CVA Podcast: Chris Thomas, Swissquote

Transcript

[Music] hello hello shrez ahmed here presenting to you another bite size episode of the crypto valley association podcast let's discover together the growing trends of this fast-moving space and try to shed some light on the mysteries it contains we are joined by chris thomas head of digital assets at swiss quote switzerland's leading online bank that enabled private clients as early as in july 2017 to invest in cryptocurrencies so let's drive straight in to the hidden world of trading chris thank you for joining us how have you been shiraz pleasure to see you again i i've

been very well and i'm really happy to see the sun is shining yet again this week well maybe let's start this whole thing off by getting to know you a little bit so what first got you involved within uh this blockchain crypto space perfect well initially a long time ago i was a trader in london and some of the investment banks and one or two of the hedge funds and that got me really excited in trading however after that in 2014 january 2014 i started getting excited about bitcoin and i opened the mount gox account luckily though a few weeks later i didn't put any money in and it crashed so saved myself in that one

but i started to learn more and more about bitcoin at that point i just monitored over the next year or two 2015 i started doing daily thoughts with one of my friends who at the time was the co-founder of lika or what was going to become lika based in zurich and 2016 i was involved in blockchain projects with royal bank of scotland innovation team in london and that's actually when i first bought my first ethereum tokens so yeah i've been around for a while i've seen the changes and it's it's been quite an exciting one and it's we're only still at the start only still at the start indeed and so earlier this year you joined

swiss quote would you like to tell us a little bit more about them and their role within the growing industry absolutely yeah so the basics about swiss quote 24 year old fully regulated swiss bank we've got over three million products on the platform and in terms of retail crypto we've been involved for over three years the guys took the initiative to launch in early 2017 and so far the big run up in 2017 we did very well we had five currencies on the platform at that point and since then we've developed out to 12 currencies and the trading has scaled quite significantly over that period so that's really good in terms of other things that we do

we've had custody for bitcoin ethereum for over two years now one of our biggest clients which is public information is wisdomtree uh we've also got a lot of other institutional clients who we're talking to and who use our facility in terms of other cryptocurrency offerings we've got amc's actively managed certificates we've had these up for two years as well so very briefly amc's our actively managed certificates are on balance sheet whereas etfs exchange traded funds are off balance sheets that's the only difference or the main difference between the two our first bitcoin amc is actually expiring now after two years and it has had lower volatility but

greater return than the bitcoin underlying so that proves that swiss quotes were able to model a very good amc two years ago and hopefully the next one will be equally if not even more better going forward institutionally wise we're launching our apis in the next week or so and we've been talking to loads of really cool fun companies who are going to come on board and use the apis for our institutional trading well it's great to hear i mean we see swiss quote everywhere i recently just took a flight from geneva and you see the big swiss quote and you see your slogan straight to the coin would you like to further explain to our audience the meaning of this absolutely recently we did quite a large uh cryptocurrencies campaign through

switzerland so that's why there were key spots around particularly around geneva airport zug and others in zurich straight to the coin is one of our martin campaign slogans these campaigns were devised towards millennials and the idea around it is to demonstrate that we're different yes we are a swiss bank yes we're regulated we're safe and trusted yet we don't act like a bank we're essentially a tech company and we want people to realize that we offer something better we offer something better than the current exchanges out there but we're as safe as the most safe banks you're ever going to see so that's the idea behind these slogans and trying to drive people into

our ecosystem that's that's an interesting point i mean i definitely believe that the millennials and the younger generation are full in on crypto and they can see them really driving that forward i mean even some friends of mine were saying like why would i want gold when i can buy digital gold like bitcoin right so that's a great way to do it have you seen any of this momentum gathering in the past years uh between different age groups have you seen kind of a rise in the younger generations absolutely and it really it depends on the combination of things it depends on what countries we are targeting it depends on the the type of marketing style that we take towards the either

the existing users of the platform or we try and drive in new users so there's so many variables involved but yeah we do have quite a decent millennial audience obviously on the retail side and i'd speak to quite a lot of people who are at the the top edge of millennials onwards and institutional space okay great and you mentioned before that swisscope currently offers 12 cryptocurrencies and that's probably out of around last time i checked there were like around 6 000 out there is there a reason why you specifically chose these 12 is there a selection process choosing these what are the thoughts there yes so back when the guys had the foresight to

launch the the crypto products they launched so three and a half four years ago launched with uh bitcoin ethereum litecoin xrp ripple and bitcoin cash the reason they did that was quite simply it was around the volumes so volume is one of our most important factors as well as the actual quality of the coin for example privacy coins they're really not suited to regulated institutions so we have absolutely avoid them likewise stable coins cause similar type of problems so we avoid them and more recently just before i joined actually we brought on chain link ethereum classic eos ox stellar auger and tezos

and i think the guys had a bit of foresight looking at them four of them come from the d5 space or have d5 elements and staking elements so that's part of the thought process as well we as a bank where we make our money on the the volatility and we need enough volume in each currency for people to be able to execute into at good pricing it's important that we select the biggest volume ones the most interesting ones but also sometimes something just slightly different and to think that the guys nine months ago selected companies like chain link i think that that also reflects in the quality of

product management and technical um ability within swiss quotes for these guys who they've been trading cryptos on their own for years and years as well so we've got a very strong infrastructure and that has proven to demonstrate that we are able to have the foresight to bring these good quality coins in and we're obviously talking to other people about bringing on new coins in the future that's obviously part of how we build our offering yeah that was actually exactly the question i was going to ask you like are there any coins or tokens coming to the swiss platform so are there any thoughts behind that upping the 12 maybe to 15 within another specific niche yep so

i would think that's realistic for q1 2021 and we've got a lot of projects at the moment we're bringing the api live in the next weeks we've been um crazily going through that over the last several months so that's one of my priorities on the institutional side so in terms of new currency pairs we have to dig deep to understand and make sure it's a real genuine project or a genuine currency and to make sure the volume and the interest for our particular demographic of clients is there so that we're providing them with the best and most fun opportunities but at the same time we're going to see the revenues as a

result of doing that okay now definitely and you mentioned the api once again is there something you'd like to share about that it seems quite an interesting one absolutely so the api the institutional api allows hedge funds family offices asset managers small medium-sized banks all these type of people to connect indirectly into swiss quotes pricing or liquidity instead of having to log on to the retail platform like you or i would so it allows for faster trading so we can have high frequency trading in there and is is a far cleaner process for them so we're bringing fix and web sockets apis live and that will certainly

help us with driving a lot of volume particularly amongst the bitcoin and ethereum okay okay wow that's good to hear another great product there and so i actually saw a headline on coindesk back in 2019 quite a long time ago and now that that said that swiss quote was launching a nuke proof custody um solution so would you like to tell us a little bit more about that how that worked out so we've we've had uh institutional custody for about two years now it's uh public information that we've got wisdom trees one of our larger institutional clients we have quite a number of various institutional clients and it's been an exciting project that the guys

have been on long before i came and it's it's an ongoing project as well because we're always looking to do better and we're always looking to position it to make sure that we can offer our institutional clients what we want or what they want sorry so on the institutional side we've worked extensively on the the security aspects to go through certain processes that don't just meet the sort of the crypto hardware sort of style of storage or cold storage but it's more about how we meet the traditional in investment banking style what processes we need to put in place for our customers to be comfortable because these processes are the types of cut processes they would

have in reality in the in the fiat world so we've worked extensively with our clients to do that we're very happy with it yes it's you know it's taken us a lot of time to do but it's it's certainly a big value add and certainly makes us stand above the rest yeah well that's great to hear and yeah i agree i mean working closely with your clients is the best way to keep them happy and to grow sustainably forward um that's awesome awesome to hear and so along with your role at swisco you're recently elected as a board member of the crypto valley association congratulations thank you very much and you know it's it's great to be involved in the cva it's i'm sure most people on the podcast

actually know what the cv is but for us to be at the heart of the swiss blockchain crypto ecosystem it's great to be involved and to meet so many interesting projects who are participants who are either members or they're involved in the swiss ecosystem in some way or even there's obviously been a lot of hard work over the last several months due to the covet that we've done a lot i know yourself and previously jerome did a lot of work on webinars and it's great to see that that has attracted such a global audience and swiss as crypto valley has has evolved over the last three years from not just being the zurich and zug ecosystem but to expanding across switzerland and now

to be expanding globally is really something impressive and for us to have one of the biggest names in the whole ecosystem like the global ecosystem is great to be involved with there's a lot of hard work done by all the members and the board members the the chairs of the working groups and people like yourself and there's obviously you know where we're doing very well and the future is looking very positive for us all of us very very happy to hear your perspective on that now and i couldn't agree more it's a definitely a great bunch of people that are around us so thank you thank you for that and yeah welcome on board once uh once again and maybe as a whole then so where do you see the future of the blockchain space maybe specifically

to trading in in this perspective yeah so the future of trading there's uh there's a few themes emerging one of them's around the democratic democratization of finance where we're opening up the world to the unbanked and the underbanked previously there have been fintech projects built they tend to use the the traditional financial markets or traditional banking rails as in the infrastructure for traditional banks so the challenger banks that exist today have been building on traditional systems but now we're starting to see blockchain based systems put in place and allowing effectively the removal of many middle and back office functions

obviously allowing the super quick settlement times the the transparency and obviously reducing operating costs so this is all really positive stuff on the blockchain side on the institutional side i think we're we're slowly moving towards what's something that resembles what today's traditional financial markets ecosystem looks like i.e we are in futures and options on the crypt more so on the bitcoin side ethereum's taking off but yet bitcoin is still 99 front month only we need to be able to offer the three four six months further out the curve

there needs to be more liquidity in there and the institutions are absolutely coming into that space through the chicago mercantile exchange offerings we'll see more prime brokerage being created which then allows a lot more institutional lending and more creativity that will tie into the staking that already exists so we're taking what we've got just now taking it up a notch and we're adding a lot more institutional involvement and that's because institutional structures are now there and the institutions are certainly getting more comfortable with it so i think over the next two to four years these these futures and options curves and the full prime brokerage model will be quite solid and then on top of

that you add the the tokenization of many new products and where we're seeing lots of experiments obviously around real estate and artwork fine wines sports cars all of these things some of them are good some of them are fun engineering sorry entrepreneurial projects some shouldn't really have a tokenization element but the as that space develops a bit further as well and as it builds out beyond those products we're going to see a crypto tokenized crypto offerings that are significantly larger than what we know of the traditional financial markets today and that will allow everyone to start participating in the markets in very small sizes in sizes that

they're comfortable with and they'll have direct access to almost anything they want and if someone wants to buy a quarter of an amazon share even they'll be able to buy a quarter of an amazon share if they want to buy five thousand dollars of their neighbors property or if they want to start trading their neighbors electricity all of these things will be possible in the future so i think it's all this trading is really exciting uh but worse we've still got to remember we're at where i guess we're coming to the end of the early stage and we've still not got to the point where the majority of people in the world use anything related to crypto no no it's it's an interesting one tokenization

definitely has its part to play in that i mean i i only hope that tokenized wine tastes as good as normal wine but um no it's it's a very interesting one to talk about and um other maybe any other use cases that have peaked your mind in the past couple of months years that you see that are going to be pushing the space um further than tokenization i mean there's the supply side part there's also companies working in the legal sphere are there any others that you've seen that come up i think on the tokenization front the probably the most relevant use case that we've seen on the secondary market or that would be applicable to the secondary market is the commodities

trading because they've already got a traditional supply demand curve they're already comfortable with trading so if you add the tokenization on top of that market makers in traditional commodity markets can then get their head around it and they can start trading between the tokenized shares of the commodity products the traditional physical commodity products so that's quite interesting the other one is around the the d5 space which is currently extremely hot and has been since the end of may we're currently looking a lot around the d5 yield farming and there's some crazy people who are making genuinely a lot of money doing so but at the same time there's a high high

risk if you get it wrong where they have to end up processing three four five different steps as quickly as possible and taking yields i.e profit out of certain d5 decentralized finance transactions so this defy yield farming is quite a theme but it's really only for some experts at the moment i think that will settle down the risk will be reduced eventually probably not until maybe next year that obviously means lower yield lower reward for that but that will also be quite an interesting space that and that ties in a lot with the staking but i would i would say i think and and closing out

i would say it's very worthwhile people getting on there and and playing about with some cryptos and experimenting with the d5 world in very small size obviously because when you get your hands dirty and you transact and you see the transactions moving from one wallet to another it starts allowing you to join the dots i think it's very important for people to understand that just now and then if we fast forward five years i think many of these things will be absolutely normal but we'll have really easy to use user-centric retail guise as in like the the platforms that exist today they'll be

comfortable for even your mum and dad to be able to transact on and they'll not understand they'll not realize they'll not need to know that the blockchain is in behind it we're moving at some speed we've got a lot more still to go but if we think back 20 years ago facebook google amazon some of them didn't even exist some of them were tiny experiments and you fast forward like the last 10 years all of these have been completely normal so over the next three four five years your crypto's going to come into to many people's lives hopefully all in a good way and obviously blockchain to internet of things there's so many use cases out there that we

could explore yeah practically without them even knowing it right i always tend to try and use the example of contactless payments right i mean nobody really knows how that works but it just happened one day and people like oh wow i can pay with my card like like contactless that's great it's super fun but nobody's actually like oh wow the technology behind that is interesting so uh no i i definitely i agree with you on that yeah and i think the other thing that i trust some of these companies for trading on yes no but you know some of these exchanges you've got to think twice about transacting on um and that's i think just a quick plug at the end but that's where it's swiss quote is different because we are fully regulated swiss bank there's that safe secure trusted aspect

to trading within our ecosystem and that is something that people have to bear in mind as well when they go about doing their business in this ecosystem very briefly i mean i know that i i had to go redo the process recently on one of the exchanges and you know luckily it's a centralized exchange so i could go through the process security process to get my authenticator he reassigned and so i could get access again and that's fine on a centralized exchange as such as swiss quote but if that was a decentralized platform i would have had to be fully in control of it myself i wouldn't have been able to recover my keys and hence all of the tokens on that platform would have been lost

unfortunately so yes defy and so on you know it is great but we've still got to bear in mind you know how do you hold your keys are you comfortable holding your keys um and then you know how can we take those really cool defy concepts but still make sure that we're going to be safe if we do somehow lose our keys or whatever and how can we recover our file in a safe way that nobody else can steal our stuff so lots of thinking still are still to do but hugely positive the way we're moving forward no no i agree yeah with great power comes great responsibility right so

being able to find the the equilibrium between the two is quite important but uh yeah no thank you so much uh chris for those um valuable insights i think you'll be very very helpful to our audience and maybe to close off do you have anything else you you'd like to add or share uh with everyone today nothing at that point but if anyone wants to get hold of me please feel free to contact me directly at swissco christopher.thomas swissquote.com or feel free to connect with me um on linkedin i'm sure people will be able to find me and also if they want any advice around crypto valley association to become a member please also reach out and contact me awesome well thank you so much for that hopefully

we were able to shed some light on the hidden world of um trading and well if you enjoyed this conversation feel free to check out more on our website cryptovalley.swiss where we host plenty of events educational content and even provide information on how you can join our growing community well thanks again chris for joining us today and well stay tuned stay safe and until next time from the crypto valley in switzerland bye