The Path Forward for Institutions Building on Blockchain

Hey everybody. Thank you Robbie. So we're going to start the panel. Feel free to sit down. I'll introduce the the panelist who are you're here to listen to, not me.

Um I'll go in order. Thomas from BidGo. Great. Please join me on stage. Thank you.

We have Suzanne from Goldman Sachs. Yeah, I'll go there. Soul from Metrica, chief product officer and Miles from Taxbit Bit. Thank you very much. Thanks you guys for being here.

Exciting. So, as you guys can see, the theme of the panel is u the path forward for institution building on blockchain. I think um I'm going to quickly introduce uh I'm not going to introduce Blog Demon. Constantine did that way better than I could have done. So by now you should know who we are.

A note provider and a lot of other things. Uh in terms of the panel, two kind of I think two facts that I wanted to mention before I pass it over to the to the panelist. One is that there's an interesting kind of trend right now which is that a lot of talks are around crypto winter and how um the market is is difficult which is a reality and it it is something true but at the same time taking a more long-term view what we observe through various data is an increase adoptions particularly institutional adoptions of blockchain and can we can we cut the music if that's possible? [Music] And so that's been driven by a lot of things including all the institutions that are here. And what we are here to discuss is the rational behind it.

Why institutions are building, what are they building, how are they building and I think that will make for a pretty interesting um direction. The second thing I wanted to mention is obviously institutions is a pretty broad and general concept. It means a lot of different things from really web3 native to more traditional enterprises and that comes with different requirements and different path to building on blockchains and so this diversity is an interesting piece to keep in mind when we talk about that and I think here what's interesting is that there are very different segments of players on the panel that will give us a lot of different perspectives. So with that I will just start by asking you guys a kind of a personal question in the sense of why did you get into blockchain in the first place? Not as the institution that we represent but as as the person why was there a moment a time where you realized oh shoot blockchain is really critical strategic important a technology that's here to stay.

Um I would love to hear your thoughts. I'll start with you, Miles. All right. Thanks. Oh, good.

So, this is on. I was I always worry that the mic's not going to be on when you start talking. Um, so for me, my my sort of foray into distributed ledger techn, you know, blockchain world. Uh, before being at tax spit, I was a government lawyer. I was a lawyer for the IRS.

So, the IRS was trying to figure out this ecosystem. And I kind of fell into it through that trying to forge new ground to help them understand. And I fell into it more on a title 31, so bank secrecy act compliant side and then moved more on the tax side. And what became interesting for me and the reason I left my job to kind of join tax bit was to do the kind of stuff we're doing today, it's how this technology can transform financial products like how we can ease friction in the existing legacy ecosystems. So that was super fascinating to me.

My background before being a lawyer was finance and economics. So I kind of have that. So, it was really an opportunity to get out here and while I think you're going to hear a lot of awesome things from the rest of my co-panelists, I come from the company that's kind of the enabler of all of this. We are a financial and tax accounting compliance company. So, we try to enable these projects so they can be regulatory compliant and transparent.

So, that's sort of my background and why I think it's a super fascinating ecosystem. Uh, sure, I can follow up. So I my story my I guess um foray into crypto is um you know um I grew up in Latin America in Venezuela. Uh if you're familiar with Venezuela um the economy is your perfect example of why you need crypto. So I grew up under hyperinflation capital controls.

I couldn't buy dollars growing up. You know this affected my myself, my family, everyone I know. You know their savings were decimated and so on. You couldn't send money abroad and so on. So like all the things you talk about when you talk about crypto you you know I live them.

So when I read Satoshi's paper in 2012 I was like oh this is very interesting and uh you know fell down the rabbit hole back then. Yeah for me it was actually originally about consumer data and data ownership. You know you're selling your data to intermediaries in exchange for a platform which is a pretty bad trade. Um but I do think for you know like working in markets at Goldman right and specifically in emerging markets fixed income prior to my current role on the digital assets team you're talking about you know you have to settle you're trading Egypt Egyptian bonds and in order to make that trade you are calling there's a settlement date that you have to you have to pre-match bonds in the market prior to them to settle. So you set up between the trade date and the settlement date of those bonds a long enough time horizon where you can call the local agent and the local custodian and your counterparties local agent and local custodian.

And you're setting up like a month of time for you to be able to get everyone in those positions to press the right buttons to ensure that these bonds pre-match so that they don't fail and everyone lose money. And oftentimes you you with all efforts in place you'd still end up with failed bonds. And so, you know, it's just interesting to have watched that unfold. And now, of course, we're solving for that, which we're going to talk about. Um, but yeah, that was when I was really like, this is, you know, this is the technology that will be inevitable.

Hey everybody, Thomas Chen. I run sales here at Bitco. I don't have as cool of a backstory. I was just really bored. So, so I'll tell you guys this.

I started off had a brief stint in banking. Um, and then I switched over to find uh Silicon Valley and did tech for a number of years. And in those spaces, you know, there's a lot of innovation, this and that. But I found myself trying to kind of allude to the next coolest and greatest thing, what's going on. And at a time when I thought I was going to do my MBA, I figured, you know what?

I'll just give crypto two years and that'll be my MBA, right? And in those two years, it was the last bare market. But in those two years, I started as I got more red pill and learning about D5 1.0 and D5 2.0 know and everything that's um underneath all of that and how all the mechanics work.

I started to realize that nowhere else is there a environment where you have an almost instantaneous feedback loop from economics perspective, tokenization perspective, sorry, tokconomics perspective and that was really appealing. Um and the reason I end up at BCO was because since 2018 people were saying institutions are coming. Previously my clients were institutions. So I figured there be no better way to be place to be than Pico. Even today we're still saying institutions are coming.

I think they're largely here pending the regulation aspect which I'm sure we'll get into. Um but that's my quick backstory. Thanks. Awesome. Thank you.

Thank you all. Now, same question but from your institution perspective. Why is Bitcoin? Why is Metrica? Why is Taxbit Bit in blockchain?

Why in the first place did you enter the space? And whatever order you guys you can start. I can start. I can start. So, as Chen mentioned earlier for those who are here, Bitco's been around for a long time.

We were founded in 2013. So we're not a startup series, you know, series A or series B startup. We've been around for quite a long time. And the story of Bitco actually mimics the evolution of the industry from 2013 to 2016. It was all about hot wallets, right?

Okay, I don't really have a good interface to store my crypto. I need a wallet. Bitco pioneered the first multi-IG multi-chain hot wallet. Check. Then you had a lot of the hacks, right?

Mount Gaus and if you remember back in 2017 during the bull market there was an exchange hack every month right everyone's like okay who's going to get hacked next so in 2017 to 2019ish we came out and pioneered again cold storage qualified custody insured products that then exchanges and other clients started to adopt and then the question shifted and became all right so I have all this crypto inside my cold wallet but it is a pain to get it out and it's meant to be a pain to get it out, but I need liquidity. So, how do we solve for that? And then again, Bitcoin to evolve and now we have trading, we have borrowing lending, we have NFT, we have DeFi wallets, staking, you name it. So, it it really follows the curve of adoption and need in the industry as it kind of evolved from primitives back in 2013 all the way to some of the more complex structures you see today. Yeah, for us it's um you know, when you think about Goldman Sachs, we're were across the spectrum of finance.

And so how that's evolved from the inception of my team in 2018 is kind of between almost like crypto and blockchain. And so the inception was actually more on the crypto side where we were looking at you know the CME futures is coming out with this product. Obviously we are very familiar with the CME how do we build products that simulate you know crypto trading even if regulation doesn't permit for us to trade the physical asset today. And so I can get into what that product looks like which which we are trading. Um but the other part is blockchain um so to speak right if we're if we're to separate that out um and something we're really focused on now is the GSDAP our tokenization platform um which we can talk a little about bit about what we're actually building on chain but essentially thinking about moving the operational infrastructure that is very legacy across traditional markets um which you know with its implementation on blockchain rails will disrupt everything from capital markets to private placement to secondary markets It's both OTC and exchange based.

Awesome. For Metrica, you know, the the team, we have a global team. So, similar to my um origin story, I guess in crypto, we have people from all over the world. Everyone has been a victim, so to speak, of some sort of financial crisis, government, mismanagement of the economy and so on. So, we want to fundamentally accelerate the transition of uh the world to digital assets.

So, we want to accelerate the adoption of digital assets across the world. We recognize that in order for that to happen, there needs to be institutional adoption. So, we're building tooling to enable that. The origin story of the company started with our founder Nikos um scratching his own itch. Uh he was running a node uh and he comes from telecom.

So, he was running his own node for a blockchain and he realized that there's no observability on that protocol. He he had no way of knowing if it's performing, if it's up, if it's down and so on. So, he started building some of this tooling himself. start applying u you know anomaly detection started showing that to the protocol team and uh helping that protocol kind of fix bugs and things under code uh eventually figured out oh there's an opportunity here because there's no observability layer uh on blockchain so that's how the first iteration of metrica started we started working very closely with protocol teams foundations helping them build this observability layer out for their protocols that naturally led us to uh work with uh node runners and validators like black demon uh and individual validators as well um and organically that brought us to working with financial institutions um which we're focused on today. All right.

And thanks for I think uh tax bit story is a little bit kind of like Thomas' story like we've kind of grown up with the ecosystem although we haven't been around since 2013. and we came a little bit later, but we started sort of uh focused on the tax side for retail investors in crypto and it was trying to solve a problem with just tax filing because anyone in this room probably knows filing your taxes, particularly here in the United States, is a pain. Um, but with that initial beginning of the story, there was an acknowledgement that like this can't be the world forever. There's going to be a time when the places we're going to that we do trading and we do investment on or new projects that are built on chain are going to have to integrate tax compliance or even just broader regulatory compliance into their projects and they're going to also have to surface internal control like internal financial accounting information. So we sort of pivoted and slowly been moving away from um while we still operate in the consumer tax sort of industry.

We've moving more into enterprise and institutional focused uh financial accounting requirements. That's led us to we have partnerships with Deote and EY trying to build to really focus on enabling projects like what the institutional uh institutions are building as well as working closely with regulators to develop reasonable compliance or regional regulatory requirements in the space because whether we all like it or not financial products are heavily regulated and so trying to find that nice middle ground with the government side about what those regulations should look like is a key element of what's happening in this ecosystem right now. like where do we draw the line? How do things pan out? So that's how we've kind of made it to that spot.

Awesome. Thank you. Um and now kind of jumping into the meat of it and more of the now that we talk about the why, the what and particularly what's your vision as an institutions and what are the exciting projects and progresses that you've that you've seen and that you expect for 2023. I think that can make a pretty interesting echo between the four organization here. Um and Mice you can you can go ahead if if that's something that's Yeah, I can I can start although I I might be able to finish the back end too based on what the other three here talk about.

I mean on our side as as an enablement type company for the type of projects that the institutions are building. I think the goal is two things. As products get designed there are end users of those products. Those end users want easy access and the ability to understand data from what they're transacting, what they're doing on chain and they because they need to be able to meet their own personal filing requirements for taxes, that kind of information. So our software platform is working to help enable that to make that type of data to be that connective link between uh an onchain type protocol and an enduser to surface tax related information so people has an easier time filing taxes.

that sort of goes to the consumer side or or whoever the end user is. Now, separately for an institution or for any sort of project on chain, we have financial accounting related software products that we're trying to build to help surface if you're holding crypto assets, you can do reserve, meet reserve requirements or surface that data to regulators so they can see it and know that you're compliant. Anyone who's been around for the last 12 months knows that's sort of been a dark spot in the industry about questions like what are reserves, who's really who's really holding what um and what's happening from a custodial standpoint of stuff that's deposited in accounts and that kind of question. So, we're working to solve that problem and bring that information out so regulators can see it but also to make it very easy for institutions to surface that information to their investors, to their customers and regulators. Yeah, for us our focus is uh we have multiple fronts as well uh but our uh focus that may be more relevant for today is we are helping financial institutions adopt blockchains as a foundation for their business.

So we help them uh you know with our platform they can identify what are the metrics they care about uh to monitor on the different protocols. So they can continuously first assess if it the blockchain is safe enough for them to build products or services on top of it and then continuously monitor that that health of the network is you know healthy uh throughout their lifetime and if it's not they can react uh pretty fast to it and have you know ensure that they have business continuity. So in order to do that we've been working for the past you know number of years with different protocols to build out that telemetry on their protocols and bring the observability layer to their different plat their different protocols and making that available through our platform. So on top of the raw data that we have on operational um you know performance of the different protocols we have obviously value ad um uh with uh things like anomaly detection and so on that help the financial institutions building on top of it manage the risk and mitigate the risk um along with the regulators. Yeah Goldman um I'll go back to GSDAP to start.

So the intention behind GSDAP is to accelerate the traditional market participants blockchain based use cases um and we're doing that by providing connectivity to a private permissioned network as well as access to readytouse um product modules. And so for example um two bond issuances that we just did were um European Investment Bank and Hong Kong Monetary Authority. in terms of what that platform and infrastructure supports currently includes tokenization and native issuance, distribution, asset servicing and settlement of bonds. Um but really the oh in addition to um we can we support um crosschain connectivity into uh thirdparty cash networks. But the end end vision of that is to provide clients with you know products services and service providers through the GSDAP connective tissue and you know so the GSDAP is very much in focus right now but that's I would note like one of a very large you know GS digital assets puzzle um with other components being trading lending you know tokenized RWA and and the list goes on.

So, Bitco is known, the brand is pretty synonymous with custody, right? But, you know, in our 10 years of existence, we've done a lot more than just custody. Um, if I were to talk about the vision, at the end of the day, here's how I would put it. Wallets are at the core of anybody trying to build in web 3 period, right? You need a wallet to interact.

You need a wallet to securely store. You need a wallet to do anything. And so, we view ourselves as the wallet company. Um, so in the future, the way that I like to think about this is whether you're an institution, whether you're a enterprise, a corporation, a brand, whether you are building a DEX, right? Sorry, whether you're building a project on any platform, you probably just need three things.

You need Twitter handle, you need Amazon Web Services, and you need a Bitco's brand and products in the minds of people inside uh building the type of web 3. So at the end of the day, it's very much an infrastructure play. And then you can get into nuances of, okay, it's a wallet, but there's hot wallets, there's cold wallets. Some players, our peers, call smart wallets, there's custodial wallets, there's non-custodial wallets, there's qualified custody. It gets a little confusing.

Um, partially because the tech tech is complex, but also because of regulation and the different marketing. But at the end of the day, I think we need to trend towards a world where just a wallet and whether it's us or our peers are able to abstract away all the different complex uh uh necessities underneath it so that it works fit for purpose and it plugs into other enablement services like tax bit and metrica as well as you know if go down tokenization route GS products. Awesome. And so you guys talk about your vision and kind of how how you position each organization here for in 2023. I'm kind of curious to hear and and double down on that in terms of what are the milestones or what success look like for you by end of 2023?

Like what are really focusing on? What are you trying to achieve? And and how do you measure it? like what would be a good KPI to you to for you to look at and say yes we've we've you know we've delivered I don't know who wants to take that question I guess the answer is revenue but um um we do this thing called OKRs within the company so you're just giving me PTSD on all the OKRs that we did um but I think at the end of the day there's for us there are two main I'll say three but there's two main sleeves of core four products that we're trying to drive right one is what we call wallets as a service which for call it uh I'll name some clients right SoFi Bitstamp any B to C platform B2B TC platform they can build on top of our API and run right um that's a core aspect the other main line of business is what we call the bread and butter on the custody side so working with very large institutions um uh asset managers raas right they can come keep asses in a safe secure place and then borrow and lend trade enable all those to their end users as well. Uh the third one which I I'll call out because it's quite interesting and you mentioned the KPIs.

So back in Janu I'll tell you guys a story back in January of last year NFTts were everywhere right? You probably couldn't go anywhere without seeing some sort of derivative on a on an ape. Um and we thought it'd be great idea to build an NFT wallet. Makes sense, right? So, we built out the NFT wallet except when we launched it, it was after Luna had collapsed.

It was after the market tanked. So, then we thought, well, we've got this product and probably should there's still product market fit. Let's chip and let's see who adopts, right? We're we started scooping up a lot of these NFT funds who had these um blue chip uh portfolios. It was great.

What we did not expect was there was a surge of interest from corporate brands. So, a little bit of a plugin here. We are the guys who did uh we're the wallets behind Nike's swoosh app, right? So all of a sudden this year at the tail end of last year plus this year we're seeing a huge influx of corporate and global media digital brands figuring out ways to to monetize their IP through the form of NFTTS. And for us the KPI there actually it's not revenue so much since it's a new business but more on number of wallets, number of users that are using our wallets etc.

Adoption. Exactly. Yeah. So for better or worse, uh the pain points at a financial institution like GS are pretty clear-cut. So as far as the endstate vision and the goal, I mean, you know, the unfortunately the bond settlement cycle that I kind of kicked off talking about is only one example of the legacy infrastructure that exists in traditional finance.

And again like moving all that onchain is going to have a massive impact on you know across the life cycle and asset type um that we deal with today whether it be the private placements or alternative assets or exchange listed products so on and so forth. Um now and and that's not to mention by the way the fungeability of those asset classes with the you know by leveraging blockchain rails. Um now in the near term because that's the endstate vision in the near term there's a number of building blocks that we need to achieve to get there and so while we're building that in parallel we have to think about things like for example Goldman Sachs has a very structured process for how we evaluate counterparty risk KYC compliance and legal analysis of all of our activities right and so now and now I'm thinking more on our the crypto trading side where we we have crypto derivatives cash settled crypto derivatives that trade when we evaluate crypto So counterparties as we've seen kind of develop as a use case in the last year two years um we have to apply all of those counterparty risk KYC etc diligence processes to this new subsect of the franchise and you know that's no easy task we have to there's a lot of robust education that has to go into all the stakeholders across the you know across the GS I guess support teams um going into diligencing this process and this new subset of the franchise and so that is something in the near term that we're being thoughtful about at GS. Yeah, for us it's uh continuing to help financial institutions like GS uh assess that counterparty risk uh and bring you know create new frameworks for assessing risk of adopting blockchains as part of your core business. So um we're very much focused on that working with a number of large financial institutions uh all over the world.

Uh and then on the protocol side we just released a node agent for the flow flow network. So if you recall, Dapper Labs was the original um you know, they they brought down Ethereum with CryptoKittades a number of years ago. So they launched their own uh chain. They're using u Metrica's uh node agent to help their node runners um manage and uh operate their nodes. Um we're doing the same with Salana Foundation.

Um and on the Ethereum side also we're working with Lido with Ethereum Foundation itself launching a number of dashboards and metrics uh that are being used by the community but also by financial institutions in their um in their assessment of the different networks they're building on and their continuous monitoring of those networks so they can react if uh something happens. Yeah. So I think I mean I think everyone that's working on a project has some sort of like KPIs or OKRs or metrics and it's it's revenue like how many logos do you have? what's your revenue, whatever. And so we we kind of have those on the tax side, tax products, financial accounting products.

Um, but then we also have or at least one of the areas I focus on is sort of what I think is like softer metrics. Um, a little more qualitative, which is sort of the regulatory side that the conversations we have with regulators about trying to create what I think of as converts. Like you get regulators that don't understand the ecosystem. They don't understand the technology. And I get that.

I was sort of one of those people. Like you're like, what is this? What's going on here? I am not a computer programmer by any stretch of of the means. So try to understand like how to code things.

But it is trying to have those conversations with people and not just always regulators but sometimes other people to get them to understand here's what's going on in this ecosystem. Here's what the ecosystem can do. Here's what the ecosystem at least currently may not be able to. So when you're a regulator swooping in with some draconian rule, um being able to get them to understand like, wait a minute, the ecosystem maybe wants to do that, but you need to give them a little time to build and adopt into that new regulation or find a way to get that regulation to be sort of a middle ground. And I think of those as softer metrics that we have like when we make those connections with people and are able to to achieve those goals to make life easier for everybody, but also to get more mainstream adoption because we're getting regulators on board with steps that are being taken.

And I think bringing regulators on board gets more institutions involved because they feel it's a safer place and they're not going to get sort of swatted down by the SEC or something because that seems to be a going concern for a number of years now. Awesome. Thank you. And so soul you you you mentioned that essentially part of your journey and KPIs is to help or goal is to help institutions like Goldman to um kind of help them assess the risk and and mitigate the risk to enter a specific ecosystem or specific protocol. I I want to double click on that because I find that it's and it flows into the now the we talked about the why the what's now the how like how do you enter an ecosystem?

How do you categorize the ecosystem? What are the criteria that you look at to say it is ranking X or Y on my you know uh scale of risk and this is our recommendation to institutions like I'd be very curious to hear more about tactically the criteria that you look at. Yeah sure. Um I'm sure we all have um similar frameworks. Uh so we've developed a framework ourselves.

Uh so I would say I divided into two sides. on the one side is who do we work with as a company on the protocol and foundation side. So for that, you know, we look at a number of dimensions and then for a financial institution wanting to work with a blockchain, you know, we recommend that same framework uh that we've developed um to for them to evaluate and assess the health of the network before they build on top of it. But as I said, you know, blockchains are living things. They they're not a once, you know, set and forget type of thing.

They're evol continuously evolving. there's human beings behind them. Uh you want to look at um you know at that evolution over time. So for us I can talk about a couple of the buckets we look into. Uh one is obviously like the community.

Uh and community meaning what's the theme behind it? Um what's the development community? How is it growing? Is it stagnant? Is it declining?

How active is the development community? Um we look at things like um uh another bucket would be economics of the of the of the network. Obviously, so people usually tend to focus on the macro. So things like the token price and you know total value locked and market cap and so on. Um we looked at the micro as well.

Uh so for us it's very important to look at the micro. So the tokconomics do they make sense? But also things like do the unit economics of running a node and a validator make sense? Will is that sustainable? Will this network you know be financially sustainable over time or is it heavily subsidized?

Is it something we're seeing a decline on and so on? We obviously looked at the network side of things as well. So the actual, you know, people talk about blockchains as if they're magically running somewhere in a cloud, but people forget the cloud is a server somewhere. Um, and we want to make sure that those servers are performing and they're uh, you know, well distributed around the world and well distributed uh, across multiple um, you know, cloud providers so that you don't get a situation like what happened with Salana and Hner a couple you know months ago. So those are some of the buckets obviously there's a regulatory side and there's um you know other things we look at and for each one of those we have a whole set of metrics that we uh we recommend you look into and obviously we our platform uh you know provides the ability to look at that continuously in real time and uh react to it.

So awesome. Yeah. I can we can circle around um at uh on the trady side. I guess you know the extent to which we are active on chain is somewhat I guess I should say pending per regulation. Um and so what that means for us now is that we have like a kind of like bilateral approach where we're building in-house but we couple that with tight partnerships um through strategic investments that we've made um you know blockchain and and bitco um where we work with partners who are accessing the onchain infrastructure that is required for some of our services that are in build and in flight um and an example of that is um you know GS DAP that I was mentioning is built using DAML the smart contract programming language of um digital asset holding which is one of our portfolio companies.

So um yeah it's a lot of thirdparty structures um you know I know you know something about that um with us but yeah it's that's kind of it's all pending regulation for the onchain landscape and in the meantime working with these onchain partners of ours. I I would say bridging what was asked earlier about KPIs, one thing I forgot to mention is liquidity is king, right? At the end of the day, you can view it from different angles from a custodian perspective. What does that mean? We care about AU assets under custody because the more assets we have, not only do we appreciate the price, enjoy the price appreciation, but we can do more with those assets, right?

Whether it's to stake it or if the user wants to borrow and lend it out. Um, on the other side of that, if you're in D5, from a liquidity perspective, the core metric is TVL, right? measurement of community and how active they are and who's actively using the system. So when it comes to us, we do try to make sure we have the top 25 by Coin Gecko, Coin Market Cap um supported. We're not trying to be kingmakers here.

We do take direction from market demand. A lot of the stuff that S mentioned around how they go about evaluating a chain is similar to us. Uh security of course first first and foremost most paramount and then it's the regulatory aspect, compliance aspect. Um and then beyond that it's looking at what the future of the chain holds right I'll give you some examples we partnered with near foundation you know mid last year and we see that as a promising chain three four years ago we partnered with some other chains um like EOS for example right which unfortunately has not come to f fruition so you never really know where it's at but because for us our business drivers are driven by the needs of our clients who are driven by the needs of their retail users or institutional users. We do have to make sure we keep up and it's a challenge of prioritization of which chain to choose over the other pretty much every planning cycle.

Yeah. And I think from our perspective at text like we're on the same page as what Thomas just described. It's you know we really don't we focus less on trying to pick chains up front and we kind of go where our customers are going. You know if our goal is just to enable them being able to surface whatever their holdings are and do financial accounting for those. It's just looking at our clients or customers and saying, "Okay, what chains are you on?

We need to figure out how to get that information and be able to value it so you can provide that information for internal control purposes or external reporting purposes or whatever." And the same kind of goes for tax. The tax side's a little bit more of a wild west because there was an opportunity with particularly in the past couple years where we're sort of in a boom cycle of people, individual investors jumping from chain to chain trying to do stuff in DeFi and then being like, hey, do you got an integration to support this so I can can you tell me what happened in this smart contract on some crazy chain over here? And it's like, uh, we're not moving that quickly. And then about the time you build to like support that chain, then another chain pops up that everyone's running to.

So it's a little bit difficult. you're always sort of chasing um and and so that makes that the tax side at least the retail investor for the tax side a little bit more difficult but generally for our more institutional enterprise customers we kind of just go where they go and provide support for whatever they need. Awesome. Thank you. We have 10 minutes left.

I have one more question and then I know we said we wouldn't do that but I might give one or two people the chance to ask questions. Um the last question I have is about this concept that has been around and that we talk about a lot I think in various channels around mass adoptions and the conditions to mass adoptions and particularly I'd be very curious from you guys's perspective what needs to happen in the industry to move toward that and there's some vanilla plain vanilla kind of I think ideas that are floated around the abstracting the complexity of blockchain and enabling users to you know on board and I think these are very valid but I would also would love to hear your personal thoughts on yeah what the markets needs to to put in place for it to grow and and reach this mass adoptions kind of like targets that everybody has here I think I'm happy to start with that one because I think there's one probably a common denominator here is regulation of course you know I think like standards and certifications. Um, particularly for financial institutions, right? There needs to be regulatory clarity and that's something that we face every single day on every initiative that we have and every initiative that we're building. So, it's regulatory clarity of course, but then also for an efficient market to exist, you have to have clarity around h the discrepancies amongst jurisdictions and their respective regulations.

of course like if you don't have that then there's uh you know immense arbitrage that can take place and just leads to inefficiency among other issues. Um so that's that's the one piece. Um and then I think you know one thing that we see all the time from Goldman there's a very vast spectrum of the state of institutions and their position around blockchain or crypto. Some are super excited about it and they want to trade spot all day. They want to do DeFi everything else.

Some are like so crypto's over now right? like there you know it's it's the whole spectrum that we see and um I think like the core component of that is you have to have a world where we can offer them the benefits of blockchain without them required to have a team of people who have blockchain specific training or technical expertise. They can just use the um you know use the products that are available get the benefits of it and they don't need to know what what rails it's sitting on whether it's on or offchain. Um a good anecdote for that is like you know in you know emerging markets early stage venture specifically like Africa there's a number of companies who are positioned completely on blockchain rails but they don't brand or pitch it that way because the user experience is such that no one needs to know and that's not the point right it's just delivering the value I would echo that sentiment it's around regulation but I'm not a regatory expert so I'm going to say market infrastructure so I'll give an example and And it's it's it's really just FTX, right? What happened with FTX?

FTX created an exchange whereby a lot of these a lot I have a lot of peers and friends who have um you know their market makers or their hedge funds and they trade on FTX. But in reality what's happening is FTX is just taking all the funds in and putting on their balance sheet. All right. So it's on their balance sheet. What can they do then?

Then they have full discretion to do whatever they want with it. loan to Alama, invest in gosh, um, essentially prop up the market of shipcoins. Um, I can say that because we want the contract for FTX, so so we can see like what's going on there. Um, but essentially like there's there's no bankruptcy remoteness either. Meaning all your assets that were stuck are going through this long legal process of of bankruptcy filings and you're probably at the bottom trunch as an unsecured creditor, right?

Um, and it's not it's it's not a good it's not good for the industry and a better infrastructure. And what I'm starting to see now is there's a lot of these second generation, if you call it, post FTX exchanges that are trying to build exchanges that are non-custodial. So what does that mean? That means they still have the front end, the order book, etc., but they don't custody the funds.

That's being could be, you know, given to a Bitcoin, but that's how the evolution seems to be trending. And then, of course, with better regulation, I think it'll come um come to bear fruit. You want me to go? How much time's left? Yeah, go ahead.

I could talk forever about regulatory stuff. Um, no, so I think the answer the answer is regulatory compliance. Although before I jump into that, I do like Suzanne's answer about um sort of user interface, user access. I had a conversation a few with someone and they were sort of trying to pick apart like well crypto no one understands it or whatever and I said well do you understand how the internet works like no like yeah I just know I click on this website and this thing happens. So I think the same kind of concept could come to you know blockchain and distributed ledger technology.

So that that's going to help with like user adoption make it more mainstream but I do think the thing that's currently stunting growth from an institutional or sort of mainstream adoption side is the regulatory overhang or hangover um that no one knows what's going on and now we talk about that sometimes and no one knows like what does that mean like to have regulation. Uh so there's a couple different facets there. you have like what is here in the United States title 31 so that's KYC know your customer rules compliance um separately you have whether or not something's a security so that's kind of the SEC's bucket as well as financial accounting um which generally gets surfaced if you're a public company to the SEC so that's GAAP accounting or if IRS sorry I can't even talk today um if you're on the international front and then tax compliance and so those are sort of your buckets when you think about regulation and where each of them are at and they're they're at different stages um but what I think is great is we're slowly starting to see things materialize from the ether of lack of regulation. Um, and the first step is coming, at least for me, I'm a tax lawyer by trade, comes in the tax area. We had a couple years ago, Congress passed the first actual federal statutes in our tax code that relate to digital assets specifically, and that's focused on tax information reporting.

So, it's telling the centralized brokers and likely some decentralized brokers that may exist that they're going to have to provide end users with tax information. Uh so that's great that makes everyone's tax life easier. But I also think separately there's a there's a different thing that comes out of that is by telling uh businesses operating in space that you need to organize your data in a way that makes it easily accessible and easily surfaceable to your customers also requires some to some extent some internal IT infrastructure rebuilding. Um, I've talked to a number of places that say like, well, we can't really figure out who's who because one one server, one piece of the cloud is over here with trade data. The KYC data is over here somewhere else and like the deposit withdrawals of onchain records are over here and none of these servers talk to each other.

So, trying to pull all that together on a mass scale for all of our customers is really, really hard. Uh so trying to redo that to meet the tax reporting needs is going to help those companies become more in line and more prepared for the reg regulatory scheme that's coming which I think is happening as we start to see stuff. The next step is last year's bankruptcies. You have consumer protection notions. You have the idea and I always try to remind everyone that what happened with FTX was fraud whether it's in the crypto world or not.

You can't take deposits from customers and have an agreement that say they're yours. We won't do anything with them and then immediately turn around and do something else with them. So they're gone when your customers want them back. Uh so that's going to bring likely some legislation around consumer protection type stuff and how draconian that legislation is is going to be a question of how well I think our ecosystem interacts with the government in trying to provide feedback about what those rules. We don't want the government to go overboard and stunt growth.

So that'll be the consumer part. And then with that you kind of have this SEC thing. You had case last week the judge ruled uh or refused to dismiss a case against Dapper Labs about whether or not Top Shots was a security. So you have stuff starting to develop in the securities world which is back to what I think Goldman's talking about like permissioned permissionless like what your network looks like. You have on one end of the spectrum Bitcoin fully decentralized fully distributed.

I do think what a lot of institutions are building are not all the way out there on that end of the spectrum. They're partially centralized. you know, they're not fully fully readable by anybody, that kind of stuff. And I think some of those are going to be questions that the we need assistance from the government on like what where do those fit and what controls because the thing that popped up in the Dapper Labs case was the amount of control Dapper Labs had, not only over Top Shots, but over the blockchain itself and the ecosystem. And when you unify all that control, it made it look a lot more like a security, which irked the SEC.

I I think mass adoption, you know, on the consumer side, I agree with with what everyone said. I think abstraction, I think you put it nicely, like you don't know, maybe you don't know how the internet works, but you still use it and you enjoy it. Been building digital products for 15 years and nobody cares about your tech stack. Nobody cares about what database you're using, what programming language you're using. They just want the thing to work.

So definitely there's a lot we could do uh as an industry to improve the UI uh and the user experience of our products, create better products frankly that leverage blockchain, but you don't need to know how it works in order to use them and get value. So I agree with that on the consumer side, but I think true mass adoption, you know, requires institutional adoption. Um and uh you know, regulation is definitely stalling some of that. uh a good regulation I should say and not necessarily some of the regulation we've been hearing about lately. Um so I think like that's you know that's an area we should all be cautious about.

Um but I think look if you think about how institutions adopt any type of technology um consider a bank when a bank is going to uh build something on a with a technological vendor they have a set of processes that they go through and they have a bunch of audits that Suzanne alluded to. It's very thorough. Um, usually they looked at things like ISO certifications and SOCK 2 compliance blah blah blah. Um, so we can't really have that adoption uh, mass adoption of blockchain, you know, at the core of a business without having some sort of, you know, quality stamp for that underlying technology or some sort of way to evaluate it. Um, the problem is that you can't apply the traditional labels like ISO, SU to a blockchain because what company is behind it?

like there's no company this distributed like you can't go and audit them. Um so we need to redefine what that means. Uh and that's you know part of what we're trying to do at Metrica um by helping define what those metrics are, what those um rules procedures should be so that banks each bank or each institution can define okay what are the things we care about and um lead the way. uh because regulation moves very slow and if you look at how it's working right now, regulators are sometimes looking at the leaders in the space to see how are they you know managing the risk here. What are they doing?

What is the best practice? So we want to help facilitate that so that you can have more success stories and then you know have the regulation follow on u because otherwise maybe regulators will um you know uh slow down the innovation in the space. Awesome. Thank you. I know we're already at time.

If there is one burning question, go ahead. You raise your hand. So, you'll be the one, the lucky winner. that will play uh within kind of mass adoption academic and universities role for mass adoption. Maybe 30 seconds each.

So we respect you guys' time and I can jump in. I mean I guess a question I have if you're thinking more in line from an educational standpoint like class offerings. I know there's some folks, former colleagues of mine on the government side that have reached out. They actually done some programs at the university level trying to educate around distributed ledger technology and use cases to sort of the next generation of college graduates kind of has that as a base mindset. It's kind of like probably a lot of us up here understand the internet as a base mindset.

It was something that we came across as we were coming of age. So I think that would be the first part. And then there's a second part of how universities might be able to incorporate distributed ledger technology into their ecosystems. And one area that I've seen that come up or been talked about is like grant funding where you can create transparency about where money is flowing, where's it who's who's getting it and what are the grants and what's going on with it. So that's like one use case.

I'm sure there's a million of them um as far as university records that could be done, but I'll pass it off as we're running out of time. Um I mean I went to MIT. MIT has done a bunch of interesting stuff. They gave Bitcoin back in the day to a bunch of students and that was a really interesting experiment. Um I do think like universities play a role in everything.

So I think like that's an interesting uh use case. I you know I love the grant funding as a use case as well. I think like there's a lot of cool stuff being done by Gitcoin for example on um you know um on funding um on quadratic funding and so on. Um, another area I mean if you want me I mean if you want me to go a bit more creative um I've thought and I've seen a couple of persons talking about doing uh you know when you go to school you got a diploma but that diploma like how do you know somebody actually went to school? That's a perfect use case for an NFT, right?

So I think that's another way in which universities can start adopting the technology as well. That's a good idea. You should definitely do that. I would say just dive in, right? like I I mean my foray into the space definitely came came 2015 on campus and you know the nature of the technology and the ecosystem is like by and large open source so there's no reason to not get educated and participate and get to know the ecosystem from from your standpoint a lot of the greatest L1's right now started from colleges right so Algoran was one I would just say don't be afraid of the bare market right um a lot of my friends who've went back to their kind of alma modders and pulled the class of people who are interested in crypto post FTX not a But this is actually the best time.

If you think about Salana or some of the other large L1s, they were all started back in 1819, right? So stay focused. I would say just double down in the bare market. Yeah. One one stat that I think is pretty cool to that to that question is you've seen in 2022 market cap going down but the level of developer adoption going up and I think a lot of them were boosted by students and and and folks at different universities to getting into the space as well as transition from web two to web three but that was definitely part of it.

Thank you to the four of you. Um thank you very much for your time and and the insights. It was a pleasure to have you. [Applause]