Tokenized Funds and The Custody Question: Who Actually Holds The Asset? | EBC12

Good morning everyone. It's very nice to be here , in Barcelona, ​​and to see everyone here. My name is Maria Ineva Olmes and I manage the business development department at Trever. At Trever, we've built an infrastructure layer for banks and brokers that do, uh, trading, uh, treasury, reconciliation, and accounting, uh, for digital assets. So, we support banks in managing these processes with digital assets.

And digital assets. And , uh, every day I talk to regulated financial institutions specifically about their operating structure, their custody structure custody structure . And it's great for me to have these four panelists today. And each of them has its own structure, and we're going to learn about it. And during this panel, you'll learn how their structure is built and why it's built the way it is.

And also, what is the connection between building your ideal structure and your end customer. And it's not just about choosing the right suppliers, but also about your own business your own business model and your end customer. So, here's what you can expect from us today. Now I'd like to give the floor to the panelists, and, um, I'd like to ask everyone to briefly introduce themselves and in 90 seconds tell us, if a client tokenizes a fund with you, tell us who ultimately legally owns the asset, what your specific role is in that chain, and do you have a real-life example that you can give? Thank you can give?

Thank you . So maybe let 's start with David. Yes. So, um, my name is David Calve. I am a digital asset specialist at Security Services and at BNP Paribas in Madrid.

So, uh, Security Services at BNP Paribas is the largest custodian in Europe, fifth in the world. So, um, we have to provide services to our institutional clients wherever they want to invest. Uh want to invest. Uh , and that includes now tokenized instruments, and of course tokenized funds, that's, um, the topic of this panel. Uh, regarding tokenized funds , hmm, we are developing opportunities in Luxembourg and in France.

And this includes the services of a transfer agent. I don't know if this...Does it sound normal? Yes, we hear. And this includes funds transfer agent services , depository services that include safekeeping, as well as fund management services.

We are currently working on developing solutions for money market funds in Ethereum. But we are open to expanding opportunities depending on customer needs and market developments. On the other hand, over the past years and months we have been working on various life experiments with Allfunds Blockchain in Spain and Luxembourg. And also with UCITS and specific money market funds. So on one hand, it's a private public network, on the other hand, it's a private network.

So it shows flexibility, and I think it's important for players like us to be flexible in the state flexible in the state we're in right now. Thank you, David. Good morning everyone. So I want to introduce myself as the most unpronounceable name of the entire Cedric group that I'm representing today. So, like David, I am also a representative of the traditional financial industry.

We financial industry. We are still a custodian, but to be more precise, we provide many services with assets. We provide many services, primarily to institutional clients. We were among the first to see that blockchain technology could meet the new needs of our client base, as well as take into account the significant transformations significant transformations currently taking place in the financial infrastructure. In addition to the depository business, which is our core business, we also help our clients distribute their funds, and we have started to leverage our ability to tokenize and distribute funds in tokenized format on the blockchain.

But we haven't created a model that is separate, completely separate from the rest. We take rest. We take any fund that exists today, that has been distributed over the centuries. We also add the ability to distribute it on the blockchain, and this is very efficient in the sense that it reduces the effort for our customers related to testing and experimentation. Today, when you talk about blockchain, I like to talk a lot about experimentation because the institutional world is starting to talk about how they need to be ready to adapt to these new changes in infrastructure, and that's what's happening right now.

So, we also started with the whole market being largely focused on money market funds. The reason is clear. There was an early expectation that with tokenized fund shares, they could be a secondary use of these tokens to use money market funds as collateral for some transactions, and again, the market is restructuring. Also within repo operations, the use of tokenized money market funds can be very effective, and this is currently being tested. So, it's not a revolution per se, it's the first steps towards a big transformation, but I think something smart that we've done is that we've given our customers the opportunity to say that we can offer the best of both worlds.

We can still support fund allocation in traditional infrastructures, while also giving them the opportunity to test how their investment base will react to this new offering of receiving and purchasing fund shares on the blockchain in different models. Various models are completed very quickly. We enable investors who come in and want to invest in tokenized fund shares tokenized fund shares to say, "I can, I want to use my own wallet," and in that case, we verify the wallet and tokenize the fund units in their wallet. They have private keys. Or we can provide wallets to our customers in a fairly structured way.

So I'll stop with this introduction, otherwise it would be much longer and leave it to my panelists. Thank you very much for this introduction. And Philip? Yes, good morning. My name is Philip Wagner.

I am the head of digital assets at DVP Bank. We are a traditional bank that provides other banks in Germany with, uh banks in Germany with, uh , security services. And within 4 years, uh, I was able to create a platform with the team for, uh, Mika tools as well. So Mika tools as well. So , we have a vice , we have a vice president from the platform who serves the, uh, product for, uh, crypto trading.

Eh, it's more of a new world it's more of a new world . And, uh, at the moment, uh, we're seeing a shift to traditional instruments as well. And I think what's really, uh, important is our vision of what we're going to be in a hybrid world. So, we still have traditional tools on traditional rails. There are many more.

But there are more and more, uh, tokenized and digital securities emerging. Uh, from our perspective, we're really, uh , mainly focused on the German market. So, the law is somewhat special. We have a law on crypto security. And here, um, we're doing proof of concept testing concept testing to, um, enable tokenization of securities.

And, um, yes, we're here to manage the securities accounts , manage the custody, um, and bring that process to life so that all of our customers have a good experience. Thank you, Arthur. Very. Does this work? Yes.

Yes, yes. Perfectly. Well, yes . Arthur Stadler, I'm the CEO of The Vault, and we're a digital asset infrastructure company. And for the last few years, we've been mostly dealing with cold storage and on-premise storage solutions.

Um, but now we see the market moving more towards blockchain, so we're very interested in covering more aspects of that and working with private companies, whereas historically it's been more central banks and sovereign wealth funds. And, um, yes, I really like Lawrence's idea about experiments. I think we're doing a lot of that right now. We are working to become a regulated company in Europe, and we are regulated in Switzerland. And now we are working with MiFID-licensed companies to provide a platform and regulated infrastructure for tokenized securities in general.

So we will go beyond funds. I mean funds. I mean , funds are the first thing you do, but we're really looking at the next 2-3 years and really providing the ability to tokenize to tokenize any type of securities that exist. And from our side, yes, we are responsible for everything related to digital assets, because the traditional market will still store and hold the traditional instruments that are collateral and used for these securities, and we will tokenize the securities. So, yes, we cover everything related to digital assets.

Thank you. So, we've heard Thank you. So, we've heard what each of our panelists does, and I think it's really interesting to see how different storage can look . So now let's focus on tokenized fund storage , and I'd like to start by asking David to walk us through what that looks like from your side step by step. So, at BNP Paribas, we are developing digital asset capabilities in- house.

We developed a platform called Asset Foundry for funds, which was originally designed for digital bonds, and now we have adapted it to other instruments and specialize in funds. It is based on Ethereum and interacts with public and private blockchains. This is not the only tokenization platform that BNP has. We have another one. It's called Neo Bonds.

It is intended for digital bonds, the original name. And it is placed in the global market teams. It manages the entire bond issuance and life cycle . And in this case, it is built on Canton technology, so it is located in the private network of BNP Paribas. So, Asset Foundry for funds manages the entire life cycle of a fund, including legal aspects, compliance aspects, and all business functions or capabilities.

But this is not enough. So we developed an intermediate layer that we call Dawn, Digital Asset Wallet and Networks. And that's really key for us because it's the layer us because it's the layer that interacts with the blockchain, private or public blockchain public blockchain , and interacts with all of our underlying infrastructure. So, ultimately, Don is integrating blockchain into our core infrastructure and making our lives easier. It's not just about connectivity, it's also about storage, as it holds the wallet of our investors, our customers, and it also has built-in or connected compliance tools for AML, KYC, travel regulations solutions .

So we see that having that layer helps us also provide our clients with a standardized service, similar to what Laurent talked about earlier about bringing together traditional and tokenized assets, because ultimately we can do a single reporting, a single way of withdrawal. And we also see the role of the custodian changing from holding an asset to holding public or private keys. And we must change this with us. And we see that in the blockchain world, investors or customers can independently decide to store keys in a wallet. They can store funds at BNP, but they can also store funds with a third-party provider.

So we're creating a flexible storage model that can fit fit any of three different possibilities. So we adapt to the client. And also, on the funds transfer agency side, we see an evolution from managing the fund registry in a traditional federated ecosystem to managing the fund issuance and fund registry in multiple ecosystems that are managed, controlled, or connected to public and/or private blockchains private blockchains . So, this is the path we are taking. Thank you for this very detailed description, and I think, Laurent, you have some similarities, but also differences.

Can you explain to us what is similar and what is different about your system ? Of course. Speaking of the custody business, we have expanded our capabilities, as I mentioned in my introduction, to allow our clients to hold traditional financial instruments in the same portfolio when they have a banking relationship with us, as well as cryptoassets and tokenized financial instruments. It is very easy for the client to activate this service. Ultimately, the difference is that in the traditional financial industry, we hold assets somewhere in a CSD, in an ICSD, using a sub-custodian in the market, and we reflect those positions in the securities account at the bank and in the client's portfolio.

Ultimately, within the blockchain, the logic is the same. No sub-custodian, no CSD. We take our own wallets to the blockchain, and when we receive assets, we record that receipt and those assets and reflect that in the custody account. So, to summarize, for any securities account with us, the client has the opportunity to activate one wallet per blockchain and per securities account . So, this is a simple exercise, no hesitation.

As for distribution, that's a completely different matter because we don't have a default custody relationship with the investor. This can happen if the investor is also a client, but this is only an exception. So, again , it's an exclusive relationship by default when it comes to the allocation of funds between the investor and the asset manager, as well as the fund. When an investor first signs up, we ask them to state: “I want to use my wallet” or “I want the wallet” or “I want the wallet to be made available to me.” And then that changes the answer to the question: "Who owns the assets?"

Because every time they want us to tokenize and issue a token on their wallet, they get the private keys. So they are the owner of the position. It's more structured than when they ask us to provide a wallet . They do n't have any wallets. So it's a little more complicated.

This is a wallet that we provide at the request of the asset manager to the investor. They have restrictions on this. They have restrictions in that we don't allow them to store anything other than the fund units that we issue, that we tokenize, and the stablecoins that we may also issue in their wallet. They cannot store Bitcoins in the wallet they provide . And it's also very structured because it's self- custody at the investor level with delegation of custody of the fund's private keys through our intermediary.

So it's not just a vanilla answer, it's more structured, but it's very effective, and it's due to the constraints of the fund distribution business. And at the time , as it was initiated in the case of Ethereum, that was the first goal, and pretty quickly we got to a situation where investors asked us to tokenize the fund's shares on other blockchains, as well as on private blockchains private blockchains . So we moved away from my initial strategy where we started deploying our smart contracts to be able to tokenize the fund shares as well as on private blockchains private blockchains . Perfectly. Thank you for this very detailed explanation.

Now, Philip, tell us Philip, tell us how it works from your side, the whole storage process. Yes. So, I think to understand how we approach this, there are two main questions at the beginning. The first question is: who has, um, a relationship with the end customer. Uh end customer.

Uh , if you look at the retail business that we serve. And the second question is, how are risks managed? So, if you look at the Mika regime for crypto assets, by default the end client must have a contract with a custodian. So in this case, we started with a partnership model, so you have a third party that is a custodian. But we will change that, and we have a Mika license, now that we are the custodian.

However, there are questions about However, there are questions about how to technically do this with storage, and how we use substorage. So the benefits that you can have are also several, you can have a very flexible model here in storage. So, this is our approach. If we look at the MiFID regime more or less from the perspective of, yes, tokenized shares or, yes, cryptocurrency securities that are regulated by MiFID, then the legislation in Germany is actually different there. So here, um, in the traditional market, it's the custodian, the CSD, as mentioned, and we do mostly accounting and account management, um, and that changes a bit in the DLT world because we will also be able to be the custodian here from a legal perspective.

Um, still from a technical perspective, you can hire another partner to build the technical infrastructure here. Yes. Yes, yes, but our main questions when we talk to our our bank clients, and we serve about 1,000 banks in Germany 1,000 banks in Germany , are always what contracts do we need and how is the risk managed? And I think that, um, we are experts in DORA and all that because we also work in digital markets. We have many partners, a large, um, network regarding, um, exchanges or, um, storage.

And I think we can do that very well in the digital world as well. Perfectly. And now, Artem, I think you have a completely different scheme here completely different scheme here . Um, yes, tell us about yours, please. I think it would be fair to say that I don't have one .

I have a lot of different schemes that we use with clients, so it's different because, um, well, the guys with me on the panel, they have to make decisions about how they want to work, what kinds of risk leverage they want to use, and how much they want to take on and how much to delegate. For us, it's really us acting as a distribution and infrastructure layer, and we work in two ways. So, ways. So, first, it's the technological aspect technological aspect , like the storage technology itself and the end type of customers that we're talking to, whether it's not an end customer or the company, the institutional company that's managing the storage, has to make a decision about what level of control and, um, you know, what ownership stake they get over those assets. Are they fully embracing this both from a technology and licensing perspective?

Do they outsource licensing ? Do they also outsource technology? So, all these aspects are very important at the design stage. And yes, we support both. So sometimes we deal with the technological part, sometimes with the part, sometimes with the regulatory part.

And here the question arises, what happens to tokenized tokenized funds and tokenized securities. And it's really important for us to maintain all of these assets. And when we talk about the regulatory regime, if we ultimately get those who keep them, that means we just need to have all the necessary regulation. And yes, we are not afraid of ownership and control, but really for us it depends on what the end customers choose. And also an important aspect is the non- custodial models or built-in wallets, or as Lauren said, so that you give retail customers and end customers full ownership of their own wallets.

This is also another aspect where you have to completely delegate, right? So you're the one right? So you're the one providing these tokenized shares, but you don't do anything other than that after that, right? If I may, I forgot to mention one more thing, which is that when you transfer ownership to a client, because they receive private keys, as long as you use your smart contract to tokenize the fund shares most of the time , in our case you retain some level of control to block any transfers to a party that would not be known to the fund. Even if it is a tokenized environment, you may still be required to follow the rules to follow the rules set forth in the prospectus.

And you need to make sure need to make sure that when you are a transfer agent or a service provider used by a transfer agent, you can control that the fund that is shared by the fund, even in tokenized format, goes through the blockchain, but only into the hands of those who have been approved and identified by the fund. So, this is an unforeseen factor that matters for funds when compared to other asset types. You continue to be responsible for having the other side of your distribution structure. Yes. Now a question for Laurent and David.

Can you give us an example of a fund that you have tokenized? And can you tell us where your work as a custodian ends and where it begins as a bridge between traditional finance and the digital asset ecosystem? Maybe, David. So, if I may, I'll give you two quick examples. Yes, please.

The more, um, real-world examples, the better, I think. Yes. So, we are in Spain. So, one case is, um, a tokenized fund, um, in Spain by one asset manager, which is a local asset manager, a client of ours. Hmm, where we act as the fund administrator and, um, the depository bank.

Hmm, this is a UCITS fund, hmm, tokenized in the, hmm, hmm, Allfunds blockchain infrastructure. He, um, still works. Hmm, and it's in, um, the Spanish regulatory sandbox, the CNMV sandbox. Hmm, in this case, hmm, it's not just about ensuring efficiency through blockchain in fund management. It's also, uh, to provide, uh, a user experience for the end investor, because they have, uh, two ways to access the fund's investments.

So, the first one is traditional subscription and redemption, but managed by blockchain. But regulators have their time regulators have their time , as do traditional deadlines. Another way is that the Allfunds blockchain has a module where the end investor can buy and sell shares of the fund directly, 24/7. So, uh, that means that depending on the, uh, strategy, they can use, uh, one or the other way of investing in the fund. Uh, and in this case we act as the fund administrator, uh, and we act as the fund's depository bank.

Uh, the second example is in, uh, Luxembourg. Uh in, uh, Luxembourg. Uh , our BNP Paribas Asset Management , our BNP Paribas Asset Management , our asset management division, recently tokenized a fund, a money market fund, in Ethereum. Uh, it was my own fund. This means that it is issued and registered directly on the blockchain.

It's not mirrored, but, uh, issued and registered directly on the blockchain. Um, and, um, we also tested a cross-border, um, transaction between France and Luxembourg. Um, so in this case we act as a transfer agent. So different roles. Um, and, um, we see that, um, the traditional and tokenized worlds will coexist, um, for a long time to come.

Um, and that's why organizations like us, um , need to position ourselves as facilitators, as connectors, um, for our clients, for asset managers, for investors, and, um, removing that, um, complexity, or absorbing that complexity, um, managing all the routine connections to different networks, um, um, private, public, etc. Um, so, um, I think that, um, the role of connectors as simplifiers, um, is really key for us. Thank you. Very good. Um, with these two examples.

Um, Laurent, can you give us an example? Yes, I will, but first, um, I would just like to remind you that, um, blockchain was created with the initial philosophy that it would replace banks. And today we are two banks on the panel, so it's a testament to the fact that we can ultimately have a different perspective than the one that Satoshi Nakamoto had in the beginning, at the origins. And we believe, and I firmly believe, that the future of blockchain lies in the ability to transform the financial industry and implement it using blockchain technology, as well as in creating a healthy ecosystem. And not everyone shares this point of view.

We are strong advocates of the financially regulated use of blockchain finance, which is why we have such a different position when we talk about institutional clients and retail clients. Retail customers can easily choose easily choose any available solution and will be largely guided by the value offered. And for retail investors, there was a lot of incentive to choose cheap solutions, efficient solutions that could provide easy access to exotic products, and this is the beginning of the success of the introduction and development of tokenized access to financial instruments and cryptocurrency platforms that were created in Europe and around the world. As for us, our clients are institutional. Of course, they supply, distribute their product to retailers, but they are more looking for some security around the services that we provide, and security is we provide, and security is not just about cybersecurity, it's also about compliance and avoiding any scandals that could change their reputation.

So, this is a different paradigm, and it's important to remind ourselves of that. In terms of experience, of course, we have tokenized, as I said in my introduction, mainly a few money market funds. We also have asset managers who are currently tokenizing more traditional equity funds that only work with long positions, but I would like to talk about some future developments that we are working on now. This is n't launched yet, but we want to give a clear answer to a question that was asked to us and perhaps to you very quickly. It's great that you're tokenizing funds, okay, nice demonstration, but what's the value in that?

What, what, what, what is the benefit to the tokenization fund? And then we demonstrated that through the use of blockchain technology, wallets, stablecoins, we now have the ability to service funds that don't yet exist. This means that a traditional fund is structured in such a way that you receive orders throughout the day up to a certain threshold, whatever threshold we're talking about. There may be more, two or three per day for money market funds, but there is usually one limit per day. Then there is the calculation of the net asset value (NAV), execution and settlement date with the exchange between fund units and cash between T plus zero and T plus two.

We have demonstrated that we now have the ability to service funds where every investor order will generate an instant NAV calculation and instant order execution order execution . This means that the money market fund we are currently working on will have the ability to open subscription and redemption windows at any time of the day or night, weekday, weeknight, and weekend. Profit. So, this is a huge advantage. And if you can demonstrate the value of how we can bring about real transformation, because everyone is talking about revolution.

Everyone is changing the world, and this is where you demonstrate that you are changing the paradigm of the industry. You are modernizing the way you work. You provide value to your asset managers and your underlying investors. And this is the real answer to the question of why we do this. We're not there yet.

We are moving towards this goal. But this is definitely a demonstration that there is a very strong interest in tokenizing fund shares. And again fund shares. And again , the model we chose is a way in which we can serve funds in a traditional way and with new distribution channels that we have built into blockchains. I put S because again S because again , it was in many blockchains.

And this is proof that blockchain has a truly transformative power in the industry. Perfectly. Thank you for that. Philip, you also serve Sparkasse in Germany or I think that is the correct translation. And today their life is with cryptocurrency, which is micro-regulated.

Can you tell us who actually holds the client's assets in the end? And also, I know you are also exploring tokenization of securities. So, can you tell us you tell us if there is another model with tokenized securities? Yes, so we will soon look at Sparkassen with savings banks. And in this model, we are the custodian.

As I said, we have a MiCA license. And on the server side, we have a substorage system. But we can always model it differently, and we can also, if we want can also, if we want , buy the technology and do the storage ourselves. The question always lies in the risk model and investment. Yes, how much do you invest to reduce the risk a little.

As I said, with DORA and with regulation, there are also a lot of rules around sub-storage. This is also clearly regulated in MiCA . So, in our opinion, this is quite a good option. Emm. So, I think what I said here is that it's important that our customers don't want to have too many parties in the chain, and as far as the end customers are concerned, they want to have a partner, um, or yeah, um, that they know well.

So, if we're doing storage, um, that's a better option. Um, in traditional markets, as I said markets, as I said , it's mostly a sub-custody model, but now it's changing to where we are the custodian. Um, I think what was said earlier is really important. Um, the question is , um, what are the benefits of all this? So I think, um, we need faster money transactions to make payments faster, and I think Pontus and Apia will play a big role here.

We see in traditional, um, institutional markets institutional markets that this is likely to be more with this solution more with this solution , not so with stablecoins in Europe. Um, but I think there are quite a few different strategies on the market. Um, but we focus on this connection with Pontus, and later with Appia. I think this will really create benefits in terms of settlement time, as well as flexibility, for example, for provisioning. And then provisioning.

And then , I think the last point is quite interesting, that now these internal platforms are also emerging, for example from Clearstream. They are creating D7 DLT, which is an internal blockchain platform. And it's, um, the question is whether it can offer the same benefits as if you were doing it really on- chain with new partners, but that's their strategy. And from our perspective, it's important for us to say, can we provide the best service to our customers? And we need to assess through what partnership setup or what platform this is possible.

But I think DTCC is doing it in the US with this hybrid model to say you can do it the traditional way or directly in a digital way. Clearstream will do the same with very, um, yes, great compatibility between the two worlds. And so I think it's going to be very interesting in the next, yeah, one or next, yeah, one or two years to see how this infrastructure develops. Thank you. Um, Artem, you already explained that you have different business models for your end customers.

You offer storage as software as a service, but you also offer your customers self-deployment. Um, can you explain to us when a customer chooses software as a service and when they choose self- deployment? Yes, thank you. Um, so I think everyone here would agree that the technology issue is now resolved for what we need to do. So, I think it's more about the operational setup, which is very different from one company to another, and that's something that we see a lot of, and a lot of the mistakes that have been made before in the industry, is this lack of proper design, design architecture, design implementation, and operational setup.

So when you ask about what customers chose? I always like to use this trilemma question: you have, um, an accessibility question, a security question, and a product question. And, uh, typically, you know, lighter solutions, more integrated solutions offer more, um offer more, um , connectivity to, uh, liquidity, exchanges, market makers, etc. So, uh, even with DeFi, right? Uh, but they carry more risk because you're more exposed to the blockchain, and, uh, you can't 100% control, uh, every asset movement and wallet transfer.

So the security issue arises, you know, how much you move everything internally all the way to the cold wallet and to the cold storage. Uh, but that kind of kills a lot of that flexibility that we need for a lot of the different tools that we're trying to manage here. So, uh, yeah manage here. So, uh, yeah . And the last question, for example, is accessibility.

You know, if you create everything yourself, it's quite expensive. And, uh, this is a question for you: are you going to go to a vendor who has already done this, or are you really going to hire internal specialists and build a team? And you may not even be sure of the outcome, but you will do it anyway because you want to keep it internal. So, as I said, unfortunately, on this panel, I can't, I can't give, you know I can't give, you know , one right answer. I don't think there really is one because each, uh, each company chooses for itself, and, uh, what I've seen is obviously in the fintech industry, which is actually well known for its quite rich fintech rich fintech industry and many, uh, different solutions for retail customers.

Uh, they really like cloud solutions that run fast and better. But if you go to, uh, the banking industry, and especially when it comes to central banks, uh, outside of Europe, they mostly prefer a local setup, and regulation in some countries is also moving in that direction. So they require having, uh, key management and key storage either within the country or now on company premises. So that's pretty important So that's pretty important , and the fact that regulation also pushes us towards the design choices, uh towards the design choices, uh , that we have to make. Okay, that's very interesting.

Thank you for summarizing a bit what the client pays attention to. Uh, now I have a question for all of you guys, and maybe Artem, you'll start, because you've already started answering this question. Uh, what type of setup is best for what type of client, or do we have the best type of setup for a specific client? You want me to start, right, of course, because you've already started talking about it , so we can continue. Perfectly.

Uh, well, listen, as I explained, you know, uh, I think it's really, really, uh, a lot about regulation right now. And, uh, I think I'll even jump ahead and we have some predictions. I think custody will become increasingly regulated and it will be separated from other digital asset activities because digital assets are very different from a traditional market where you essentially give each individual the ability to, let's say each individual the ability to, let's say , license their organization or any organization or any other regulated organization to be the ultimate custodian of cryptocurrency, right? And, uh, there's not enough operational resilience or operational demand to actually protect the assets because there are so many different ways to store them. Therefore, I think this issue will increasingly be outsourced to large institutions in different regions.

And I think smaller players will simply use other solutions. And I think SaaS, the cloud approach, the cloud approach, is going to face significant challenges over the next few years because we've recently seen the popularity it can create in the marketplace. So I think there's an internal key publishing or at least key publishing or at least somewhere local, that's what I see. Yes. Good.

Thank you. Philip, do you want to answer the question? Yes, I can, I think I can continue. I think it's two-dimensional. One dimension is the value of the asset.

So we believe that retail customers will not store their digital securities or other things in their own wallet because it is too risky. If you lose your keys, you lose everything. So they will be perfectly happy that banks will still exist, where they can go and say, "Okay, this is a service for me, and I don't have to worry about losing it." Another very important point is point is that if someone dies and has an account in the banking system, there will be clear rules on how to transfer it to their children, spouse, or someone else. Yes, I think it's for retail customers, we don't see self- storage as the future.

I think for market participants, as well as for institutional players, it's more interesting because you can have other use cases, you can use, for example, faster transactions, also globally, also with, m globally, also with, m , cross-border, m, settlements. So I think it's useful to have maybe your own wallets and your own infrastructure, and very quickly sync that with your systems and accounting systems and so on. This can also help from a compliance perspective. I think there are some technical advantages to DLT. really in place, and it could be a big, uh, yeah, uh , momentum for saving money, yeah, for the, uh, financial industry.

If you have less, uh, effort to reconcile, uh, so I think, uh, yeah, uh, uh... to our legacy. This is related. This is the difference. We have a workflow orchestrator that acts as a middleware , and that will allow us to change the solution tomorrow if you want, or if you want to add a new one.

We can work with two different types of solutions, and we have complete flexibility and control over how we work. Perfectly. David. So, hmm, I think this state is not the right model. We are in a very early stage or early stage, um, market with a very fragmented public, private, um, infrastructure in consortia, um, independent platforms.

So, hmm, our priorities sometimes change over the weeks. So, um, I think weeks. So, um, I think flexibility is key. We need to be close to our customers. We need to be close to regulators.

We need to be there for our colleagues to develop. Uh, and flexibility is key, and flexible models are key at this stage . We'll see what happens in the future, but at this point I don't think there's really a right model for this. I think it's very encouraging...to hear that we can't do it wrong.

And, uh, and the right decision for someone who thinks you might be doing it wrong. We're just not all in the room doing it wrong. Okay, but I think it's good to know that if you're a financial institution here, you can, you should develop your own structure, and, uh your own structure, and, uh , we've heard, I think, great advice from our members about how they do it and how each model works. So thank you all for your input. So if you have any questions for the participants, I think this is a very valuable face-to-face discussion.

And if you have any questions about trade orchestration, custody, reconciliation, and accounting in financial services institutions, you can also come talk to me. And thank you all for being here, and yes, listening to our panel discussion. Thank you.