Exclusive Interview with BITGO Co-Founder and CEO Mike Belshe | KBW2023

[Music] well I would argue that Banks everywhere are pretty conservative um you know whether you're talking about the US you're talking about Europe uh talking about here in Korea tend to see a much slower adoption of cryptocurrency and the reality is is that all of these companies have a fiduciary responsibility to their clients to keep their assets and their Investments safe and you can't take on a new technology uh without a tremendous amount of diligence so look we're honored and flattered that we're able to work with an institution like Hana Bank you know and they are ready to to start figuring this out it's a it's an iterative process right and you know they need some expertise that we have we need some expertise that they have and the goal here is to make it so that everyone can have safer access to digital assets and that we can take digital assets into markets that without hitting traditional Finance s simply wouldn't be possible [Music] well part of that is to be determined right so um look we're taking a multifaceted approach as bito to how we how we address the global footprint of digital assets we got started as a technology firm and uh we were excited about the non-custodial component the self- custody component that's where we started we have we held one key and our clients would hold two keys and that that was a model where it was not not custody but as we grew and institutions needed more help uh they wanted a fiduciary so we became a fiduciary and now we have four trust companies you know around around the world everything is about continuing to raise the bar as as the values that we secure grow from $10 million wallets back in 2013 to100 million wallets in 2015 to billion wallets in 2017 um you need to keep raising raising raising the bar so how exactly it's going to unfold here in Korea well we've got work to do you know make sure that Regulators are comfortable with the product that we're building building a great product and service that fits the needs of local businesses here and then of course trying to interface that to what's happening around the globe as well institutional investors is is all we focus on um so you know early on you know as a security company pioneering multi signature we quickly gravitated towards businesses and the businesses then needed levels of control that we didn't have in the early days the early days was about you know multiple keys on chain but we had to add multiple user support give people different roles you know it looks a lot like a bank account you go to a bank as a business and you sign up for an Institutional account and they will have a set of controls around who's the account owner who can initiate transaction who sets policies who who approves transactions so we had to build all of that that's what we've been doing for years and then of course we've been growing the scale so this is our area of focus one of the things that we've seen as new use cases emerge in crypto is that everybody starts to run into questions about money that is once you've created digital property and that digital property can exist on the internet when you move it you are now moving monetary value so companies that traditionally like Nike were thinking hey can we make nfts to help build brand loyalty by way of having digital property have created something of value and now when they transmit it they're wondering like wait a minute does this intersect with banking law and payment law Etc so bito has been through this the reason Nike likes us is a the technology that we have affords them to be able to interface with nfts in a bunch of creative ways but second they know that bito has taken the steps that are necessary in order to interface with financial products and monetary systems and so we so we have that in place so this is is hard look I think the number one thing you got to do is have a dialogue with The Regulators what's definitely happened in the last 18 months Amplified in the last 12 post FTX every regulator on the planet in every country is figuring out how to deal with digital assets and cryptocurrencies and so they're all changing the good news they're mostly changing in the same types of ways but they each go about it slightly differently um to some degree it's almost an impossible job we now have to think very carefully when we bring on a new client in a new jurisdiction what does that mean to us a few years ago we were able to be a little bit less concerned about that but now we have to look at it deeply and then look um we try to interface with The Regulators make sure that they know exactly who we are and what we do um and you know our goal here in Korea of course is to start meeting the needs of the Korean Regulators that's an easy one we talked about that quite a lot so look bit goes behind the scenes we do about 20% of all Bitcoin transactions by value you know when you look at the other chains which ethereum or salana um and others we have significant volume on all of those um and I think this just goes to show look we have a lot of institutional clients and they use us behind the scenes so a lot of things touch a big a w everyone should have concerns in the digital asset space right like this thing is growing and it's growing the way software does it can grow virally where you know very quickly it can grow by a factor of 10 and we've seen that in our space already so of course people should be concerned about that Additionally the whole point of what we're trying to do here is to decentralize we're trying to make it so that we don't have to have complete dependence on just a small number of Institutions now on one hand bco has a business um and of course we are looking to sign up clients and we want clients to come to bco and we want to do business but on at the same time the way this industry evolves is to make sure that there's decentralization where there's a a plethora of participants whether you're talking about custodians or Banks or Clearing Houses or prime Brokers or whatever so um look this is something that we're we're concerned about I talked in my talk today about the importance of interoperability HTTP and protocols right we're going to get to a point quickly where the digital asset ecosystem has to figure out how we all interoperate the blockchain's part of it that's a huge interop right there but there's more to be done kind of at the higher levels and once we figure that out we'll be able to maintain both decentralization and yet also have you know more centralized type parties like us they required when you know fiduciary or business is interacting with digital [Music] assets well as I said in my talk earlier you know we're thinking about Global Financial system so I've used this analogy before we have a global economy um the US of course does trade imports and exports with China with Korea with India um labors you know a lot of tech labor is out to India in Mexico a lot of things are produced every country has this pattern but when it comes to just being able to interoperate the basics of money every country has kind of got its own localized regime and everybody's separate and so we have Bridges between the different countries of how money flows digital assets are going to break down these borders so all of a sudden instead of everybody being able to regulate just locally we're also going to have to consider how to regulate globally and this is something that The Regulators haven't really had to think about until now all of a sudden software blows the doors open where money can be stored in ways that never could be stored before and so these questions are emerging right now