Navigating the Legal Landscape: Perspectives on Global Crypto Regulation - TOKEN2049 Dubai 2024

Richard you're now serving at the helm as CEO of Finance the world's largest and dominant crypto exchange thank you Matthew you're the co-founder and chairman of block uh you've been called a double OG been around block uh for for a number of years uh since Anthony mentioned uh my suit I'm obviously wearing orange for for Bitcoin today um today's a a historic day for Bitcoin it's the it's the Bitcoin having so why don't we just start there and acknowledge kind of what what's happening in the community um so are we like cutting our Bitcoin in half um what what is the significance of the having yeah the Bitcoin having happy having we're uh in this fouryear cycle that Bitcoin has uh and it's a fascinating cycle um everything in life has a a Cadence whether it's your birthday or some anniversary in the Bitcoin world every four years the supply uh of Bitcoin the incentives to miners get cut in half as the network continues to grow and other fees come into play uh the reward uh for mining goes down and we're upon that moment moment here this weekend uh in this very moment which is pretty historic uh being at historic highs and so I think the attraction and understanding of a thing called the Bitcoin happening is now in more of the public Consciousness uh it's kind of interesting people are talking about it seeing all the uh ETFs go from zero to one uh it's a a pretty incredible moment well I I think this Hing is especially special because if you remember all the previous Haring Cycles the last Haring was really watched closely by crypto enthusias crypto Deen so to say but this Haring is unique is watched by the global institutions right this time around including on Wall Street and that's what make this Haring very different from previous Haring we have seen alltime high in terms of Bitcoin prices even way before the Haring which is something that we have not seen in past cycle so in many any sense this cycle is is very unique uh we are start of a bullish Trend today uh despite all the volatility that you see in the market and hopefully that Trend persists uh and we see so many new exciting projects coming into play uh in on the crypto front but also on things like tokenization use cases um a lot more web tree projects bring a lot more users investors into the crypto space so there's a general bullishness about this right so we are all very Astic watching this having yeah I think the other thing that's unique or different from this having to previous Habs and of course this is impacting the the miners dramatically is you now have all these public Bitcoin mining companies and every having you see the mining industry completely transform and so from the last one we saw the public companies come on the scene and that you know the future of the mining industry is going to change dramatically from today I think we'll see mergers and Acquisitions we're already seeing that consolidations and now that you have public institutions mining Bitcoin and even sovereigns yes mining Bitcoin um it'll be interesting to see the changes we see from here and and that's a great Point uh talking about the volatility of Bitcoin to all these publicly traded miners um the miners have different Capital structures different uh requirements uh and how they Source Capital with it's public markets private markets and sometimes go those in favor of cycles and out of favor and right now it's a it's a very unique time because we're at these pricing levels uh their market caps their ability to uh keep their cost structure in line get uh access to new miners is uh is every uh thing for a minor is getting pressure tested right now uh from the operational standpoint to the uh to the underlying asset yeah absolutely yeah I mean it really wasn't that long ago that most of the mining Community was people just mining Bitcoin at home on their personal computers where that's really not much of the case anymore uh so Richard since taking o t taking over as a CEO congratulations on taking the role um you have a big job to fill you're you're leading the charge at the largest crypto exchange uh in the world and um you regulation and compliance has obviously been front and center for the company what what do you have to get right this year what's your number one priority I don't think I have one priority I mean firstly thank you so much for that I'm really honored and humbled uh by you know the shareholders and management backing me up for this Ro but it's not a one man show right I have a very talented very strong team of professionals behind me right in terms of really supporting the growth of this very important franchise and we continue to grow from strength to strength uh in the last quarter alone we have added 16 million new registered users bring the total today to 188 million close to 188 million users on our platform we are seeing assets of close to 120 billion on on the bance platform right so we have seen net asset inflow of close to 9 billion but those those are just figures off hand yeah uh I don't think there's one top priority um there are several right and I always say that if we get those things right we'll be hugely successful and it's very simple right so firstly users we are a very user focused platform we want to make sure that we offer the best products and services to our users on that front and it's a consistency of action I mean the course of the last six and a half years of bance we always make sure that user security user protection user safety comfort and you know users are hugely confident in what we do on that front as we continue to enhance our features uh to support users much better secondly you mentioned regulation uh is extremely important the direction of travel within the entire industry is one that's much more compliant much more regulated compared to before right so if you look at I first got into crypto around 2017 2018 when I was CEO of Abu Global Market and we became one of the first Regulators in the world to really start regulating this crypto space and pushing the global crypto agenda at that point in time it's extremely early right and you have very few Regulators really looking into that you have very few institutions like what you see today I mean institutions then think that is passing F you go away but today the landcape has changed so differently so again I'm looking forward it's part of my tree commitments looking forward to working with global Regulatory Agencies to uphold Global standards on that front and thirdly we are still at a very early stage of the development in a crypto space we have estimated what globally 420 million users on that um so is about 5% crypto adoption today so we want to look forward to working very closely with Global Partners local Partners to really Embrace and support the development crypto adoption crypto deployment in the various areas right so if we can do those tra tra things well users Regulators as well as our partners we we will be successful yeah absolutely yeah that's a great uh I think perspective on Innovation and Regulation and how to balance that in a pioneering industry think about 10 years ago this was uh a very hard to explain industry to uh Folks at the dinner table and look where we've come uh to now and it goes back to that old adage of uh Innovation kind of outpaces uh regulatory Frameworks typically uh and then catches up and he gets uh figured out uh in this case with uh crypto Ai and some of the intersections of multiple Tech techologies I think that pace is going to get faster uh and there's two parts to that one is Regulators need to figure uh out constructs and principles in order to kind of get ahead of some of the stuff uh and then innovators and Builders uh have to be conscious of what's responsible and uh try to almost self-govern as these markets go from zero to one and this happened in every industry we know whether it's railroads uh internet uh this is a class classic kind of uh industrial organization uh Dynamic where uh you have a bunch of innovators and then you get really big and now we're like uh okay we're trillion dollar networks and let's be responsible let's think about the responsible Tech responsible regulation and all that is kind of happened in real time in an open source kind of open uh way for a decade and now it's trying to get uh find its footing in the more traditional world right so as we're talking about more of the traditional conversations I think 2024 I've called this this will be the Cardinal year for crypto the year that we go mainstream we saw the introduction of spot Bitcoin ETFs in the United States which allows a whole new class of investors to to come into the market we're seeing record multi-billion dollar inflows uh into Bitcoin today through through through Wall Street uh which we have arrived we're now uh you know we are um hand inand with with the institutions with the traditional uh Financial Services industry um and one of the um you know Arguments for investing in Bitcoin in particular but in the digital asset space is is a non-correlated asset uh and can be a flight to safety it there's no um I think doubt or question that there's a number of major changes happening around the world there's a number of geopolitical events a number of which uh you know we saw impacts to the markets over the weekend um Richard how do you think about geopolitical events uh the significance of them uh and how that can impact the digital asset markets well I I would think that the broader macro economy as well as geopolitical events will impact any asset class right so I don't think there's one single asset class impact it could negative or or or positive right so for example go right with all these geopolitical event impacts go in a positive sense right in terms of asset prices well and there are many comparison of Bitcoin to digital gold right so really is a deflationary asset class there's a fixed amount um I mean if you look at three years ago versus now you have the largest Wall Street firm Black Rock Fidelity and the lights going on air to say that look this is a very important asset class going for forward is compared to digital goal it has many characteristics that's far superior in many sense to goal it can be traded 247 there's no barriers of entry in any parts of the world over the weekend uh where there's a bit of tension right and where all other traditional assets are closed for trading crypto is the only one that's working through the weekend right so people can do different type of trading strategies on it investment trading hedging which makes it very powerful in that sense right so it it will impact uh but the long-term trend of that is is bullish but I just wanted to also touch on the other point that you mentioned about the introduction of ETF in the US right so if you look at the global agenda I mentioned just now the direction of travel is very clear for crypto you're going to get much more compliance my H my hypothesis way back in 2017 when I got involved in crypto and why we I was pushing for regulations in this sector then was that I always think that for Mass adoption to take place in the crypto in the blockchain industry you need two Dimensions the first you need clear regulations so that industry players know how to navigate that space right and bring about greater user protection second dimension you need institutional embracement of this right and they bring in a lot more expertise in terms of product structuring bring new liquidity new user pool and we are seeing these two Dimensions at work now in 2024 that which is why 2024 is a very important year because we are starting to see all these important things at play so which is why from now on the pace of adoption will be much faster over the course of the next five years compared to the last five years it's not only the US approving it you see Hong Kong announcing uh uh approval of Bitcoin as well as ether ETF on that front uh I think you'll come through in other jurisdiction and a lot of regulatory Clarity coming true including MAA in Europe I think all those are key positive for the industry yeah I couldn't agree more and uh I think about how Wall Street uh considers Bitcoin kind of like how some crypto people consider Bitcoin meaning like your uh the way you hold cash is kind of like in Bitcoin right that's in your your mind the cash equivalent and when will Wall Street start to think that way where um exposure to bitcoin is actually a it's a it's a treasury management function or it's a portfolio allocation function that starts to really get into um uh the kind of common thinking uh on on Wall Street and and I remember like in 2015 I had this tweet where wall uh every firm on Wall Street has Bitcoin on their whiteboard and it was probably true but they just kind of are slow to adopt new tech and and especially when it's uh you know the regulatory constructs are aren't clear now that there's uh uh clear guidance on an ETF uh we saw what has happened since the beginning of the year and it's profound and so uh you know is the um you know investment better than Bitcoin or investment better than uh ethereum with the staking reward is that now the new measuring stick because you could just hold those assets you don't have to do a single thing watch the rest of this room innovate uh adopt uh and and kind of push this Tech forward and you're sitting on these two underlying assets that kind of grow like like a weed so that's another interesting Dynamic for Wall Street to kind of get into their psyche and then it's like well what's the third ETF you know and then the fifth and sixth and then you have forfill construction and then all these other things that uh will start to create this Cambrian explosion for Wall Street much like it's happened for uh the crypto uh folks last decade right I think I think you're absolutely right we're just getting started so spot coin ETFs are are new uh well at least in the united uh in the United States that we've had Spa in many other countries for a number of years but that's bringing in a new level of institutional inflows which is great uh e ETFs spot eth is kind of up next and then um you Black Rock has announced a partnership around tokenization so real world assets not a conversation that's that's new to to either of you all but I think there's new opportunities to really grow that in a material way um we're kind of uh talking a little bit about the jurisdictional conversation so it's been a couple years since I've personally been back to Dubai um and I've I've been here a number of times with the crypto industry particularly with a number of the US companies um and uh the UAE has changed the crypto industry in the UAE has changed dramatically in just a couple of years that's really my first observation being on the ground this week is it's incredibly vibrant uh there's a lot of of opportunity to build companies of consequence here uh and I think a big reason is because of the forward leaning uh work that I think you started uh Richard but from The Regulators to have um you regulatory Frameworks to provide that Clarity what we hear from companies and investors over and over again is what businesses need in order to build is is a a clear rule of law and clear regulatory Frameworks arguably as an American I can say I'm very disappointed in how the US has handled the space it seems like we're fumbling and bumbling the ball uh in ways that can be very detrimental to our markets in the United States and the dichotomy here is uh you know it's deafening where're so it's obviously the US is one of the largest markets and there's a lot of interest for a lot of different companies to have access to the US markets I think Richard you may think about that a little bit differently but my main question is where are so we look forward five 10 maybe 20 years on the horizon where are the global crypto hubs going to be located what is your prediction well it's it's a tough I don't have a crystal ball so I can't make those prediction but I can just highlight some of the parameters right that will make a hub successful for instance right so if you look at any regions I mean biners do Global deployment so we're active in in most of the regions globally but if you look at where crypto adoption are the fastest you you have two parameters at play right so one younger demographics so every time you have a much younger demographics the crypto adoption tends to be much faster because people are much more Savvy in this space if you look at research coming out uh the young adults today whole more crypto than stocks which is an interesting research right so you look at various pieces on that front because this is this represents the future I think Matt just now me mentioned AI but there's a ABCD so to say so AI blockchain cloud and data infrastructure right so this this represents the industry of the future so blockchain crypto are extremely important but the young people are holding much more crypto than than stocks today and that's telling the the second dimension is where you see finan I inclusion being lower right so if you look at much more developed jurisdiction crypto adoption may be lower because most people are bank and maybe overbank on that front but in many parts of the world that's underdeveloped where Financial inclusion is only 10 to 20% right those are challenging you can make payments you can do remittance at very low cost I mean you go through traditional Banks and remittance houses they charge you up to 10% where W crypto is just a tiny fraction of that so many lives have transformed and benefited because of crypto people are better off holding off on to stable coins in many of this jurisdiction which go through you know hyperinflationary situation right uh and you see the currency facing challenges so I've seen that at play and many of these countries will continue to do well from a crypto adoption standpoint but from a crypto hub standpoint I think the one that is embracing give clarities of rules and regulations very very similar to what you see in UAE and Dubai right um and very welcoming of talent coming here to really base them themselves here to develop new projects um is a good place for people to meet fundraising take place etc those will be very important crypto hubs for the future and I think mle East and the UAE will be that right if you look at you mentioned it I mean the last time around you came here versus this time around it's so vibrant this community now binance sign aou with Dubai virtual asset regulatory Authority just towards the end of 2021 at that point in time the framework is not even up yet right and we work very closely with Vara to come at the framework we've gotten the license uh in terms of minimal viable product and you see the community I mean today token 249 has like 10,000 registered participants making it more of the largest crypto event globally that just show the dynamism of this and I'm very confident that this place will become very important Global Hub serving not only the mle East North Africa south Asia region but beyond that right and you see hubs coming up in different parts of the world that Embrace that but in the crypto scene you know things develop very quickly it depends on which new jurisdiction embrace it and really how they execute it going forward what jurisdictions Matt do you think you're getting this right I think it's fascinating to to look at the world and how crypto has evolved in the earliest days uh spent all my time in Asia because that's where the first adopters Builders investors building wallets mining companies exchanges uh you name it um San Francisco 10 years ago was a fly over town you would not stop there uh because there was nothing there to actually do you educate people maybe on what crypto is or whatever but all the action was in Asia and then some of the regulatory dynamics that uh changed that Dimension pushed it to to the US now the US is in kind of a uh I would say not clear not friendly uh posture to the industry so what's interesting is geography matter in the evolution of tech and like sometimes it's different uh parts of the world at different junctures of this industry's maturation and like right now um and for for the longest time uh Dubai Abu Dhabi has been very kind of uh forward-leaning and thoughtful uh engaging with the industry and being uh very uh just uh the thought leader that you would want in your home country you know kind of a thing and um and so when you when you take a step back and and take a case study like Japan uh Japan had you know Regulators like oh man you know uh Mount gox blew up it was the biggest advantage AG they could have gotten to have a leg up in this industry so what happened Mount gox one of largest exchanges blew up went bankrupt and Regulators had to say what's Bitcoin uh what do we do with this thing and gave them the advantage to say uh to understand and educate ourselves about this and so they had like um very basic lure rules uh segregated accounts uh uh some reporting and disclosures very simple ways in which to kind of understand and harness this uh industry without stifling it and so that's a great case study to to think about and now Japan is a very Major Market and the space is going to continue to lever off of that so that's fascinating and then you think about like where uh innovators in this space go and and I've been in Tech uh as as Richard for for a long time and it's hard to see historically where somebody would be like I'm going to start a cloud company and like move to Helsinki like that you don't hear that very often but in crypto it's like yeah I'm going to move to Dubai I am heading to Singapore with my family and I'm starting XY and Z that is a very common theme and so the opportunity in this space uh makes it so clear which is pretty cool yeah I mean a lot of my American friends are now here which is unbelievable and I think we're all like I think I could live here like things are really nice here um and as innovators having you know the opportunity to build cool stuff that's really what people you know want to do and do it in a legally compliant you know way with a strong rule of law um I want to turn to a topic um that's a little bit more serious uh you mentioned uh you know we've been talking about some of the geopolitical events uh you know bance is making inroads in uh a number of nations around the world where inflation is getting completely out of control and I think at this point we all are feeling the impacts of inflation the cost of everything is is rising and just day-to-day what it takes to live and survive takes more and you know wages aren't necessarily keeping up and the money printers uh keep Printing and um in digital assets have um a lot to offer for people normal people just impacted by what's happening around the world um bance currently has an employee Tan in Nigeria who is um being held uh in my opinion illegally um and in extremely dangerous situation um is there anything you'd like to say about this well as as all of you appreciate this is a sensitive matter so I can't discuss too much about it but what I can say is we are working very closely with the Nigerian authorities to try to resolve the matter on T I just wanted to stress that t Grand is a professional of the highest order a person of very high integrity and for many of you in this space and Beyond you know that t make his life mission previously with us agency and then subsequently joining us as head our financial crime he make it his life mission to really work with global law enforcement agencies to fight Financial crimes to fight illicit crimes right um so uh our priority is to make sure that we bring him back safely as soon as possible resolving all these issues and we are supporting tan his family in this time of need um through all these challenges through all these challenges and we are you know we praying that he gets back as soon as possible on that front right so I think those are the things I want to leave you T's wife Yuki has start a petition on that front and you mentioned that um so I mean if you're interested please go and have a look at that petition yeah I've shared the petition on uh my Social account so that is one thing the community can do to help bring tan home home and I think it uh it is important that those who are working who've dedicated their career to law enforcement especially those who are now working in the private sector who are dedicated to supporting law enforcement clearly uh aren't the right people to go after uh and it's AB absolutely essential that we bring him home um immediately um as we're on the topic of inflation and geopolitical events uh another uh you know piece of crypto Innovation that's relevant to that is what what's happening in the St in stable coins stable coins are significant um a matter of significance um stable coins today are some of the biggest purchasers of bonds we have you know a huge amount of digital asset transactions are done using stable coins uh to me what's really interesting about stable coins uh at least the ones that are have proliferated because you do have a very wide degre Ree of innovation from algorithmic stable coins to ones that are one to one back to Fiat uh what's kind of interesting with these US dollar one toone back stable coins is the way that they're collateralized so when you take the baking industry and you take deposits obviously these are re hypothecated in the US we've gotten rid of Reserve ratios altoe if there's a massive flight to stable coins where these are onetoone back this can have dramatic implications just for the banking system overall are you guys thinking about that um what are you seeing in terms of the market trends happening in stable coins and how important are stable coins going to be to the larger digital asset markets in the long term M I'm not quite sure you want to take that first or you want me to do it I'd love to hear your answer I'm going to chime in as well stable coins are important cond do it into crypto right so I think for people that have been involved in crypto for the longest time all of you know the functions of stable coins on that front my view is that The Regulators are getting involved quite a lot more so you're going to see a lot more regulations coming into play for stable coins you have seen it uh in Europe now so M with the stable coins regulations coming into effect in July and that gives a lot more clarity on what sort of stable coins can be offered uh in the European Union uh I've seen a lot of chatter I've seen a lot of um different discussion about the same being R out in places like the Us and other jurisdiction right and all those would then prescribe the type of features that stable coin would need to have including some of the things that you mentioned the backing uh where is it properly customized Etc so my view is that you're going to get a lot more regulatory Clarity on the stable coin front and with the aim for for user protection love the answer and I was curious where you were going with this rational Reserve banking or uh fully Reser it seems like it will have a huge impact it's kind of a competitive advantage to be able to do those types of things but it's uh it's interesting the nature of stable coins today and the just the concentration uh in US bonds is uh top 10 holder right in the in the world uh it's pretty significant and so governments are thinking about this uh builders in crypto are thinking about what's the next Generation what's another way to make a more resilient uh stable coin that doesn't depend when a bank or a regulator sneezes and keeps uh a stable coin stable for the right reasons not for the wrong reasons uh and so I think some of those like um dampeners and ex uh uh how how those get balanced uh maybe more algorithmically maybe with different assets I think the the future of stable coins is going to be very interesting how that uh evolves versus just the basic deposit a dollar tokenize it byy a bunch of bonds and you know earn the interest which is a great model uh but I think that's going to evolve over time that's all the time we have uh with with uh Richard and Matt please join me and thanking our speakers thank you you job good job