Crypto Risk Management 360

Transcript

hi everybody um well my name is Maxim K I'm one of the board members of the crypto valy Association I hope you can hear me well um not well all right good um in my normal professional life I'm a compliance and risk manager and uh consultant um but here we have today experts from different fields of Industry you have already met Tim Rice the CEO of coin metrics we have also anou arish I will not say sorry anou um she is the chief risk officer of zodia a custodian we have Lon Hendrick from a an insurance company and you are the

digital assets practice leader of there and we have Josh Pesco who is the head of compliance at Talos a trading infrastructure provider so we have different companies from the crypto industry and Tim gave us already a great head start but more from a micro perspective in terms of risk now we will take a look from a micro company level risk management Approach at the world of risk and risk management we call it the risk management 360 panel we will talk about risk today from different perspectives starting with identifying the risks and uh trying to mitigate the risk as much

as we can and figure out what risk is there that we have to live with with talk about insurance in detail and we'll be excited about the Outlook may I ask you guys to introduce your in more detail Tim maybe you can do a little bit more Deep dive into what coin metric does and yourself as a person sure thank you so as I mentioned I've spent four decades building data businesses for large regulated financial institutions primarily um coin metrics was founded in 2018 we're a crypto data and Analytics company we cover both the onchain and the market data space as well as the index category um our clients and investors are large financial

institutions such as Fidelity Goldman Sachs Bank of New York Chicago Board of options exchange um and that's where we do most of our business activi is with that large tier client and large hedge funds um as well as uh we do a fair amount of work in the Oracle space across chain link Redstone pith and other areas providing content to there um so we we've been at it for 5 years um seen a lot of different things as I said earlier but it's really a pleasure to be here thank you Tim an would you quick ince it's a pleasure to be here and I mean just even looking at this Auditorium thinking about how far crypto has come that we're we here talking about risk um and there's so many people so thank you thank you for coming to

this I'm I'm an I've spent about a decade in traditional Finance so working for City Group in a number of roles all of which were're in the payment sector so it's really quite interesting to now shift over about four or five years ago over to toodia custody which is a digital asset custodian we've had the Head Start in the sense of we we we're a a venture underneath standard chart Adventures um having that background has allowed us to go through some painful experiences over the past three or four years which have now put us in aead where we're ready for regulation we're ready for things like ma it's really not a heavy lift for us we're ready for for further establishment formalization of of

various different requirements so um yeah I'm I'm really excited to talk about risk today and everything that we're doing and some of the challenges that we're seeing and maybe some of the the emerging things that we can also do to work together to make the industry as a whole more mature as Tim was mentioning thank you lauron yeah thank you also for having me on the on the panel just um a small comment uh we're not an insurance company we're a broker uh so basically what do we do at Aon is um we help the client to secure and to obtain um coverage uh through the traditional uh Insurance sector uh we've been in this space since uh 2013 by um being the first of offer who offered uh

crime insurance uh to large custodian and exchanges um and we also have an innovation poll uh in the UK and the us thank you and Josh hi working all right uh Josh Pesco I'm the head of compliance strategy at tallos uh before tallos I've been there for about two years I was at aqr Capital Management for 16 years which feels like a lifetime uh aqr is a very large quantitative hedge fund uh known primarily for their kind of model driven alternative Investments which is an interesting conversation I think I've been hearing more and more crypto and digital assets being described as an alternative investment so we'll talk a little bit about what that means uh prior to uh aqr I was uh at JP Morgan in

the risk Department thank you well you and I were closer to the compliance world and I think the typical risk that a compliance person would say is AML risk um would you give us a little introduction into the risk that you see in your company other than AML risk but maybe also touch up on that yeah absolutely so if you're not familiar with Talos Talos is a software provider Powers you know many of your infrastructures uh so basically if you are an Institutional uh play in this space buying and selling crypto portfolio manager OTC broker custodian whatever it may be we connect all those pipes for you so you don't have to hire a humongous engineering team so at aqr where many of the people came from that

that came to T are found Founders from aqr you know we had 60 Engineers supporting kind of the full stack um that tals can provide so you know saves you a bit of money um you know when I came into to crypto into TS it was almost right before FDX so it was a very good learning experience for me to see how some of the differences are about how the risk is approached when you are uh doing business with somebody so your partners are extremely important in this industry as we all know super collaborative um you know we get a lot done and it's a very happy friendly workplace I think something that I noticed immediately uh is is kind of uh I don't maybe an optimistic way to say it's too trusting but there's no concept of uh a conflict of interest that you

that you want to dig into or even asking the question uh so you know the the relationship with FTX and Al was was really one of the larger pieces of this whole thing and and that's a conflict I think in tral finance that would be escalated and talked about more and and oftentimes you know maybe not uh would be avoided completely so I think more and more as you see these operational due diligence teams coming in and they treat digital assets like an alternative investment you're going to see a much deeper dive into conflicts of interest and conflicts of interests are okay we all have conflicts of interests right like we might have brothers at work in competing companies and but but disclos those and then knowing how to handle those and risk mitigate those is really where we're kind of losing that that message so um that's the one thing I

think I I would I would say right away I noticed the other thing I think and we'll see this as as our industry evolves is just the the concept of uh a more mature counterparty risk management so I think when people start you know you're it takes a lot of time and and a lot of legal fees and lawyers to negotiate all these agreements with all these different counterparties uh in in you know in tral finance shops you have teams of people that do that and and that's what they do and it's not fun but it creates an environment where you have multiple counterparties you're not relying on just one so you know when FTX goes down or somebody else goes down you can quickly switch over and especially as we get into the area where these asset managers are managing other people's money so it's Pension funds

there's a there's a heightened level of responsibility to continue to be able to trade and to continue to be to risk manage uh and and an excuse saying oh my my counterparty is down it just won't fly so those are the two things I would I would note is the conflicts of interest and then kind of the counterparty risks thank you an you as a chief risk officer but from a slightly different product field would you have something to add yeah absolutely so I I think of custody as the plumbing to the digital asset ecosystem um it is Dependable it is quiet it is boring but it is super important at the end of the day um as a custodian obviously our biggest risks are looking at the safety of the client's private keys and how that's managed and making sure that any

transaction s are verified authenticated and they're appropriate um as needed depending on that client now as you think of that I think one of our biggest Investments has been how we actually safekeep the private keys and how we protect that and the measures we go through to ensure that the instruction is coming from the client itself and what I've seen in the industry is that many companies look at that in a really really manual way it relies on humans to make decisions and if you think about the volume of your assets that are actually under custody and how much of that is prone to human interaction is prone to video call back you're you're seeing fraudsters take a really novel

approach with things like deep fakes Etc um I think one of the things that many custodians are looking at is really maturing themselves trying to understand how can they automate processes I think at the end of the day you need to think about how quickly uh the the crypto ecosystem in its whole is actually also it really has attracted a lot of in institutional interest and that's great but sometimes people negate the fact that we're also looking at small teams that have gone really big at the end of the day sometimes those teams are sub 100 people and I'm not taking a dig at that at all but we need to understand as well where you have concentration risk

so very much tagging on to what Josh was mentioning earlier when you're thinking about that counterparty risk just think of it in its broadest sense don't just look at it in terms of oh exchanges and how much credit exposure do I have but at the same time just think about where you have those concentrations if you're staking think about the validated nodes who's staking those are there is all centralized in a specific geography and a specific um cloud service provider Etc I feel like that's something that's the hidden risk that is there it's staring us right in the face but we don't talk about it enough thank thank you Tim well not talking about let itting all burn how do you like within your company and within your client field what what risks would

you also add that there like bit more micro that have not been mentioned yet that you see as very important yeah I'll just double down on the C counterparty risk I mean one of the beautiful parts of this technology hope in public blockchains is the disclosure of address and so kind of piling on with Joshua saying you know one of the reasons people have kind of plowed through is some younger teams have been afraid to ask for disclosure it's like you don't need that it's like if you look at the FTX situation when I go to get a banking license anywhere in the world they

probably know what I had for breakfast because they asked for that much in order to engage with Fiat money in the crypto space like we now have the ability to ask for those disclosures from Affiliated entities with something like FTX and they should have had to disclose alme and they should have disclosed the addresses of those two firms and you would have been able to in real time see the intermingling and the efforts that were going in between them so I think we are there's a lot of work being done on private blockchains I'm a maxi on public blockchains and the transparency that they offer and the security they provide so I think that's super important important I think we spent a lot of time several years ago and still you know we

were kind of ahead of things and looking at what is the risk that could occur on a blockchain so I kind of highlighted is it a 51% attack is my transaction in the next block going to be included is there an me activity going on where I'm going to get excluded is the chain up and operating um and if you look at some of the disclosures risk disclosures in the at least in the US in the filing for all of the ETFs you will see a list of excl um risk disclosures related to onchain behaviors all of those can be monitored and resolved um I think we're just quick to get there so we focus a lot on the

onchain side what's going on with nodes are they up and operating um is there a 51% attack mounting in the stable coin environment for every stable coin and we track every single one of them we pay immense attention to the administrative key of that stable coin and looking at normal behavior of minting and burning because a stablecoin admin key hack could be one of the most damaging threats to the industry because if I can hack a stable coin and I can go drain an exchange with that onchain asset and you can do it really really quickly so there's a lot of different risk vectors you can monitor because of the nature of the open public blockchain you just have to know what we're looking for thank

you from from your perspective before we go to like mitigating uh risks what risks do you see from your perspective so um just to add on what Anu said I think um the the biggest product we have and the biggest um type of risk we are covering is clearly like the custodi so link to the safekeeping of the assets um and um we've been working on this by building facilities on the London Market because in Switzerland and most of the countries the traditional Insurance Market they are not ready they are not uh they don't have enough data in order to be able to provide uh comprehensive

coverage so what we did is we built um a facility in London for everything related to spec so it's a spec coverage so everything related to cold storage we also have a broader one which is called the crime so it's everything that's linked to theft of asset um um so that's the main the main product at the main risk that our clients wants to mitigate and to transfer to to the market to the insurance Market what we see as well is now they the the the industry is getting more professionalized and they want also to have coverage for the liability of their director's an officer so everything related to um I don't know regulation um mismanagement uh that would that would cause Financial losses

they want to transfer also the risk um to the market and the third one would be um the the outage and the failure of a technology or service provider um including data breach because companies also have centralized data um that can be hacked and they want to be covered also for ransomware and business Interruption linked to an attack or or hack so I I would say that these are the main three topics we are we are covering at uh at Aon thanks a lot and and if if I may as well it's quite interesting so from what we've all described hopefully you can see that none of these are digital they're not

risks that are specific to digital assets digital assets and blockchain are basically used as the the means in which these day-to-day risks that we've seen in traditional Finance for decades are just enacted and I I I think that that's the point that we need to also just realize it sometimes it comes down to boring Enterprise risk management of which we've seen many many examples of of various different events if you look at for example I think it was last week uh the DMM Exchange in Japan that was just hacked of 300 million worth of of Bitcoin what happened there again everyone speaks about address spoofing or um address poisoning as if it's a novel thing where in in fact what what's happening there is a fraud or a

fraudulent type of attempt preying on humans tendency to not look at all X number of characters in an address right so it's thinking about it that way right H how can we how can we think about the day-to-day risks it comes back to process and how do we manage those through much more automated fashion can I add one more thing to get completely off topic or off the agenda I I think there's a sense sometimes that you so far we've talking about these negative things and like oh the compliance guys are going to like ruin all the fun I I joined this industry cuz we we can do it differently like I I hated the rules that you can't explain there's no logic to it there's all this paperwork it's like the compliance guy always saying no and you don't know why like we

don't need to do that we can we can make things better and and put these controls in place in a more thoughtful way and I so I think there's a big opportunity here and I think we should just accept that there is risk and and let's mitigate that in in a very different more effective way together thank you and well from a compliance and risk perspective I agree that there's so much overlap with the thread fire world in the drop description of it compliance officer or chief risk officer but would you agree that the means on how to mitigate those risks are they different or are they uh very similar are there any tools that the tradire world would not have absolutely just to piggy back off of what uh Josh just mentioned I think

we're in an incredible position being in the second line of defense within the crypto space and I say that because the tools that are at our disposal are if if I may say so decades ahead of what you see in traditional financial institutions and I think that's that is in itself the beauty the inherent beauty of the blockchain everything is transparent right even in the case where we say pseudonymous not Anonymous it is still transparent there is still data that you're able to capture and try to understand um the association with that wallet address um I think to to your point uh we've seen a lot of firms uh become Market leaders now in the sense that they gather dat data offchain onchain to portray perhaps a financial

crime view so tools like analysis chain analysis rather elliptic trm Etc um they've become leaders in that space you've seen tools like coin metrics for example perhaps uh expand in terms of the remit in in what it's what it's covering not just for trading purposes but actually moving beyond that and using the information in there to make um some really valid decisions um what I would like to see and what I think has super super potential is the use of the combined use of AI and blockchain data and I think you're starting to see a lot of um projects or initiatives that are out there that are trying to gather um data on various different chains use

that combine that with offchain onchain in order to actually paint a picture of a wallet risk score that isn't just looking at sanctions lists and financial crime but it's actually quite comprehensive it can tell you the the probability that that um that address is linked to for example uh rug pools poison addresses Etc which I think that's where we should all be working to to Josh's Point how can we make this better Josh do you have something to add okay um Tim how do you see that like what what what is the special things that the digital assets world has in their hands in terms of mitigating risks yeah I well I'll pile on a bit because

again the blockchain does present itself as probably the best solution and been doing this for long started in the back office and fund accounting and other places you know passing paper tickets and moving money through actually paper ledgers this is a digital letter recorded in real time with all the transparency that you need and you know the address that was hacked at that exchange will be identified will know exactly where it went after it left that address and we may not be able to get those funds back because they may end up in the wrong place but um you know I think it's really a special technology and um you know it it just does what it

says and it does it and it does it and just keeps doing what it was meant to do so you know from a risk perspective you know kind of looking at the conversation here I think the challenge we had as a business frankly is explaining we weren't a crypto business that we were a Data Business that we don't actually trade coin hold coin movecoin or whatever else the name of the company's coin metrics so there's a half an hour explaining to someone that you're not in crypto and you don't hold this um but it just takes some time and I you know I can tell you how many banking relationships we lost last year and now we have five new ones on this

year as regard of svb signature Republic Bank all of these other ones going so just touching it sometimes affects you as a data company these is this company is the same as things that I built everywhere else um so I think it's interesting how you get kind of collateral damage when we get some Bad actors we very much feel the pain of having or opening a bank account as a crypto company in Switzerland the struggle is real even though we have crypto Banks here or crypto-friendly Banks the struggle is still the same how is it with with insurance companies an insurance company should be more open to accept a crypto company because of all

our powerful tools or isn't that not the case um no no definitely not and that's the that's the um that's the problem that's the what we are working on on a daily basis so basically we could say like AI blockchain transparency of the ecosystem and and so on would help the insurance to to come with with quotes to understand the business to propose good coverage uh good premiums um and to transfer the risk uh at a like more in a more suitable manner but in the end it's not the case because they most of them they don't understand they don't have the knowledge to understand what we do because they see the news it's also linked a lot by uh the the news the trends if the market goes up it's like

they're opening up a little bit if it goes down they close everything they want to like cancel policies they want to withdraw from some accounts so that's what we are witnessing um so our job as a as a broker and we we want to educate them um before because what are they missing is more data they need to have data on the loss because that's why that's how they are building their pricing so if they first don't understand the ecosystem they don't have data they don't want to provide any solutions so on um on on an insurance perspective it's and I totally agree AI blockchain transparency should help but like in the real real world it doesn't

for the moment it's not where like in in percentage how far are we on the education level of insurance companies um we have specialized insurance insure on the London Market it's more really like Lloyds or Bermuda um we have carriers that are open to crypto market like on traditional like Swiss or european and the traditional insures it's quite difficult I think we are opening up they are opening up to to the new technology because I think they understood that crypto is here to stay and it's not going to disappear overnight so they will have to deal with it and they will have to tackle uh the ecosystem and the industry um I think we

are like 50 50% 60% but it will take more time I think to educate to do workshop with them and that's what also we are doing on a daily basis if I can just so I think one of the challenges that we have to remember is we're all here because we care about crypto but not that much of the world cares about crypto yet and so when you look at generating revenues as an insurance carrier or broker or whatever and it's a tiny little line in your Revenue stream your doing your best to invest in quality services and care but until we continue to scale I mean Nvidia and

apple each are both bigger than this industry right now right um so I have to step back all the time from my Twitter feed and everything else and realize that oh I have children there's a world out there people care about other things than crypto and I think this is the problem with a lot of this service providers from the traditional world looking at us like we're a crazy little petri dish so you have to give them some respect for why you can see they would do that there's not the financial motivation for them to do this because it won't add up and to train someone up which is the same thing with The Regulators right it's the same thing with The Regulators the insurance companies anybody who provides it it's kind of like we're so small and we've demonstrated that we're amazing

enhancing risk if we're held within your portfolio but when we blow up oh like we really blow up like we we don't go in the middle yet we we don't do anything half halfway sorry yeah just to to on on a more micro aspect of that the insurance company certainly on the larger scale dealing with asset managers and this goes back to kind of like it makes so much sense to add Bitcoin to your you know 6040 portfolio and here's it's a better portfolio than performance that's that's a compelling story for the investment professional for a CCO saying hearing that I want to buy crypto they're going to say no because it's so small because you're because the way to to implement that strategy is going to be at very small percent it's 1% of your portfolio maybe five you know for for

getting crazy so so I think we need to get better at at kind of educating at that level as well so the raas in the US or or any other multi strategy asset manager uh again their investment teams can make a compelling case that this is this should be added but you're going to hit a hard stop uh at the compliance and legal level and and getting them comfortable with us and our ecosystem that it's not just going to crash that it is safe uh I think is a big challenge that we we all need to work on thank you there is definitely a risk that we will blow up or something will blow up what what is this residual risk that you see that you really have to accept within your risk management framework

and how big is it how do you live with it you want to go Josh I mean yeah so we we Talis is software and it's kind of a nice place to live like Tim and I were talking about our our business businesses are not we don't own assets we don't trade them ourselves we're not in the flow of funds um but you know we're we we deal with very regulated entities and um especially in the US to on board with a large uh uh custodian or whatever is going to be a big hurdle I think that what the what we can all do and what gets compliance people comfortable is as is disclosure um so we talked about the conflicts of interest disclosure but there's still not a level of kind of a common playing field of like what what what is this token doing what's out

there is this are is this volume real right and M has done I think a decent job uh with a really intense level of of um of disclosure and we'll see how that that plays out but I think once we get disclosures uh that we can all trust and we can kind of compare apples to apples I think that is uh how I'm hoping to to kind of deal with some of our mitigating factors Tim yeah I think um one of the things kind of off of the conflict of interest so I was fortunate to be running a business at Reuters in 2008 that did the liore fixing settlement rate um and the challenge there was the collusion of the participants within the

banks in London on the fixing there's great books great coverage on it because we're so small and I was listening to a panel earlier talk about indexes on new things and how we calculate indexes it's easy to move a market if you get a group of people who are collaborating around some end point so I think for me the the size and the capability of people now with machines and Ai and other things to manipulate these markets is ongoing risk and you know Z said it's probably a positive thing we can use to catch them or catch up with them but I just think there's still an opportunity for a fair amount of manipulation and we put a lot of effort into kind of trying to see

through it um but it's still a big thing for me an how do you see that yeah I think I think for me as well just going back to your point it's it goes down to the ironic level of centralization in this decentralized space um the things that we really or the things that make me a little bit worried is just thinking about okay what would happen if one of the large centralized exchanges were to fail or some of them quite frankly too big to fail at this stage and what would happen if um some of the largest node providers were were to fail I'm thinking of proof

of stake U models here and we've seen an example of that happen as well um not too long ago um I think there isn't there hasn't been enough uh coverage or understanding okay is there a network of custodians you want to work with is there a network of exchangers are you monitoring your exposures and your limits on those um exchanges or even software providers at the same time as well um one of the things that I would say that actually MAA is helping out with and you'll see many firms that have been in traditional Finance they are used to this things like windown planning it's a necessity I will say especially for custodians um that's something that your clients need to have

that trust that if you're not there tomorrow how are they going to get their assets back so yeah I would say concentration risk thank you la is there from like an insurance perspective is there an insurance against ft X or binance failing uh or what are they doing no not really but I mean what we um we we stick to to traditional like TFT of assets um so this is the main the main one and uh if I yeah just on this one I think it's important to to know about the res residual risk um that we need we we tell our clients that we cannot transfer all the risk we cannot ensure all the asset under custody uh to the the insurance

Market it's impossible because first we don't have the capacity uh and it would be ridiculous in terms of pricing um what we what we see and just also to add on the traditional Insurance Market um it's com we need to to train them we need to um to give more explanation it's hard also to find industry in the industry people that wants to take the time to educate them and it's also um the fact that the industry they don't they don't trust they don't want to pay that much of premium for for insurance and on the other side you have the insurer who doesn't understand uh the real risk of the activity it's not helping so basically we are quite in a dead end and that's why we need to

continue I mean on a daily basis to get the insur inside the industry like to explain and find new Solutions also we have um Now product for slashing events we can also ensure uh the the slashing event and the penalty so we are also trying to um innovate in that sense and creating more Workshop so yeah that's what what I would say about the insurance Market what is just one question what what is the top three Insurance products that you would see from the crypto industry so the one that we are uh receiving the more request about is uh directors and officer liability clearly uh because the the

industry is getting more professionalized and the trfy people people are now coming at like high level position in in the industry so they want to have the same kind of coverage as they had before so I would say this a lot of Association also now wants to have uh to have DN coverage so directors and officer liability second one would be definitely uh theft of asset um for a crime so uh on um um hot uh or cold storage um and also data breach and uh technology um te technological failure so basically you're offering a platform service and the platform goes goes out uh you can you don't perform the service

you were supposed to deliver and then um then you can get coverage for that so I would say that that would be the three main coverages we are we are offering thank you Josh wanted to add something the the the um scenario of the F FTX collap just just made me think of something that so we uh at Talis we just acquired as company uh Cloud wall um which some of you may have heard but what the interesting part was was for the portfolio managers in the room it is the scenario analyses right and it's not your general like oil crisis like the first slide that Tim showed right which is what you see traditional managers do it was crypto specific ones and then how do you hedge that risk uh or how would your portfolio behave in a scenario like that I think it's it's certainly an

evolving field um but I think for portfolio managers I think those sorts of tools uh really give you a chance to kind of get ahead of of any sort of collapse thank you and just on on on the points that Lon mentioned about the educational piece to the insurers I think the the other thing that we don't particularly do well as an industry is the use of specific terminology sometimes we say we have a catchall term like even the term crypto that means everything and nothing right not you look at each of the thousands of coins that's out there they all have significantly different properties even if they are using the same consensus mechanism some times we're not specific enough whether it's that the terminology

crypto whether it's even even the word staking there's hundreds of different staking models out there even if it's just looking at the same chain um one of the things that we really need to work better on is just making sure that we're understanding each other because I think at the end of the day that will lead to things like premium relief that will lead to understanding what your risk actually is and also I totally agree I mean uh if the guy I'm talking to doesn't understand what I say it's not possible for him to sell it at his board at his board level so in the end I can talk to a guy will say okay I like the ID I will offer coverage I I want to develop a product an insurance product but if he doesn't understand if he understands it but cannot explain it to

his boss I mean I it's it's also a dead end so definitely the terminology uh is is uh super important and to try to simplify at maximum what what the industry does it's it's it's key I think uh it's necessary for the traditional Insurance uh industry don't even get me started on the word tokenization again it means everything and nothing at the same time Tim you already mentioned the Outlook briefly how would you define your your personal View for the next few years what would be like your wish list towards the regulator um Dar you called it um what else is on on your wish list for for the future um so I I have this

weird saying that people come to crypto to change the world until it changes their world and it does change your world if you're around long enough because you become wealthier than you ever expected to be but all of the pattern matching for businesses that I think are successful are long-term businesses they're not a three to fiveyear business they're a longer term business with a longer term plan on how to survive and so I'm hoping that we can within the industry create career paths and career opportunities to bring younger people in to get older people involved and Mentor these people into this category and you know kind of do it correctly so you know I think from where

I I've been doing this for five years I've run into more individuals who are on their fifth sixth seventh company in this space in the five years I'm kind of like there must be something wrong with me I like need to move on um but honestly it really is about longevity in the space and time it's it's like anything else the amount of time and practice you put into doing this um and bringing younger people into this area and teaching them and working with them to understand that this is the the yield in this space is so incredible like I said in the beginning and they don't understand what a three and a half% treasury yield can just do over 40 years um they want 80 90 whatever we've got this year um and I love it too so don't

get me wrong but you know and I'm the old guy in the room obviously right so I'm just kind of sitting here reflecting on the companies that I worked for built before sold or went public after overnight successes of 17 and 20 years and I don't think we have folks yet in this industry who have the grit to kind of stay at it so for me it's kind of like getting the culture right getting people here to stay um and convincing them this is a really special industry to be in an what what's on your wish list what's on my wish list I I think I will go back and say better collaboration across across the industry

I think we are seeing much it is getting much better but trying to understand um I can't remember who was speaking with us about yesterday but it's it's not we we need to work together right there is a network the pi is big enough to fit in the participants we need to work together with a network of custodians a network of exchanges software providers providers and and really to to maximize that partnership angle both with onchain information and onchain partners and then separately offchain as well because I think in those points of transposing onchain to offchain or where when a transaction occurs I think that's when we really need to be quite careful and mindful that breaks do happen thank you Lon um I think um my wish list would be

more partnership between the industry and the guys I'm working with in London uh definitely um I think also more clarity on uh on regulation about what is needed in terms of of coverage uh because it will if you look at the MAA Mika regulation there's uh all artical all clause about insurance but honestly it's super vague so it doesn't bring Clarity uh for for for clients basically to to know what they what they need to be uh when they need to purchase and in order to be compliant so definitely I would say regulation and partnership uh with the with the ecosystem I agree Josh what's on your list I would I would say the SRO I mean that one of the first things that I um really kind of got

passionate about was was trying to find the groups that were trying to start those and and to Tim's point on the consistency one of them I don't know where they went like they you know they were they were big and expensive and and then they wouldn't answer the phone but at one point I think they were one of the larger groups and then they're all kind of like dwindling away and sometimes it's because leadership leaves right they might have it might be a really driven organization from one person who's getting all these people into a room and then they move somewhere else so it's very hard to to maintain momentum um when you have that kind of turnover so I definitely an SRO I think is you know would be an amazing thing for the industry if we can all gather around one fantastic um I think it's

time to grab lunch unless there are questions from the audience yes please I'll let a answer that but I don't hold anything on a centralized exchange yeah I I think it boils down to your risk appetite right so for for retail users for individual users um a as you look at things that that might

fit into your risk profile to to keep your own keys right and to have a non-custodial wallet for larger institutions with upcoming regulation given the level of scrutiny that they're under the audits that they require self- custody typically isn't an option um so that's where you appoint an expert custodian for example to do that it helps as well with off venue or off exchange settlement reduces that counterparty exposure but again different risk appetites B institutions versus retail Lon can I ensure my ledger stick that I have under my pillow at home sorry my ledger C cold wallet can I ensure it under under his pillow no all right any other questions from the

audience yes please here RK allowing masses toal world is there a message I'll State an opinion um you now probably have given the 13f filings are out on who has bought these ETFs you can start to look at the Persona of those corporations and and endowments and realize you probably have a floor in for where the price of Bitcoin would be um we have a consolidation issue risk when

it comes to vendor supplying service to the current ETFs Black Rock set the tone said these are the providers that'll be allowed to engage with this ETF everybody else followed suit there was the CME was here earlier they are The Benchmark provider behind six of the or nine of some of these things coinbase is a single point of failure as the custodian of the physical asset behind all these which is why we need Sab 20 121 repeal so Bank of New York zodia others can get into this space so and then now we have an ethereum Fund in the US that's probably approved you're the point of what what I was saying earlier is they're throwing stuff

at us that is going to create risk so now in the wealth management and advisory space everybody's gone to market for the past six months and said here do a 1% or 3% allocation to this Bitcoin fund and now Along Comes an ether fund what am I going to do I'm going to put my clients into a capital gain situation to move them into crypto some other ways so I worry we're being given stuff without the government reg in the United States giving regulations so that's what I see as the risk of the ETFs that's actually reminded me of another item on the wish list which is practical regulation not just regulation for the sake of it but practical working together across industry to to make our that's on my wish list as well any other questions let's have an last

one well we're good so thank you everybody thank you to my speakers enjoy your lunch