Separate Builds or Integrated Design?

Transcript

Hello. I'm Hyung Yeon Lee, founder of Altus. Nice to meet you. Today's program has had a lot of discussion about Ethereum, much of it from the viewpoint of public infrastructure. I'd like to take a slightly different viewpoint — that of financial institutions — and talk about how they should look at public or private blockchains, and blockchain infrastructure in general. If you remember just one thing from my talk today, I'll consider it a success.

That word is "integrated design": what it is, why financial institutions need it, and what to do about it. If you leave thinking about that, I think my talk will have succeeded. So today's topic is a question: separate builds, or integrated design? As the digital asset market that blockchain started keeps expanding, financial institutions are working hard on system design, builds, workflow design, approval procedures, regulatory controls and internal controls.

In many cases, they're going with separate builds. Avalanche for Avalanche, Ethereum for Ethereum, Solana for Solana — within one environment, you build a system that covers a single use case. That's what I call a separate build. The opposite of that is integrated design. So I'll spend this time explaining why integrated design is needed and why it deserves your consideration. Let me start with the background.

The diversity of digital assets keeps expanding, and this is not something individual financial institutions get to choose. Assets are diversifying. In Korea alone there are CBDCs, deposit tokens, stablecoins, foreign stablecoins, security tokens (STO), RWA, real-world assets — asset classes keep diversifying. Issuers are also expanding: central banks, commercial banks, non-banks, and foreign issuers. Distribution channels are diversifying too.

On the technology side, there are many chains, many contracts, many custody technologies, and regulation differs by country — it's all diversifying. By geography, there's APAC — Korea, of course, and in Asia, Hong Kong, Singapore and Japan; then the US and Europe, plus emerging markets like Abu Dhabi. If we think more about what this diversity means, we can understand it as globalization.

Just as Netflix transformed the content business for both suppliers and consumers. On Netflix, suppliers diversified and became multinational, and consumers now watch content from many countries. Put simply, the borders came down. The expansion of digital assets through blockchain is also, in the end, heading toward breaking down borders. That's how I see it.

What matters here is that this shift in the global environment isn't something individual financial institutions can pick and choose from. Within financial institutions' current field of view — in Korea, for example — there are CBDCs, deposit tokens, stablecoins and STOs. Those are in view, but what's happening overseas, how it will come into Korea, what diversification will happen here, what will happen in Japan or Hong Kong — and whether that's irrelevant to Korean financial institutions — these are questions worth asking.

It's hard to predict what will or won't succeed, but that things will diversify is about as certain as the future gets. In that environment, is assuming that covering two or three domestic options is enough really a wise choice? I think that deserves longer-term thought. In this environment, things are added one at a time. If someone said, "Here's what will emerge over the next 10 years," you could plan and build. But they appear one by one — regulation hasn't opened up yet, or something doesn't exist yet. Making decisions in that setting, diversity grows bit by bit,

and it feels like external pressure you have no choice but to respond to. That's the institution's position. As these pile up one by one, the system keeps growing through add-ons. You could call that the fragmentation of an institution's internal systems. Even within Korea we have all this, but blockchain is ultimately a technology that makes finance global and borderless. So what will come in from overseas, and how we'll expand abroad — all of that is uncertain right now.

When new services keep getting added, are you building an integrated design they can attach to naturally? That's the question I want to put to you today. Even if you only operate in Korea, regulation changes every year. I've heard of blockchain systems built a few years ago becoming useless because the regulation changed completely. Even domestically, regulation shifts dynamically. So will you rebuild the system every time it changes, or design it so that when regulation changes, you just modify a module and keep the system running? That's the question.

One company we're currently consulting for is based in the UK. What they told us was this: the company is a financial firm, but one that has been actively doing crypto business. It lets clients trade derivatives using things like Bitcoin as collateral. And they told us: "Our company has branches all over the world, and each branch uses a different wallet." One branch uses Fireblocks, another uses Copper, and another uses BitGo.

So depending on which custodian they use, internal control policies differ, and every branch has a completely different process. The people in charge differ too, so headquarters can't manage risk holistically or see who is doing what. So they said they need to integrate all this. And ultimately, I think that's the future of Korean institutions. They built without foreseeing this, and only later realized they had to integrate. For Korean institutions, the golden window hasn't closed yet.

I believe there's still time to design with integration as the baseline. Here I'd like to point to a more practical problem. At the leadership level of financial institutions, budgets are probably allocated business by business. And the pattern is that budgets are mostly assigned to individual, specific projects. The biggest problem then is that an integrated system can't be assigned to any single project.

Because it's a system that covers every project. So, ironically, it belongs to every project but has a place in none. That's the problem. If you only approach things project by project, without thinking about integration, then "we're doing something with Avalanche," "we're doing something with Solana" — those get budgets, but there's no room to even consider a budget for connecting and integrating it all. So I think leadership needs to give working-level teams the opportunity and the budget to work out how to approach an integrated system.

That's my view. Projects come in one at a time, and with external timelines uncertain, you end up tackling them one by one, and it becomes hard to approach the whole. And what I'm telling you isn't just our own claim. Everything here reflects what BCG, McKinsey, Deloitte, the BIS, the Basel Committee and the IMF — global institutions — commonly predict as the bottleneck.

They all say these will be the biggest bottlenecks when financial institutions adopt blockchain. So to integrate while already in operation, you have to pull fragmented systems back together through live migration; post-hoc integration brings difficulty and risk; and without an integrated system, repeated build costs and vendor lock-in keep getting worse.

So the longer you miss the golden window, the more it costs to integrate later. That's how I'd put it. So let me briefly introduce Foundry, a product designed by Altus. Foundry is an integrated internal control framework for digital assets. We see any business line as an application. And we treat the application and the system an institution must control internally as separate layers.

Whether it's tokenization or stablecoin payments, that's an application, and the system that lets you run it safely must be built at a lower level — that's our position. Through principles like permission-based boundaries, real control, and separation of procedures and permissions, we built a framework that lets us build this. So, to sum up my talk briefly: the diversification of digital assets isn't optional — it's a strategic inevitability.

It's external pressure you can't choose internally. And an integrated internal control system should be considered before the golden window closes; permission control and flexible scalability are its key requirements. That's the message I wanted to share. Thank you. Thank you, CEO Hyung Yeon Lee.