PT | A maturidade dos mercados cripto: pagamentos, tokenização e escala institucional | MERGE SP

Let's move to our next session that is the the materation of crypto markets payments tokenization and institutional scale. Please welcome to the stage Hina Pedrosu executive director at Abettoken. So you can invite the others and present them. Thank you.

Great. I'd like to invite to the stage Hanos, institutional relationship manager from Karak. Welcome Han. Thanks. I'd like to invite in stage Aden Levine, corporate development and co the fire blocks.

It's a pleasure ad and uh Pedro Bahero Noma the director and Bruno Gross head of digital assets from banku winter. Good morning everyone. It's a pleasure to to be here and thanks for merge for this exceptional uh meeting and event congratulations for all. This is a very special moment in the market. I'm Regina Pedroso, executive director from Ne token, the Brazilian Association of Digital Assets and Tokenization.

We represent more than 80 companies here in Brazil and globally and we very happy to be discussing this this important theme. So I'd like to first what is the actually moment nowadays? What do you think about uh tokenization is uh is already the time or we need to wait a little bit for a mature of the the the the market starting for renown?

Yeah. Um so when it comes to tokenization I think there are many many aspects of tokenization that we have to to address. So right now as everybody knows we have uh started with XT stocks. I think that's the the the foundation of um the equity market the the start of the equity market coming to to um to onchain. Uh but apart from that I think it's it's a broader um subject because we we can talk about uh stable coins we can talk I mean there are so many things that we can address when it comes to tokenization.

I think the maturity of the market um is definitely way more mature than it was um you know two three years ago. Uh we have large players now. We have you know ETFs, Black Rockck ETF, we have you know spot ETFs for everyone. We have Vanguards, we have you know that's digital asset treasury companies all around left and right. um you know just last year alone just Micro Strategy and Black Rockck accounted for over $44 billion of you know net spot buying um Bitcoin and still the price didn't didn't u uh do as well as we expected but still it shows that there is a lot of liquidity in the market and we have definitely reached a point where we see a lot more institutional players uh um you know able to to offer crypto projects in general.

Um here in Brazil, you know, bringing to Brazil, all of the banks are already in the game. You know, the the major retail banks are already doing it. And I think that in I believe that with Clarity Act and other um foundation frameworks uh jurisdiction wise uh and and uh I mean um legal wise in the states, we're probably going to see way more development here in Brazil and other jurisdictions as well. So yeah.

Great. Adam, uh you represent of the most important company around the world and the most important infrastructure. tell me about about the vision of Fireblocks uh in the moment now.

Absolutely and really appreciate the compliment. Uh Fireblocks as technology infrastructure has been working in Brazil and Latin America for a long time and we're really proud of the institutions that we help support from a tech perspective. Uh and why it's so exciting is Fireblocks has long held the view that the future financial services will move on chain. Right? While that started with crypto moving to payments and the tokenization of traditional financial assets, we're all seeing that for a long time.

Uh people are starting to notice that stable coins are becoming bigger and the rate of acceleration is increasing year on year. Still relatively small and often time we get people saying, "Oh, it's not ready yet." But now is the time that institutions should be investing already. Right? Many times we talk to institutions that are still considering if they need that digital asset team or digital asset division.

And I liken that to having the internet division. It sounds insane right now. No one in the audience has an internet division of their company because that's part of how you operate. And that's how we see financial services moving when it comes to blockchain. And in the past, I've said for institutions that haven't already been aligning their strategy to figure out how they're going to be moving on chain, they're going to have to have uh very expensive acquisitions to play catch-up.

Uh now, I feel like I actually am right. If you look at the news just yesterday coming out with Mastercard or earlier this week, Mastercard's massive acquisition, it's just another example of we're seeing that the world's largest financial institutions are sharing the vision that financial services is coming. Uh you could look at financial market infrastructures in the US and other parts of Europe. Uh seeing the activity that's happening here in Sa Paulo, every major institution has that vision. And so it's no longer time to think about it.

It's having that clear strategy about how you're going to be able to support moving financial services on chain. Uh working with companies like us and others and the leadership you see on this panel. Uh it is happening now. It's obviously not going to take over traditional finance in the next year or two. Uh but it's going to become much more meaningful for everyone's business.

And um Pedro Nomad is one of the most innovative companies in the financial sector. how the company adopts crypto and then digital assets uh at the moment. So how we are looking into digital assets in in a most broader way is that we think of as as Adam was mentioning like the the next step like how we are looking for the future of the whole financial infrastructure and we strongly believe that there's a a a pathway that it's it's not reversible. So it's uh so it's very likely that going onchain is the is the path path forward and we are adopting this and we are looking into building this strategy moving our structures our treasury structure first onchain moving using stable coins to move money across the borders. Um then looking into how to service our customers in a in a in a fashion that is onchain native but bearing in mind that these customers have different perspectives and have different ideas of what crypto assets are or digital assets are.

So there's an education aspect to a component for it to teach these people teach customers until it became like full mainstream. So and when elderlys or people that are not cryptonative are using this is then when we we understand that this is becoming mainstream. This is not the case right now but this is the long run. So we're not playing here for for the next 2 3 years. We're we're looking into this and how to build the infrastructure that we want to offer for the next 101 15 years and we have a strong belief that digital assets tokenization everything will move onchain at some level and this will be this will come with a lot of enhancements a lot of benefits when it comes to efficiency operations availability and and the exchange of assets across across not not only across the assets but across jurisdictions across borders across uh all the demands that our customers might have.

So it's it's still very incipient how we're building and how we are using but the long run it's very promising for us

definitely and uh Bruno uh how inter digital bank very popular here in Brazil is getting prepared for the the transformation to offchain to onchain. what's the main the most principles initiatives?

Well, thank you Regina for the the question. It's a pleasure to be here with such guys. Uh uh I think we In is one of of the most innovative bank in Brazil, right? We we are the first digital bank in Brazil also before uh new bank uh and we are always investing in new technology in innovation. Right.

We offer crypto for our clients since 2023. Uh and we are since then trying to understand the future and how we can use the technology behind crypto to improve our our mechanism to improve our system and to improve our uh ourselves for the clients, right? Uh and we are in a very special moment now because we have a strong uh strong solution for a custody for example for for trading for uh mechanism for uh security right but we are we are already trying to understand and to trying to to improve uh those ability for the clients uh ability for everyone and we are always looking for how this technology will improve our customers uh solution uh our customers life right in a in a global in a global world in a global world right every bank today is has a global account right everyone a lot of people is traveling more than than ever right and the uh the glo the blockchain uh is the only financial solution that was born global by design, right? We don't we don't have uh we don't have anything before that before Bitcoin before blockchain that was born globally uh for financial solution. So we think that is a a a kind of lingo frank for every every financial ecosystem in the future and we really believe that that we are in in a clear path for a more more integrated and more interp interparable uh eos financial ecosystem globally right it's a very very interesting month and we are building a lot of things but we already have a lot of uh mechan financial mechanism using as as Hannah told us, right?

The derivatives for example and the uh ATFs for for institutional uh access for for the crypto currency and the and the uh but we are still building a lot of things and I think that the next next years will be very very test for for us for everyone. Inside the association we realize clearly all these uh challenge that we missing. We must facing education infrastructure interopolability standardization of the infrastructure very important. How to use uh custody in the right way to to give safety cyber security. We are facing a lot of challenge during this moment but u one thing is true uh the ma mass adoption will come and all the companies must uh get prepared as soon as possible uh and do the the digital transformation and the onchain offchain onchain transformation very quickly but I like to to talk about now a word that's very trendy uh stable stable coins.

Stable coins is one of the the responsible here in Brazil to to scale the market and provoke the regulation in here in Brazil. the central bank was very pushed by the stable coins numbers and I'd like to to ask uh for Pedro in first time how nomad use stable coins what your perspective for global payments

yeah so we've seen this adoption in Brazil uh for multiple reasons one is is that usually like the financial system in Brazil the way it was built, it was hard for people to it is still hard for people to hold like foreign currency in Brazil. So when stable coin came with the with the simplicity and with the very intuitive way in which you can hold dollar equivalent uh with liquidity with safety with protection, it makes uh a lot of noise and it makes a lot of uh understandable uh use for for our C for for general population and how we perceive this and how we are shifting this because we were born in a fiat world Trafy world and we scaled our business in in this uh let's say old world. Um and how we are looking into this is how can we improve first the institutional aspects of the of the company using stable coins to improve liquidity movement. Using stable coins to improve liquidity demand having the money where we want how we want how much we want and where we want at the time we want. So having this 24/7 availability not being bound by the traditional time commercial hours or working hours for financial systems everybody here I don't know but US system it's it's very broken it's very uh hard to scale so you have multiple payment rails you have multiple structures and when it comes a solution that offers you the ability to trade 24/7 without limitations without being bound by the time time zones without being bound by all of these other aspects and with a significant uh significant reduction of cost to move money especially within the US there's a lot of benefits that we can take so as I said so our first step is moving the institutional money so how we move liquidity etc and the next step moving forward is how can we offer this also to our customers and how they can take the the best advantage on the products that we will build on build build on top of it for for servicing uh Brazilians everywhere.

Excellent. Pedro, you highlight very well the benefits of the technology. Adam, I'd like to to hear about your perspective globally. How Fireblocks are uh providing infrastructure and what's the target now? uh how the how can you link for the audience custod versus stable coin what's the importance uh sure so very different concepts of a stable coin and custo custody right uh custody or custodian is the same as it is in a traditional world you're uh having someone else hold your assets for you um right we've seen now from our clients many of which are digital asset custodians but more importantly uh those companies that are leaning into payments is leveraging the technology uh because of the ability to move assets quicker, often with less risk and in many cases it's cheaper.

But uh increased liquidity as a business outcome, reduction of risk is possible when you think about mitigating settlement risk exposures and credit exposures because you're moving assets on chain and then you think about cost reduction. And so we're seeing massive adoption in some of the more obvious areas, crossber payments where you have so many correspondent banks uh that are that are touching a transaction. um but also seeing uh when whether it's remittances but all now we're seeing uh in B TOC uh payouts to individuals that are leveraging stable coins in many cases like was just mentioned because they want access to US dollar uh but sometimes they're just looking for access to their currency quicker and being able to do that today with stable coins facilitates that and we're seeing that adoption globally uh in folkander we see it from emerging markets quicker than we see from the established markets uh in the US there's a lot of ways to make payments that are pretty efficient to one another. We could argue whether stable coins are better or not. Um but what we definitely see is as you go further from those established markets into emerging markets, those that want access to dollars, those that are moving assets crossboarder, uh some of the world's largest corporates that have the who's who of correspondent banks knocking down their door are coming to Fireblocks because they see that being able to make those global payments on stable coins is actually going to help their business more than the traditional rails of the the cities, the HSBC's, the standard banks that are standard that's located almost every country.

Thanks a lot. Uh Renant, how Kraken is addressing the stable coin uh moment.

Yeah, I mean I think uh it's not only Kraken, the the stable coin, it's important to to address as well what the how important the stable coins all the issuers like you know the the circles and the the the tethers of the world they are the largest holders of US uh government debt right now. um they're super relevant for the world. Uh they as of end of 2024 they were responsible for I don't know the market cap was around 200 billion right now is around over 300 billion. So you know we see a an exponential growth and the usability like Pedro was saying it's not only for the Latin America countries that you know we obviously we have a use case because we have you know difficulty accessing dollar and and foreign currencies in general but in the in the US we also had the Genius Act passed. We're probably going to have Clarity Act passing soon and that will unlock a lot of potential businesses as well.

um personal experience when you try to to do you know an a or a wire is extremely expensive and if it's a a bank holiday that is on a Friday the money if you make a transfer on a on a Thursday it's only going to arrive on a Monday of the ne the other week so it it is extremely important to to address those issues that you know it's a real issue in the world that the stable coin resolves So from from a Kraken perspective, obviously you can have stable coins uh held in our custody. We have qualified custody. I think I have a little issue with the microphone. Um but um we have qualified custody. we have uh custody in general and yeah I think um we we provide a solution for for customers to um bring you know we also have track so it's a credit card especially for the US right now we're probably going to have it um elsewhere around the world as well so you can uh feed your card with USDC and you know make a payment in US when when you when you travel around and I mean that's that's the the real issues of the world that the stable coins are actually resolving.

So that's a that's a major um upside for us.

That's that's why the innovation is so important because really solve some daily problems. I I I used to say and uh let's talk a little bit about tokenization. uh besides uh stable coin we we clear percept inside the association uh increasing move movement and uh uh the the word tokenization is becoming trendy this year Bruno inside the interbank what's the main projects that involve tokenization

uh tokenization is uh as said one of the most trending uh word this this year for the the crypto space and we are looking for a lot of use case a real use case right regarding stable coins is the most successful organization uh use case but you are really looking for another solution for uh another use case for organization one of them is is about uh new kind of innov uh the the X stocks for example when you can uh uh buy and sell uh in stocks 24 by 7 right and the uh other we can bring for for Brazil some other kinds of investment that don't don't that is not accessible for uh Brazilians for like MMFs the black rocks mmf the build uh solution uh bring them bring to Brazilian some kind of uh investment that is only possible using uh a global account today, right? Uh but we are also looking for more complex use case like uh some credit tokenization, some agricultural commodities tokenization, right? uh and some solution some solution to to sell uh and give uh bring uh credit from outside of the country to investment in in Brazil too, right? And we are also looking for some we are talking with some uh Brazilian stable coins Brazilian house back stable coins that can bring in uh bring the the how do I say the yield the Brazilian yield to outside investments too. Right.

So there is a lot of interesting use case that is being tested now in Brazil. We uh we have the beamer network to that that will bring us some uh new new use case for investment mechanism right and uh so there is a lot of things to do in stable tokenization. We are looking for them and they implement some of them in a in a pilot just now and but we want to put some uh to in production at the end of the the year right. Uh so there is a lot of things to do to build

to close this panel I'd like to to ask about the future. What the expectation for the next two years starting from

uh in the next two years we're going to see uh a material amount of tokenized real world assets or traditional assets move on chain. you're going to start to see regulated entities that are aversions of an ATS or broker dealer in the US and both sides of the transaction are going to be digital asset, right? You're going to get the advantages of stablecoin by moving uh purchasing an asset that's tokenized with the stable coin and that's really going to be big unlock. It's going to be small percentage of the market, but that's where we're going to start to see become just a traditional way that banks and asset managers are going to start to transact. I definitely expect that happening next 18 months.

right now.

Yeah, I think uh there's a reason for the the the word tokenization being so trendy and one of the reasons is that so for right now what we see is like precious metals is already tokenized during the war all of the precious metals were heavily traded. Oil price as well is being heavily traded as well. Um and for us the next step is obviously X stocks. uh just as of today, this morning, the SEC has just approved uh NASDAQ tokenizing um uh equities and that we have a partnership with uh with NA NASDAQ for that distribution. And I mean, we're super bullish.

There are so many things as um Bruno said, there are so many other things we can do with tokenization like we can use that as a collateral to offer credit to to the final client. Um I mean it's way more versatile. not only being 24/7, but you it's permissionless. So, you can actually um swap to another um you know account as I was talking to Pedro before you can swap to another equity without having to pay um anything on it, right? So, because you're not actually selling the um the stock.

So I mean there are so many things we can do and I think you know for the next 18 months we're going to be seeing a huge an explanation growth and tokenization. That's the reason that's the reason why we're seeing all of the banks and and you know talking about tokenization. Totally agree, Pedro.

I think it's going to be a massive adoption in terms of the the incumbents when you look into uh the digital players, they have already been adopting this these technologies and web 3 players have already born were already born in this way. But when you see like the real massification, it's when incumbents start playing this game and you will see like the the larger banks in in not only in Brazil, Latin America or the world uh adopting this this sort of technology and this is when things are are becoming more mainstream as black as some people said here like Black Rockck, Vanguard and the other uh like like behemoths of the world are using these technologies. is when things are uh becomes real. So the next 24 months it's uh massive adoption of all of these technologies not only stable coins but equities uh securities uh money market funds everything

Bruno

for the the next two two years uh we are waiting for more regulatory clarity right I think it's important to do more clarity in a lot of topics and the more integration between different regulations I think it's important for that that point that Pedro mentioned about the more uh big players being inside this this market and there a lot of innovation too. I think we have a lot of things to to innovate yet. Well, for the association uh we have uh some highlights the clarification of regulation. We we hope that central bank and uh CVM working hard to to give safety and safer adoption and uh start with the regulation of the market. The second we bet strongly in we award assets and for third the infrastructure very important to working in infrastructure for mass adoption.

We must uh find a way to work uh globally and uh uh find a way to improve the interop interoperability and uh standardization is something that we must hard work inside the association from the next months. So, I'd like to thank a lot. Uh, it's a pleasure to be here and enjoy Brazil and Roy S. Paulo and thanks Merge for this amazing event. Thanks and have a good morning.

Thank you.