Whatever your role is at work, there are a lot of competing priorities as to “what to spend your time on.” Doing the work, of course, is the first one. But continuing education, reading books, doing trainings are also important, and are always one of the first things to go in a busy season. Joining TechEx Events last week to chair their crypto and digital assets track, my aim was to collect as much intel from their highly expert speakers so that if you couldn’t join us in Amsterdam - we could all still “go to school” on what’s happening in cryptoassets.
With that, an array of links, studies, quotes and otherwise wise wisdom from the biggest players in web3 that I found valuable to share with my rockstar team at Maneuvre, and you!
Regrettably, I didn’t know much at all about the bank’s work in building tokenised models for bonds and other financial technologies (maybe it’s because the bitcoin ETFs take up all the noise?) but here are the highlights:
Facts, Statistics and Stories:
Tokenising these products could lead to a 65% or more cost reduction for banks and financial services providers - which was cited in his presentation from this report by @Finoa published in 2020. A nice statistic to have at hand when arguing for the tokenisation of the world.
For regulation wonks: The existing securities law in the Netherlands is tech-agnostic, which in theory should make it more easily applicable ongoing to new technologies and digital assets.
For sustainability roles: An awesome initiative that I completely missed where ABN AMRO registered the first digital “green bond” on the blockchain. Read it here.
Wisdom:
Martijn pointed out that the end goal of tokenised, fractionalised investing is to make illiquid markets more liquid - a problem that has resisted solution for decades, but now could be possible. I’m also a fan of how digitisation can make liquid assets even more accessible to “illiquid” processes, i.e., traditional finance - like the work
Marc Taverner
and XEROF are doing with bitcoin active managed certificates - more about this here. TL;DR: Digitisation makes life easier.
Nick shared that, in the UK for the last 1,000 years there have been exactly two types of property, which is backed by this entry in the HM Revenue and Customs handbook and that which Wikipedia takes further to explain as movable and immovable property. So when wondering why jurisdictions like the UK aren’t moving faster on cryptoassets, it might well be because some of the traditional definitions date back to the Romans.
Regulatory arbitrage. In other words, what you see happening as companies leave the U.S. and decide which EU country to base in, as well as what operations to move to other jurisdictions like the UAE.
CLS. I love a wonky talk about FX - because the more you learn about how money moves, the more crypto and fintech makes sense. If you’re unfamiliar with the CLS, start here.
Wisdom:
From Nick: Any jurisdiction hoping to ban cryptoassets is like a king standing in the ocean commanding the tide to stay away - you’ll get stuck in the sand.
From both Nick and James: Being able to move money effortlessly with cryptoassets around the world doesn’t do very much for you if you don’t have a bank account in which you can pay out (or pay in). Having rules so institutional clients and retail clients can be banked and engage in crypto is key.
On the future of staked products
Jeff Zhao
from Darwinbit had one of the single strongest statistics of the entire track, which was:
A 1% more market penetration of each asset class could lead to a tenfold increase in crypto.
Meaning: If each digital currency, existing in the market it does, could take up just 1% more market share compared to other financial products, the overall increase in value to the entire sector would be 10x. Now, there are plenty of asterisks to this data (what global asset do you compare each to, how are you calculating value - on today’s exchange rate or a predicted exchange rate, etc), and Jeff acknowledged this is the result of several outside data sources including Credit Suisse as well as their own calculations, so I’ve included the slide here for you to be the judge.
Pankhuri talked about how she was using PayPal as a global advisor to get paid and was losing 10% to fees and costs - moving to crypto took it down to 0.1%. There’s many benefits, but so much focused on “emergent” use cases - having SMEs be able to save 10% on costs is also huge for GDP and societal development.
Vlad asked a great question: If you are a global worker, and you accept crypto, where should you pay taxes? The mark of a good moderator is to ask the questions everyone really needs the answers to. While our panelists did a nice job of talking through the current options and challenges, there just isn’t a good answer yet.
Wisdom:
Chris from Trendmaster said that disintermediation and financial inclusion are important trends, but they don’t weigh out against the first and most important one: A way for people to trust, but verify. It’s lovely to bring more people into the financial system and reduce intermediaries, but people need a way to trust you and verify their security even in a decentralized system.
Alex added that there’s still an issue with using fiat accounts related to crypto use (backed up by this nugget from Bloomberg Crypto’s by
Olga Kharif
in the Bloomberg Crypto newsletter last week). Not only might some banks have issue with it, but they still can take too long if your fiat account is initiating a transaction or receiving it. If fiat is going to stay, then the rails with it in/out of crypto have to be faster and ideally, not punitive.
On the incoming regulations related to cryptoasset risk:
Robert Richter, CFA
of Zanders guided us through the intricacies of the soon-to-be-enforced BCBS crypto standard. This is one of the best presentations I’ve ever seen, in terms of how much free information Robert gave away on how to prepare for BCBS. I hate to think how much there is still to know if that was the “free” version of the consulting!
Terms:
BCBS Crypto standard - more on this from the ECB. Well-known to our finance experts, but possibly new to the rest of us who don’t sit in the financial side of crypto. Also a good summary here from the Bank of International Settlement.
Facts, Statistics and Stories:
By January 1, 2025, institutions may need to maintain a 1:1 ratio for crypto assets based on their risk level. 2025 is basically tomorrow, in bank years.
There are essentially two types of assets - Group 1 and Group 2. Group 1a is tokensised traditional assets, Group 1b is crypto assets, and Group 2 is any unbacked crypto asset, traditional assets and stablecoins that fail the test for group 1. For group 2, total exposure must not exceed 2% of bank tier-1 capital and should be lower than 1%.
On the state of web3, “metaverse” and crypto communities:
Sascha Dölker
from Germany-based DWP Bank brought us a great talk on “Crypto as Enabler for the Platform Economy of the Future." If I could bottle up how he advises talking to leadership and CEOs about “bottom-line” cost of new projects, I would sell it to every single emerging tech founder I know.
Facts, Statistics and Stories:
He asked us to recognise three distinct archetypes of individuals in the crypto world – the bullish, the skeptics, and the undecided – and noted that CEOs and many decision-makers will be skeptics. That’s because, among other reasons, they are compelled to optimize their top business lines while safeguarding their bottom line. Concerns like legacy transformation costs, risk management, and the scarcity of skilled professionals loom large. To persuade them to embrace crypto, show them the numbers of total addressable market and be upfront about investment costs and risk.
Industrial metaverse. Much of the metaverse hype (and criticism) is on the consumer metaverse, but the industrial one is a lot more like Tony Stark’s laboratory than we might think. Interestingly enough, about this time a year ago at Web Summit, we heard from Toto Wolff about how Mercedes exploits an incredible amount of data to succeed in Formula 1. The Germans are onto something!
Wisdom:
We are missing our ChatGPT moment in crypto - meaning we’re missing the moment where all hype and interest and investment and tech come together in an explosion of accessible use cases.
One of his team members said, “In 10 years, my daughter will have a piece of tokenised rainforest in her wallet.” That is a real thing (that is possible now - thanks for highlighting this
Mia Van
), but is foreign to a lot of us. Why? Because Gen Z, on the whole, is less interested in shareholder capitalism and is more interested in stakeholder capitalism.
Banks, service providers, etc., are used to talking about client management. Now we have to talk about community management - how to build products that serve the community, instead of telling the community what they want.
On web3’s power to drive sustainability
Mia Van
from Mastercard came on stage to talk about “Driving Growth and Sustainability Through NFTs."
Facts, Statistics and Stories:
This is data available to all of us, but it takes an innovator to see it for its power. Mia shared that Amazon has 167 million customers with Prime in the U.S. - and if/when they do their NFT marketplace, that’s where they’d likely start. But it would be less about selling artistic NFTs, and likely a lot closer to being a digital record of what we own (like Sascha’s BMW example above).
Similarly, the tokenisation of community projects makes it easier and more palatable for people to get involved. She used an example of an EV charging station which was tokenised and shared by a residential community - reducing friction and increasing buy-in. Imagine if your HOA dues were given as tokens and you could use them to vote, at any time, for or against that new roundabout, or whether to bring solar panels to the community. I like it.
Wisdom:
Mia made a compelling argument for how NFTs can drive business growth as records, less than collectibles. Whether we’re talking rainforest ownership, EV ownership, or goods ownership - it incentivises ownership, which is an obstinate challenge to solving the climate crisis.
On everyone’s favourite topic: regulators
I had the pleasure of wrapping up the day by asking tough questions on regulations and regulators to a slew of cryptoasset executives, as well as
Rozh Rashid
as our sole regulator who did a wonderful job of standing up for the profession (while speaking from only his experience, of course). Here’s where we got to, with insights from
Sascha Dölker
DWP,
James Toh (XenZo)
Coinstore,
Andrei Sebastian Baghiuc
ING and
Orlando Gaul
Lama
:
Facts, Statistics and Stories:
My panelists pointed to a lot of reasons that regulation isn’t perfect - and it isn’t because no regulation is perfect or because the regulations aren’t trying, but because of several factors that we need to remember: There’s an arms race for talent, and not enough to go around. There’s politics - internal party and country politics, not to mention “I am trying to get re-elected” politics. In other words, if your citizens lost money in FTX, they are coming to you to ask what you’re doing to fix it. There’s virtue signaling - both for and against digital assets, which can muddy the waters regarding whether that jurisdiction is or isn’t friendly to web3. Not to forget, there are failures on both sides. There are failures of companies to communicate with regulators, and to follow the rules, just as there are also failures by regulators to work quickly and proactively.
However, the “slowness” of regulators is possibly a feature and a bug - both
Rozh Rashid
and
Andrei Sebastian Baghiuc
noted that crypto companies can think in weeks where responsible regulators are thinking in decades.
Preparation. Orlando noted that there is never an off-season for regulation - when things are quiet, you’re preparing. James noted the same, which tracks what we hear in Europe about APAC. Namely, more openness and discussions with regulators which prevent issues from forming later on.
Wisdom:
There’s a recipe for the “utopia” of digital asset regulation - but it isn’t likely that we’ll wake up one day where there is enough talent, there’s no politics or virtue signaling, where everyone has prepared adequately and talked enough to one another, and everyone is happy - but if we can get to a place where we mostly agree at least on some asset class categories and ways to approach the technology, that begets prosperity.
Overall, my panelists agreed with this sentiment from
Andrei Sebastian Baghiuc
: Competitiveness leads to innovation, which leads to consumer happiness, which in theory leads to a better society.
Regulation changes quickly and slowly, and there’s only ever more you can know about it. They recommended the following places to stay up to date: Reports from the ECB (a few have already been linked in this article). While complex, this is a good place to start understanding the EU’s approach to financial technology, including crypto. Read the papers and opinions of the top law firms. (I recommend following
Alan D. Cohn
and
Jason Weinstein
Steptoe LLP, as well as the work
Valeria Bystrowicz
and her colleagues do over at Perkins Coie)
But James had one of the best recommendations of all - which was to cut out noise. Follow less people in the space, he advised, so you aren’t in such a loud echo chamber. I second this, and recommend highly for everyone in web3 to subscribe to
Molly White
’s Web3 Is Going Just Great newsletter. And once you do a read of that, if you’re feeling a bit under-inspired, then read
Paul Vigna
’s newsletter and subscribe to Afridigest by
Emeka Ajene
as well to re-orient yourself to what’s going on that truly matters.
And last but not least - I gave a talk on what’s changed in crypto and web3 media, PR, and storytelling. I’ll be back to share a recap of that later this week with some even newer stats and stories.
And that’s a wrap on this pulse-check turned educational article of what’s going on in cryptoassets this year. Were you at TechEx, or another conference in September, where you learned something helpful or interesting (or questionable?) If you have stats, stories, links, or wisdom to share, please drop below - I’ll add into this article, tagging you and your source!
Investor | Data As An Asset | Mergers & Acquisitions
1yCongratulations, Rachel!
Aviation - Logistics - Blockchain - Web3 - Artificial Intelligence
1yGood recap!