eight 10 years ago and I would love for I think even Paula who's the organizer of this conference used to work at Santandere as well. So there's I miss her.

So thank you for for for birthing her and producing this great conference. Yeah sure. Um yeah so we set up the blockchain lab like nine years ago in 2016 and we started exploring I mean how blockchain works I mean just copy paste the code of ethereum and and try to test it internally then um private blockchains like quorum appeared we started to forming some consortium to try to I don't know trade finance use cases I mean we did tons of of pilots and PS um but we were more focused on the enterprise use of of blockchains because there was not um regulatory clarity and obviously banks I mean we don't do anything if we are 100% clear on its legal implications I mean we are a highly regulated institutions so it all started with enterprise h use cases um and since then we have a very extensive digital assets program. We are covering digital securities. We've issued already several digital bonds on private and public blockchains.

We are covering detail cash. So we are participating in several central bank digital currencies initiatives such as uh the directs project in in Brazil. We are also participating in other industry-led um projects such as agora that it's led by the BIS and the IIF with seven central banks, 41 financial institutions trying to figure out how will be the correspondent banking on on of the future built on on blockchain. Um, we were also founding members of Finality International. Uh, that's a wholesale peer-to-peer payment system built on blockchain.

Um, where funds are held in central bank account. So it's kind of a synthetic CBDC and on that uh we already have the digital pound on production and we are doing live proving with the um central bank of of England um supervising the the trials and we we're are looking to expand this project in the US this year. So that's on on digital cash and uh on crypto we started in 2023 in Switzerland where where we also have a private banking institution uh and there well it's the crypto valley as you know so regulation is quite friendly so we started offering a crypto buy wholesale to our private banking clients there two years ago and we are right now working in Brazil and in Europe now that Mika is in place to start offering crypto as well in this in these jurisdictions. Amazing. Amazing.

Thanks for that color and and congratulations on really being one of the like the first banks to really kind of dive into this and really start exploring and it's it's been kind of a long process of trying to find out what like what what's the value that this technology offers us, right? A lot of it has been very long. So, uh but no, congratulations for being really at the forefront of a lot of these cool initiatives like project Um, and then so maybe I want to go around the horn here again and talk a little bit about I mean we talking about you know just kind of general narratives around around trap entering crypto and what are some of the use cases and things but I want to talk a bit about like I mean we have some really great both you know folks here both on the banking side and both on the service provider side and I want to kind of go around and talk a bit about what are the factors that financial institutions need to really like consider and weigh when they're trying to decide like how do I go about finding a custody provider or how do I, you know, should I does it make sense to like, you know, run my own nodes on some of these chains and offer staking services or um would like to maybe you know or like even just things like payment rails and on on an offsamp and things of that nature and I would love to kind of maybe go around and just talk about some like kind of like best practices or like what are some of the questions that people should be asking if they're they're having these meetings internally discussing with vendors that type of thing. Um maybe um maybe Kosha we'll start with you and then we'll kind of come down the line here. Yeah.

Um I think um things that you know institutions should look for. Um actually maybe go with someone else and I'll just Federico we'll start with you and then we'll come back to coach. Yeah the questions um probably the way I mean we offer the services to banks. So the the way we work is we have the custody. Um so they should be asking us how we deal with the custody probably in order to avoid any any legal issue.

Um that's the main one. Then uh it is related to custody as well. How do we do the transfers between cold and warm and and and hot wallet? Um probably the providers we using as well as um liquidity providers. I mean we work with 10 around the especially in LATAM and the US.

I think it's interesting for them to know uh which are the providers as well. And then uh finally our um cyber security stuff like uh the responsible people not not the name but I mean the number of responsible people who are in charge of doing this or this that are like a key thing in the in in in the company. I think that those are the main big questions to to ask a a provider. Yeah. So back to me.

Um I think you know the the question to ask is like you know these blockchain infrastructure providers have been around for you know we're close to a decade now um and you know we have teams of blockchain engineers we have armies of cryptographers and uh so the question you know that I would ask these institutions it's like do you want to build this yourself or would you rather outsource it um I think you know the reason why you know running nodes we run over 200,000 nodes uh across multiple protocols and you know it's easy to run one node two nodes 10 nodes and then it gets really difficult uh same thing with MPC tech like you know deploying it and operating it do you need a redundant provider cold storage so all these pieces come together and um that's that's where that's where infrastructure providers come in and help out right I think banks should um should learn more should explore all the options on the I think we saw many banks here in LA that try to build and publish that they build their own self-custody capabilities and now cancel that project as they saw the amount as you mentioned how much it actually cost every day to maintain that are they expert in security of key management. Do they have the right cryptography in place? Do that what they really want to focus on? Do you want to maybe find a different partner that can help you with? So they should explore and learn all the options on the table.

I think that many banks are now being very creative with also mix and matching. They have the ability to take the best of all worlds, some capabilities from provider A, from provider B and provider C and really build a very strong offering to the market that will enable them to scale very quickly with limited time and efforts that they have to put in. Um, so I would say definitely explore the option and and learn from other mistakes. So especially because we're here in LA and many of the banks here really try to build it themsel and and pull back. What about you Koji?

What's your advice? I could be ours talking about software requirements but um so we mainly look at I would say four key factors. One of them the most important that nobody has mentioned today it's um regulatory compliance. So obviously for tech companies may not apply but for um exchanges brokerage or even license who custodians apply. So we look at how they comply with the regulation.

That's the first thing we look at. Um those providers need to um understand governance, risk management, security as we do. I mean they should have institutional grade security. I mean we want to avoid hacks obviously because I mean banks are trusted by our clients. So that I mean we cannot fail in into that.

they need to have the appropriate uh risk management controls in place. Um they we also look at interoperability. I mean they they need to integrate seamlessly with our core banking uh systems. And last but not least I would say their operational capabilities SLAs 247 um support how they manage liquidity. So more or less that's would be the summary.

Amazing. Um, we've got a minute and a half left here. So, let's let's do a quick around the horn of uh maybe any final thoughts and any predictions you have for the rest of the year. Preferably controversial predictions, but they don't have to be. But, uh uh but um anyway, why don't we start with you Mai and then we'll move on to the rest.

I think this year we're all talking about mass adoption, but I think we will see institutional adoptions. I see I think we see it very clearly now that many institution understand that this is a huge revenue stream that they're now losing this what their client wants together with a trusted brand. So we'll see that even more massively Rico. Yeah. Uh actually it started with the ETF of Bitcoin and Ethereum.

It's definitely moving forward and uh I think that this year at least uh a few banks will start offering their users uh crypto services. I think more uh staking conversations around the asset managers and banks. That's probably my prediction. I see an explosion of a stable coin initiatives and if the genius act moves forward that I mean I I see that in the US there's going to be many banks issuing their own stable coins. Awesome.

Um well, thanks so much everybody. Uh this was a really great panel, a really fun conversation. I hope you all found this valuable and um hope you find the rest of the conference uh valuable as well. So please uh please do track down our speakers afterward if you have any questions. We'll be we'll be around.

So thank you everyone for your time. Thank you. Thank you everyone. Aaron, please don't leave. I think you're saying with me for the