🚨LIVE From SALT Digital Finance Forum in Bermuda Day 2

Transcript

[music] [music] [music] [music] Thank you. >> [music] >> Lord. We'll see you around the timeline.

Feels good to be back. [music] >> I think The Rollup is one of the most premier media brands in crypto and Andy and Robbie are great experts at [music] everything they talk about and it's my favorite podcast. adding it to my library every day. >> Potentially multi-chain deployments. We are at the connect day [music] one here from space. [music] [music] [music] Heat.

[music] [music] [music] Heat. [music] >> [music] [music] >> JP Morgan, Black Rockck, DTCC, Fidelity,

the entire thing was just institutions. It's just it's next level. Well, this industry is going to the next level. And guys, I I don't know what else to say. I'm bullish. HE SAID IT. HE FINALLY SAID IT. So bullish. It is bullish. I'm bullish. We're bullish. Heat. [music] [music]

Heat. >> [music] [music] >> Heat. Heat. Corola [music]

is headed to the top. If we're not already at the top, we're going to the tugos. >> Roll up is my favorite. >> From all walks of life, all over the world, all over this industry come together for the roll up. [music] [music] [music] >> [music]

>> Zoom out. The institutions aren't coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. [music] Welcome to the next. See you on the show. Welcome back to Bermuda. We are live from the digital finance forum here on island time at Salt Conference powered by our friends at Penrose near the premiere of Bermuda.

>> Salt. >> The rain. Um >> the rain. Yeah, it's for a little rainy sunny cloud here in Bermuda. You've been on Island Time for a while. You're coming straight from El Salvador, Bitcoin Beach, >> Miami. Miami. We've been on island time here for a little bit. Uh great day one. Uh we've changed locations. We got a little bit of a different set. >> Ballroom. >> The Trudeau Ballroom here in the Princess Hamilton Hotel. >> We've got a a saint watching over us today as well. The >> King Charles. Maybe he'll be a saint one day. Um and uh of course, shout out to Near, our exclusive AI partner. These guys are doing incredible things in the AI world as well as uh more to be disclosed later potentially with uh you

know the jurisdiction that we find ourselves in today. A tremendous show as well today. We're going to start off with our friend Raja from the stellar uh the stellar organization uh as well doing amazing things with Bermuda. uh you guys uh announced a partnership uh that is allowing the citizens of Bermuda to capitalize on the infrastructure that Stellar has built in payments uh stable coins uh and we're we're going to talk a lot more about it today. Raja, welcome to the show.

>> Thanks for having me here. >> Good morning, man. Welcome. How's the island [laughter] treating you? >> It's great. I feel like I need to be here on vacation. You know, the business is fine, but I really just want to kick back with some rum and just chill on the beach, but it's great. >> I think the headquarters of Bikardi is like right down the street. So, you're right about the rum uh what are you calling the rum swizzlers? >> Twizzlers. Yep. >> Yep. [laughter] Yep. >> Um >> how's the uh how's the event treating you? How's it been for Dave? >> You know, the event's awesome. I think there's like a lot of great folks around here. I think the interest in all of the work that we've been doing is just palpable. It's such a cool environment because in Bermuda you've got this like

confluence of the political landscape, the regulatory landscape and the technology all kind of converging for this moment. And I've gotten a opportunity to spend a lot of time with the premier while on the island but also before that. And I think everything that he's been doing over the last I don't know how long he's been in office now since 2018 or something like that. I mean everything has been leading up to this moment and it feels like it's right there which is like incredibly exciting and you can just feel the island vibes like flowing through from it. [laughter] Happiness that we're here to deliver this today.

>> Absolutely. And so Stellar as a result of this partnership is going to be powering uh Bermuda which is going to be one of the first uh if not the first onchain economy. talk us through what this means for uh an economy of, you know, Bermuda's scale to come onchain. >> I think it's really a phenomenal thing. And so, you know, I was kind of just referencing the idea that, you know, they've aligned all of these different things and that's really exciting. You know, I guess to take a step back, you know, the Stellar Development Foundation, where I'm the chief business officer, is a foundation that's designed to support the Stellar blockchain. And the reality is like Stellar as a blockchain has been around for over a dozen years. actually almost 13 years.

So when you think about it from like an infrastructure technology layer, >> that's kind of pretty OG um in terms of how long it's been around. >> And it was purpose-built for everyday financial services. And so the focus was always around how do you design delivering a payment you know at you know incredibly low cost at incredibly high speed anywhere in the world that matters. And I think that's what that design was really for. At the same time, making sure to deliver an infrastructure that is what I would describe as institutional grade, meaning that it is effectively all always up. So, we're four fives of uptime uh over the history of that period. And that I think is really speaks to the types of things that we're able to do. And so when I

think about a government like Bermuda or really any government for that m matter, one of the most important things is if you're going to introduce something that is new into the economy around things like payments and financial infrastructure, it really has to work. Like it's got to work all the time and it's got to create efficiency. You can't introduce things that are just, you know, cool technology ideas that are not actually supporting the thing because what we're talking about here is moving the entire economy on share onchain. And that is incredibly ambitious for a lot of us folks who have been in crypto or around crypto for a long time. Like thinking about like the move from where we were at with just you know buying certain coins all the way to transitioning an entire economy's financial infrastructure on chain.

That's what is required there. And so I see when we are talking about this this concept that is about not just being able to make payments happen but be able to ensure that like government fees are settled that merchant payments can happen this way that really anything that you do on the island can be facilitated through blockchain and that's the infrastructure layer that we've really focused on doing and it's really great to actually see a government like Bermuda actually make the transition move it forward and I will say that it is really hard you know I live in the United States. I think it is very very hard to get everybody aligned to be able to deliver this sort of thing. But if we can be successful here, I think this will create, you know, a blueprint for how this can

extend into a lot of other economies. >> Yeah, that that's what we're hearing is that Bermuda is sort of this financial experimentation zone where they can try things and if it works, we get to use those lessons, learn from it, and then ultimately implement it at countries of larger scale. I was also speaking with some people on the ground here and they said yeah like we don't have cash app like that that doesn't work here and so this integration allows for the largest on and off ramps I believe with stellar to help facilitate some of these movements. What what are some of the use cases that that you see as some of the most prominent here as a result of this?

>> Yeah, absolutely. So I think there's a few steps to this process. The first is I I think many of us may be aware of this but for people who aren't when you look at some of the traditional systems there's a lot of embedded cost. So if you think about like merchant payment settlement the average transaction cost can be anywhere between like 3 to 5%. When you think about remittances at a global scale like you're pushing you know the the remittance cost upwards of 10% or even more. All of these things are effectively taxes on people who in many instances aren't really well suited to be able to afford them or it's a tax on the merchant who might be a small business and they rely on cash flows to be able to pay their supplier base. And these are real these are real costs that

actually affect what they're able to do. And so the first thing is okay well if you're able to leverage stable coins and you're able to leverage digital finance infrastructure you can take that cost down dramatically. That's one that's one side because now you have incremental value that you can redeploy into the economy. So that's the first thing. The second thing is well okay when we talk about a new digital infrastructure you actually need to have the component pieces to allow for those payments to happen. And so what we've supported is a series of wallets that are actually able to absorb and effectively accept uh accept a digital asset. And so you talked about Cash App obviously you know I'm familiar with Cash App. I'm familiar with Venmo. familiar with zel. These are

all relatively common use cases in you know the United States and other places but a lot of those wallets are not available and they don't operate in a cost affordable system and so we can deliver a set of in series of wallets into the economy and we're actually launching right here which is super exciting. We're going to do a demo um I believe tomorrow with a partner which is decaf which is built on the seller ecosystem where they have wallets that are able to accept uh digital digital payments. And then the last thing and this is really about the onofframp thing is you know there's so much innovation that's happening and it's really cool but ultimately we really focus on this idea of that last mile which is it's great that I can have a digital asset but like I need to use it for real

things. So, how do I then turn that into an asset that I can pay in the economy? And so, we have the largest global network of offramps, meaning you can go into, for example, a moneygram location on island, take a digital asset in a stellar wallet, and then work with our partners, Moneygram, who we work with deeply to be able to actually offramp that digital asset into local fiat. And that's incredibly powerful because now you have all of these different use cases. Maybe you're a merchant who accepts a digital payment. Okay, great. I'll use it with a wallet. Maybe I don't. and maybe I want to be able to deploy it into a card which I'm able to go ahead and like tap and pay or I need to go and transition those dollars out and literally have like hard dollars in my hand and then be able to pay. And

we're now facilitating that entire infrastructure. And again, that is the real excitement here. And I think ultimately, and I know I'm going on because I get so excited about this, the thing that delivers value is if you kind of make that blockchain almost invisible, but all of the people behind it are the ones that just see all of this value. They just see that it's so much more efficient that I have all these different opportunities and boy, I've got all of these extra all this extra capital that I can then deploy into all of these other things. And that's how you make an economy grow. >> Yeah. You know, I think that you guys did this experiment kind of with the UBI program in Marshall Islands. I'm curious what you learned there and how you'll apply that to this excitement that you have for bringing the entire economy of

Bermuda on chain, starting with stable coins, starting with payments. What What were some of the key learnings there? >> So, I mean, the Marshall Islands is absolutely fascinating. I'm going to butcher some of these stats, but I think like there's Okay, so there's like 1,200 different islands that constitute the Marshall Islands, and I think there's 29 primary islands. If you collapse all those islands into like one specific geography, it's the size of Washington DC, but it is distributed over an area that's the size of Mexico. So all of a sudden you have this issue where you actually are trying to figure out how to deliver, you know, like a universal basic income, but just payments broadly across all of these different people.

The reality is like there's not 1,200 different bank branches. Like where do these guys get access to to cash? They don't. So they're in this barter system. Now with all of the advances in terms of like Starlink and the ability to actually deliver, you know, cellular service and mobile service to all these islands that created this real significant opportunity and the government wants to be able to deploy a basic income to all of their constituents. And so what we did was we partnered with them to deliver stellar wallets to be able to deliver that basic income into into people's wallets, which is super exciting because now it can they can actually pay merchants, they can pay peers, and they don't have to worry about like trading shells to be able to like get access to, you know, to rice and things like that. And and I

think that's super exciting. The other piece that's really exciting about, and I think this is one of the innovations that is happening in Bermuda, is the concept of yield. And so we spent a lot of time thinking about this idea of like I I'll just kind of call it like lazy capital, but basically dead capital that just sits in your wallet. It doesn't do anything for you. And when we first started seeing stable coins emerge, one of the biggest reasons that people wanted to do that was, hey, I'm in Latin America. I want to have a dollar savings account. I'm worried about like inflation risk. I'm wor worried about currency volatility. But now all of a sudden, I'm dollarized. Fantastic. The next advent of that is being able to apply yield into those into those assets. So it's actually working capital for you. And this is what we saw as a

key learning within Marshall Islands is universal basic income is actually structured as a stable bond. And that bond is actually generating incremental interest and that's creating more value for people on chain and on the economy. And I think when I when I hear the premier talk about how they're going to go approach, you know, this whole digital Bermuda dollar that yield is a critical component of it because it actually allows for more value to be attributed back into individual's hands. And I think that that is just this innovation that people don't even really understand, but just making that money work for you.

>> Yeah. And uh I'm I'm curious because, you know, sellers an OG. It's been around for a long long time, but I I personally I'm not as familiar with it as maybe some of these other blockchains. What makes Stellar uniquely positioned for these use cases with the Marshall Islands and with Bermuda? >> Yeah. I mean, I think the reality is like we've just been there and we've demonstrated all this value. So, beyond the Marshall Islands, we're also the first network that had the first um you know, tokenized money market funds. So, Franken Templeton um a lot of people don't know this. You know, I think of this as just like gospel working within Stellar and within the environment. But Franklin Templeton issued their first tokenized money market fund, which is uh the FOBXX money market fund represented by the Benji token, and that was issued

on Stellar. And so we have a huge track record with working with institutions at scale, thinking about things like yield, but actually operating with these products. We've been operating in stable coin payments before they were even called stable coins, like over a dozen years, like actually making these things happen. We've worked with organizations at scale who are delivering really really difficult payments and so like the United Nations, the World Bank, these are institutions who you know sometimes you say those things and you think about aid but actually what they demonstrate is I need to deliver the hardest payment in the hardest relocation. How do I actually do that? And one of the premier examples I think that we had um pun not intended for Premier Bermuda is that we helped um facilitate payments from the UN into

Ukraine when their correspondent banking system got disrupted. And that was like a huge issue, right? Because you have all of these people, they're dispersed, they need to be able to get aid delivered in their wallet. If you're the United Nations, you need to make sure like I'm actually getting hands into the the the the assets into the hands of the people I actually want it to get to. like I don't want it to, you know, get into the hands of a bad actor or something like that. So, it needs to be auditable. It needs to be able to go immediately. It needs to be able to go directly from one place to another. And that's like one of the hardest payments that you can demonstrate. And so, I think when we see, you know, the the government of Bermuda saying, "Hey, look, like we see Stellar.

We see what you've done. We've seen the use cases that you've focused on. It's always about like everyday financial services and actual delivery of value and that you guys are really missionoriented around like making sure that those use cases are real real and strong. I think that's really the attraction and that's what we really try to um stand behind. >> Yeah. Yeah. Most definitely. You know, I'm curious about like how this is going to actually work, right? Like what is the implementation timeline and process um and what do you actually expect from this? >> Yeah. Um I mean we're going to demonstrate this like tomorrow which is super exciting. We're going to demonstrate um so you know Circle is a strong partner of ours. They have USDC which is a um prominent uh stable coin.

We're going to demonstrate that delivery into a wallet powered by a ecosystem partner which is decaf and off-ramp through Moneygram which is an ecosystem partner. And you know, I I feel like pretty lucky getting to work at a blockchain like this because we get to operate at the infrastructure layer and we're really supporting and helping innovate on top of it. And so that's really the power that we're able to do. Now this is the first step and I think the aspirations from the premier are pretty remarkable which is let's go ahead and then go de develop our own Bermuda digital dollar and I think that is the thing that um I see a tremendous amount of interest and that is something that we'll deploy you know hopefully over I I think he's got very specific ambitions to get that thing launched

before the end of this term which um which is yeah which is which is coming up and um I'm really excited and we're really excited to be able to partner there and deliver the infrastructure But I think the key concept here is demonstrating that you actually have all of the capabilities available because now that we've set that up, now that we've set up the wallets, now that we've set up the ramps, now that we've set up the ability for people to understand the use cases and connect with governments, with merchants, with peer-to-peer, all of that infrastructure is there, the new asset delivery becomes almost secondary, but that can then be deployed into many meaningful ways and help advance, I think, all of the different items that um that the government really wants to do.

>> Yeah. And so you you think that you'll be able to see this really, you know, take place in practice before the end of his term? >> I think we're going to see this happen. Like I said, I mean, the first iteration is happening tomorrow, which is super exciting. And, you know, it's it's it's um a really exciting thing that they're doing here. I think the reason why we're going to be able to see this happen though is really this confluence I I I talked about in the beginning, which is we set up the technology. That's that was our job, right? We got it set up. And and by the way, there's there's other ways to offramp. There's the Kraken partnership we haven't even talked about. There's a lot of different things, but we set up the technology.

You have the will of the premier to ensure this is happening. And then critically important is that the regulator in Bermuda is aligned to getting this out. And I think that's where, you know, we're we're going through this thing right now in the US. There's a lot of different constituents, a lot of different things. We're starting to make movements. We're starting to see, you know, the the the the passage of regulation, which is great. We're starting to see the SEC issue guidance on what this whole thing looks like. And now we're starting to see that momentum, but you don't see that unification of that momentum like you're seeing right here. And that is the most that is the most powerful thing because they don't have to wait. And I think that's the thing that tends to like really harm innovation is this requirement to wait and people not sure

when they can make the move. And that makes innovators not be able to connect into institutional players. What we have here is the opposite. Yeah. >> Is that immediately, you know, we're at this conference and I'm talking to financial institutions that are here in Bermuda. We're speaking to infrastructure providers. We're talking to transportation, you know, airlines, hotels, you know, different like retailers. Like all of them are here and they're all like, "All right, let's go." So, it's great. >> There's no waiting. >> Yeah. Raja. Um, I feel like part of the original Stellar vision was that the actual XLM asset was going to be the payment uh asset. It was kind of part of this cohort of blockchains and and tokens that were kind of part of this

new era of the this is going to be the asset that you're going to be doing payments with. There was quite a few others. Um, some of them being three letters that start with X. Um, >> what what is the uh rise of stable coins? How has that kind of changed the vision of what Stellar is going to become as the future kind of unfolds? Maybe it wasn't maybe this was just a 2017 2020 kind of like narrative thing that that that these types of of tokens were going to be used for payments, but it's very clear that stable coins are the dominant form of payments going forward. How how do you kind of reflect upon the changing landscape of the industry and how it pertains to like the broader vision of what you're doing here?

>> Yeah. Well, so for one, XLM is used in every single transaction on Stellar and it's used um in micro formats to ensure that it's on the network and that it fights against things like broadband actors, all of those things. So XLM is used as a utility function. Um so so there's that. I think the the important point that you're bringing up is this design. And by the way, I, you know, I was at Consensus in Miami last week and I had this conversation with a bunch of peers, um, some of the folks who are competitors of ours, but, you know, we're all working together against this thing. And without a doubt, stable coins are the thing that have shown product market fit. I think we all generally speaking understand and have seen that particularly in emerging markets when you think the utility and you see the

value like 85% of that value is actually happening across borders and I think that has shown a dominance of that use case. Um and I think the reality is like we have evolved in this really I think specific way where trying to figure out what is the value of uh you know of the different coins and where do they actually create value and where do they where can they be leveraged as this payment asset. I think that has now shifted into hey look like we've actually figured out what it is. It's a stable coin. I know it's I know that it can be viable in existing financial infrastructure and I think where we were before was hey look like let's get coins out there and let's kind of like build

market cap on these and then you know almost like have fun trading them to now we're like let's replace financial infrastructure at scale like that's it like our aspirations are no longer this they are everything and I think that is the way in which I want us to position ourselves collectively as an industry and so it's not just the stable coins that we're seeing but it's these other really amazing things that are happening. Obviously, we talked about tokenized money market funds through folks like Franklin Templeton, but the asset classes are starting to shift fairly dramatically and you're tokenizing a number of different products that might be, you know, they might be structured finance products, they might be different bond structures, they might be equities that we're starting to see with folks like Kraken with their Xbox product and others. And these are the types of things that we're

seeing that innovation. And so, you know, when we were talking about this like crypto winner, again, I almost don't even like to say that because it's kind of not the same thing, but like that is sure there is some contraction there, but that's like fully independent of the institutional interest that we're seeing, which is like >> absolutely dramatic. Like I have not seen more institutional interest in all of the digital asset infrastructure as I do today. And every single day, it is higher and higher and higher. And so in my mind like let's go use the technology to go solve the problems and then all of this other stuff will take care of itself. And by the way, you know, I hold my own bag of like stuff that has [laughter] you know different letters and you know I want that stuff to go up

but ultimately like the goal here is financial infrastructure at scale. >> Yeah. And we're we're calling that institutional FOMO. Uh you know the the interest that continues to build and accelerate. Um be before we let you go Raja I mean this this is you know a landmark partnership with uh with Bermuda. Uh I'm just curious, you know, what advice might you have for other jurisdictions that are looking at this partnership and they're considering something uh like this for for their own? >> Yeah, I think it's really um focusing on the fundamentals, which is what I think Bermuda has done, right? Like the fundamentals are regulation. It is ensuring there's like there is sensible policy and make sure the the technology is there. And I think if we can get

these three things together, that's always going to be the best way to do it. Um, and then the reality, you know, and I will say this sitting from, you know, my high seat, which is work with people who have been there and done that because I think that's what that's what's going to allow for the delivery. >> Yeah. >> Yeah. Pleasure, man. Have a great day. >> Thanks for uh being flexible. >> Thanks for coming. >> Absolutely. Appreciate it, man. We'll see you next time. >> Yeah, sounds good. Thanks, guys. >> Cheers. >> All righty, guys. We've got our our next guest here, Salman from Plume. We're going to keep it rolling. That was Raja. That was their announcement with the Bermudian government. Thank you for being patient, my lovely friend. Salman, it's great to see you again. Um, man, the government of Bermuda is one of the

most innovative governments, but oh boy, David Bird is on the the wee end of his term, isn't he? >> Well, I think he's trying to push through quite a bit of uh of innovation before he ultimately leaves office. Uh, which is which is cool to see. He's trying to leave a legacy. Uh, I think it's what he should be doing. And I'm uh I I I'm pleased to see how much they're able to get done. uh because ultimately this is the foundation that they leave for, you know, the next uh the next administration that comes in. So, we're going to chat with David later today. Yeah. Uh I think in a couple of hours uh now we've got our friend Salman from uh from Plume >> in Bermuda.

>> In Bermuda, I like the >> I like the looks great on you, man. >> Thank you. Thank you. >> We've had uh plenty of movement as of late in the clarity field, uh the regulatory field. So, lots to talk. >> You had a testimony as well. >> Yeah. Last month. Yeah. >> Yeah, man. How's how's Bermuda treating you? >> Um, I love coming to Bermuda. Um, so I've been here several times now over the past several months. Um, and it's just great to meet with regulators that really want to get into the weeds in terms of how um how crypto works, how tokenization is evolving, and um trying to figure out new ways to make um regulation work as we move to a more decentralized capital market structure.

>> Yeah. And so you've been here several times. I know that you guys were working on this 40page kind of comment letter to the Bermuda Monetary Authorities's kind of overarching view on tokenization. >> Maybe you could just speak to that a bit. What is that kind of view that that they're holding? How have you influenced kind of this uh broader adoption curve for tokenization? >> Yeah, so um this was back in I want to say Q4 last year. I don't remember the dates. Um but they they came out with a very um ambitious and thorough um request for comments on um on a discussion paper they had produced around tokenization. And what was really impressive about it was not just that they um you know were were trying to

think about the the regulatory oversight issues, but they're actually getting into the weeds of um how protocols are developed um what are the controls um to ensure security, what are the best practices um and really getting into the into the details in a way that um I don't think I've seen any regulator um quite go into that level of detail. And so yeah, it took us 40 pages to, you know, to and and even then I think there's a few issues where we're like, you know what, this isn't really our domain. We'll we'll let others comment on it. Um, but we've just been really impressed by the the team at the BMA.

Um, they are among the most forwardinking. Um, I think, um, what they bring to bear is a, uh, particularly professional approach to regulation. You know, it helps that uh the BMA is the the regulator for a disproportionate amount of the the multi-t trillion dollar reinsurance market globally. >> Yeah. >> And um they've also had an outsized influence across financial services, particularly asset management industry as well. And so they bring that professionalism um the experience of being, you know, a credential regulator for those critical global markets. Um and they're applying that expertise now to digital assets and that same kind of serious attitude. but at the same time they're very innovation forward. Um they

realize that a combination of uh good but flexible rules is a good way to for them to punch above their weight when it comes to to regulation. Um and the the BMA name, you know, confers a lot of credibility um you know outside of outside of Bermuda. >> Um it's a common law jurisdiction, so there's a lot of parallels with other common law countries, including the US. Um and yeah, we've seen them um take advantage of the moment, you know, um with the change in kind of attitude when it comes to tokenization um emanating out of out of the US, but also other jurisdictions like Hong Kong, Singapore as well.

>> And um because they're they're small, because their regulatory regime is flexible, um they're able to move more quickly. Yeah. >> Um and I and I do, you know, I'm I'm very bullish on Bermuda's ability to capture um you know, another disproportionate share of this global onchain capital market that's >> what do Sorry to >> Yeah, that was that was the >> What do you think BMA got right that the regulators in the US and and large countries abroad have gotten wrong or haven't realized yet?

>> I don't think it's that any jurisdiction has gotten things wrong. It's it's a function of you know the the the US is regulatory state. It's spread across you know multiple different agencies with you know thousands and across all of them probably tens of thousands of employees. So it's hard for them to move. Um and you know coordination is is challenging because you got different leadership across all those different agencies with their own kind of parochial interests and you know political and policy constraints. Um whereas in Bermuda you know it's it's an island of 50,000 people. um the BMA is the you know financial services regulator across you know the entire financial services industry um including crypto assets. So they're just able to move more quickly. Yeah.

>> And so as as kind of the the over the global attitude to tokenization changes, they can kind of move into the space that's created in a way um and and kind of you know build paved roads um you know all the way to the perimeter of kind of where the the rest of the world is going, >> but do so in a way that's quicker than the others. So, um because they're able to and you know what also helps is the the digital asset business act uh that they uh um uh turned into law back in I think 2018 is uh very flexible. um you know it wasn't specifically drafted to support stable coins and you know now Bermuda is you know one of the leading jurisdictions when it comes to uh you know regulating stable coins because

they have that flexible kind of principles-based but still you know very serious and very robust regulatory regime um when it comes to tokenization they can also draw on their experience you know um across these other industries so one area we've been talking to the BMA about is around um vault vault curation Sure. >> So vaults, you know, in in a lot of ways they're, you know, DeFi native way of doing asset management and so they can draw on the regulatory framework they've come up with crypto assets, you know, in terms of AML control, cyber security, things of that sort um and augment that with their experience as a asset management regulator as well and come up with a very bespoke regime that works

for the creation of of vault assets um which uh you know from from a uh Bermuda perspective would be a great place for them to find a niche because that is one way of bringing globally scalable asset management products to the rest of the world. Um and uh yeah we uh we've been very encouraged by kind of their uh progressive but tough uh approach to you know bringing these assets um into their perimeter and and making sure that they're that they're brought to the world in in a safe and sound way. >> Yeah, definitely. And I mean, I think obviously Plume's been working on this Nest credit product, this Vault product has hit about 50 million in TVL and growing. Now, you know, I'm I'm curious as you start to see this vault landscape

expand, right? We've seen and heard from large asset managers that this is kind of the next iteration of ETFs from the financial product standpoint. Uh, you know, we've seen a lot of interest in these from investors onchain and also in institutional allocators. It's very clear that this is a unique new primitive. It's almost like a actively managed ETF but in a more kind of unique onchain format with kind of more capital efficiency probably more risk different types of products onchain uh that are available. And so you know with Plume then taking a stance in Bermuda as being a very friendly yet progressive regulatory environment. What are some of your plans if you are going to be regulated in Bermuda? What does that

mean for Plume? What does that mean for the Nest Vault product? How will you guys leverage better regulatory clarity from the BMA to provide a better product for your end users? >> Yeah, so there's there's really um two things that we're seeing. Uh one on the supply side and we're on the demand side. So on the supply side, you have US and other asset managers globally that want to tap into more AUM that um onchain capital markets enable. So anybody with a mobile phone can, you know, and a stable coin can can uh get exposure to, you know, Nest products or other other vault products. Um, and what we're hearing from the supply side is, hey, we have regulatory constraints in terms of like how we can um take advantage of foreign feeders to to to

kind of import that aum from overseas. Um, the Bermuda regime um enjoys, as I said, recognition from a number of other jurisdictions. It's it's it's it's you know seen as a reputable um you know peer regulator by the major jurisdictions including the SEC. Um there are foreign feeder fund structures um that the SEC has blessed over the years that um involve structures similar um to uh the regulatory structure offered by Bermuda. Um and so by being able to um bring these uh create feeder funds out of Bermuda um with in cooperation with US uh you know 40 act funds uh we can offer them that global distribution that they're looking for.

Um so that's that's on the supply side. Then on the demand side, what we're hearing from a lot of our partners, particularly regulated partners or even, you know, partners that aren't um regulated, but have, you know, thorough risk management processes, they want to see um they don't want to get rug pulled, you know, they want to make sure that the vault is actually performing in accordance with its mandate. Yeah. Um and there are certain you know um features of uh vault protocols where you can for example uh constrain the types of assets the the vault protocol um can um can incorporate um in in it and its holdings. Um but you still need you know a regulator kind of providing that independent assurance. And so what we're

hearing from on the demand side from our partners is it would be great if you guys had that independent assurance, that stamp of approval that um you know the as the assets in the vaults are actually what you report them to be. >> Yeah. >> Um and that you're you know following cyber security best practices that you're you're managing um AML risk as well. Y >> um and so from both sides of the market, we're really seeing demand for um for for regulated products. And so uh BMA has been a great partner in trying to unlock that. >> And so you know through using the BMA that like these institutional allocators, these asset managers on the demand side who want to uh participate in these products but require a certain level of um let's call it professionalism. they they have enough

assurance in the BMA and in the rules and regulatory body here that if there's a stamp of approval here for a product like Nest that means that that's likely enough for them to be able to move forward into that. >> Yeah, that we we are seeing demand you know demand for that type of uh you know independent assurance. Yeah, BMA is well positioned to to provide it. >> Yeah. And and Plume has been a steward in going out and and getting that assurance. Uh I'm curious about the the testimony uh last month uh in front of the House Financial Services. you you're talking about tokenization >> old news now now that clarity is uh you know >> well so so that's a qu so so in this testimony my understanding is that you know you were you were advocating for integrating tokenized securities into like existing framework rather than you

know creating a carveout which had been discussed right >> now with clarity this may have changed some things just I I'm curious you know why you were advocating to integrate rather than create this carveout and then what changes now with the most recent addition of clarity >> yeah I mean I think the fundamental principle that there's been uh debate over is uh the extent to which um tokens are securities and um emphatically you know many of these products uh that we see in the RWA space are securities. Um and so um we supported the the concept of you know um providing that affirmation you know in the statute to say hey um just because an asset is securitized doesn't change its nature. This is a security

it's a it stays a security. Um the the question is around um how much flexibility the SEC should have >> in terms of tailoring its rules um to to kind of meet the the new realities of you know onchain securities >> and um you know the bill that we saw in January um you know uh I thought it was pretty good particularly if you balance out the the section 505 um affirmation of the principle that you know tokenization doesn't change the nature of of the products >> combined with section 108 which called on the SEC modernize its rules to accommodate kind of onchain infrastructure. Um that same balance exists, but um in this latest version of the bill 505 has been amended to reaffirm the SEC's exemptive authority

so that it can craft more flex flexible rules around uh tokenized securities. So um yeah, I thought the January draft was great and I think this draft is is great as well. I do understand that um you know many [clears throat] of the securities industry incumbents aren't happy with uh the the version of the the bill that came out uh I guess it was a couple days ago. >> Um and there's you know extensive lobbying happening. So um we'll see where it lands. Um >> and why is that so much? >> Yeah. Who who are those security incumbents and and what is their position?

>> Yeah. So the leading um securities industry uh trade association is SIFMA. And so they they're just very they're they're worried about things like for example wrapped tokens. >> Sure. >> Um you know potentially creating a regulatory arbitrage opportunity. And so um and you know I I could see where that concern is coming from. Um but I think once as long as you affirm the principle that tokenizing a security is keeps it a security um and you preserve the SEC's you know flexibility in dealing with these products just like they've dealt with you know other novel products and giving them you know the flexibility to come up with uh new rules that achieve the same outcomes. I think uh that's a good balance. Now I don't know whether

they're convinced or not. Um, we'll see how, you know, how how hard and how successful they are in the push back, but um, yeah, it I think that's going to be an important issue for tokenization. >> Do do you have any strong opinions about what what we're seeing recently around anthropics, SPV rapper, tokenized versions on Salana, now Anthropic comes out and says these aren't real shares. How should we approach this? Yeah, I mean, one one of the things that I'm um so the SEC came out with uh the SEC staff in the Division of Trading and Markets, my my former division, um came out with a statement. I I guess it was about three weeks ago saying that DeFi user interfaces um don't have to uh register as brokers

provide they provide they meet certain conditions and that they stay very neutral, provide a very like neutral service and don't have any language that looks like solicitation language for example. Um, one of my concerns with the the just the the breadth of that um, no action statement is that um, it it creates kind of a a bizarre world where it it'll actually be easier for retail to get access to those wrapped products. Um, at least ahead of uh, you know, DTC and the SEC kind of blessing um, you know, new uh, US compliant tokens. Yeah.

And so um you know these kind of inferior wrapped products which you know may or may not even have a claim on for example anthropic yeah securities um are able to get into the into the hands of retail. Um I I did see something on Twitter I didn't you know double click to to verify but there seems to have been a repricing um and and yeah a repricing as kind of you know Anthropic came out with that statement um >> and a lot of those products were trading you know at the perceived market value for anthropic securities but now there's been a repricing down >> as the market realizes that hey a lot of these products are have a very loose if any any any claim to uh to the underlying security. So, um, the market's evolving. Um, I I I wouldn't

recommend anybody, you know, try to get exposure through these, uh, through these rap products. >> Yeah, they want exposure. They want access. >> And I don't blame [clears throat] them. I mean, >> it's these are, you know, quality companies, but the instruments to, uh, expose themselves to these quality companies are under under uh underwhelming at the very least. So, >> uh, yeah, it seems like there's a big open gap there because people want this access, uh, to figure out the right way to do this. Um, but like you said, you know, we're going to continue to see evolving regulation from the SEC tokenized or wrapped versions of securities don't change the fact that these are securities. Uh, and there are certain precautions that that are put in place as a result of that. Yeah, I think it's a win-win scenario if uh issuers

can get access to global liquidity through DeFi rails and um you know, we've been encouraging the SEC >> to come up with a framework where you can issue these products out of the US directly, you know, and just get rid of this chain of SPVS, you know, between the issuer and the investor globally. Um so, um fingers crossed, knock on wood, >> yeah, >> you know, the SEC will get to that outcome. >> Yeah. I I'm curious what the current evolution of the specific, you know, act that we're all following and waiting for, which is the Clarity Act. I saw Eleanor sort of put out some uh guidance and and notes. There was some new developments literally this week into the end of last >> 100 amendments as of this morning in >> 100 amendments. Amendments.

>> Did you get a chance to catch up on it? >> Uh so I I I read it um on the plane over here um on my phone, so it wasn't the best uh you know, highest quality read. I do have a print out that I that I need to to to to read through more closely, but um it's moving very quickly. You know, 100 amendments indicates a lot of interest, indicates a lot of controversy. Um and uh you know, I do think the bill was uh was was pretty strong. Um you know, that that bill was definitely a net positive for you, tokenization, crypto more generally. Um so I'd love to see it pass. Um the question is, you know, what comes out of the negotiation process? My understanding is Senator Lumis has um has indicated a willingness to compromise with uh you know some of the

Democrats and maybe some of the Republicans that may have some reservations about the bill in its current form. Um we think uh a lot of those um concerns are really driven by um the concerns from incumbents as well as public interest groups. So, I'm hopeful um that Senator Lumis can can work with the uh the senators that are on the fence and come up with uh you know an approach that gets sufficient Democratic support and also locks in Republican support as well. >> Yeah. So, are you thinking days now? everything.

>> I think I think I think I think tomorrow so the markup's scheduled for tomorrow and um you know I think it'll be a bad sign if uh if uh they struggle um to to move to a markup vote. >> Yeah. >> Could could you give us a best case worst case scenario maybe like the reality you know messy middle? What what do you >> Yeah, >> I think I think best case scenario it it um you know we we see a compromised version coming out of the negotiations between Lumis and some of the other senators that gets voted on um and gets unanimous Republican support and gets four or five Democrats.

>> Yeah. >> On the committee which would be a good indication of you know similar proportion when it hits the floor. >> Yeah. >> Yeah. Well, man, have a great rest of your day and week here in beautiful island, beautiful event. It's very intimate. There's a lot of high quality folks there. Um, >> will I see you guys on the yacht later tonight? >> Hopefully it doesn't rain on us. >> Yeah, hopefully. But you know what? Uh, one of the things I've learned about Bermuda is if you don't like the weather, just wait 10 minutes. [laughter] >> Sol, thanks for your time, man. >> Good to see you guys.

>> See you again soon. >> All righty, guys. We're going to throw you on to our panels live from Salt here in Bermuda at the digital finance forum. That was Raja from Stellar and Salman from Plume. There is active active developments on the Clarity Act side. Uh it is clearly moving 100 amendments as of this morning guys. We're going to have that and more covering some news and headlines live here from Bermuda. Passing you to the panels now. Don't go anywhere. >> That required all of that. And so that's really been the key. Uh but what's so fascinating to me to me about Bermuda and really just a tremendous job to you and everyone here is this is where I see the convergence of the technology, the regulation and the politics which makes

this just a phenomenal place to start thinking about what's next um as it relates to digital finance. So again, we are so excited to be here with you. Um and I'd say, you know, maybe on that note, I had the opportunity to watch you uh last week at Consensus in Miami. It was very hot. I was very sweaty. And you did an incredible job. And I I just, you know, I I watched you announce a couple of legislative updates um that the government is planning to make to further this digital finance vision. And uh I'm really curious like what do those announcements, what do they actually mean for the island?

>> Well, I think it's important if you're going to be a leader in digital finance globally, you also have to demonstrate adoption here at home and make sure that the government is playing its own particular part. And so a couple of weeks ago um uh the cabinet um had uh passed um a number of uh or sorry approved a number of proposals uh that I did announce a consensus and happy to share today. Uh the first is that um though we've been speaking about it and getting it. We've developed the framework going through all of the risk assessments which are necessary and required as Bermuda is a well- reggulated jurisdiction to get us to the point and place where we can give official announcement that is now official government policy that the government of Bermuda can accept digital assets and also invest in digital assets. In addition to that, okay,

[laughter] you like that? All right, I like it too. In addition to that, we are going to um also uh set up our um modify our fintech development fund which was set up in 2018. Um and that is going to allow for partners such as Stellar and others to support Bermuda's onchain economy vision. So of course a government needs to have clear regulation, clear legal laws, and we're going to amend the fintech development fund act to be able to accept digital assets to so other persons can go ahead and invest. And why is that important? It is important because we want to make sure that we can provide support for entrepreneurs here at home for companies that are started in Bermuda, for companies that want to be a part of this ecosystem so we can go

ahead and give grants and development and capital for them to go ahead and start. So we set up all of those structures and now we're going to be legislating that. So intentions to make sure we legislate that before the end of the summer just like how we announced the digital asset business act in 2018 and we're able to table it a few months later. That is the intention on this. So, I'm very excited. In addition to that, um you know, in order to go ahead and to accept these digital assets, we need to make sure that the government is done and we've completed all of the necessary due diligence and risk assessments to process with a circle mint account, and this will serve as a government's first digital consolidated account where digital assets can be received and managed. There's an initial pilot throughout the transport control

department. We're currently working through this initiative, but the intent is very simple. We want to lead and demonstrate with an onchain economy as to how governments can process digital assets, how you can use those digital assets to invest and save. And when I say with the government to invest in digital assets, people like, "Oh my gosh, the government's going to invest in Bitcoin." No. If we have an investment committee who will do it, but the government right now invests in money market funds, but there would be a question as to whether or not they can invest in tokenized money market funds. We want to make sure that we are demonstrating the value of digital finance and the government is going to take the leadership position to make sure uh that we go ahead and uh get that done. And so [applause] >> so from that perspective you know we

come it it's been a long journey. It's been a long journey and I mean we've been speaking about this for a while but though the government reads quickly [laughter] that also making sure that we get it right, get the risk assessments right, make sure that everything is done so that when we bring this to legislation, it continues to make sure that Bermuda is a well- reggard jurisdiction. You know, we just got a ratings upgrade last week and everything else. We want to make sure that we stay on top of mind with all the ratings agencies. They know that Bermuda continues to be a well-regulated jurisdiction and is thinking thoughtfully about these things, not just rushing into them, but saying this is how we're going to do it and this is how we're going to write.

But as you said, we're thrilled to have you here. So the question is, what announcements may you have to share with this room? I know what you're going to say, but I just want everyone else to hear what you're going to say. >> Yeah, I think that is just the perfect layup for me. And we at Stellar are just thrilled to share that Bermuda's national economy uh is going to move onchain on the Stellar network making Stellar the network of choice for the world's first fully onchain national economy. It's amazing to say those words. I mean really phenomenal. I think the the confluence of what you have done, meeting the moment, meeting I think the network that is really designed for this is really special and so it's so fantastic to be here with all of these

folks and have the opportunity to again speak with you uh on stage about this. I think what's really exciting is to make that tangible in the future. What does it mean for Bermudians? It means that they'll be using digital dollars as part of their everyday financial lives. And practically speaking, you'll be able to actually receive wages, make merchant payments, settle government fees, and save and invest through digital wallets all on Stellar. And most importantly, one of the one of the critical elements I think we identified on the Stellar network was this idea of just the last mile, which I think many of you guys might be familiar with, but this is actually the idea of being able to turn a digital asset into something that is available in the local economy. And through our deep network of partnerships to be able to actually enable kind of u

digital asset to fiat offramping through partners like Moneygram, we'll actually enable that right here in Bermuda. And I couldn't be more thrilled for us to actually do a demonstration of that on Thursday so that folks can actually see the application of a digital wallet receiving digital dollars and then offramping in the economy. And so um really phenomenal and excited to be here and announce this on stage with you. >> Excellent. Well, I mean from our perspective, um this is without exciting um a digital Bermuda dollar and I think it's important that we set the context because this is not something that is going to be issued by the government of Bermuda. The government of Bermuda is not in the business of issuing digital currency. We have set up a regulatory regime and it's been the government's policy from the very beginning that we

want the private sector to lead. And so when we talk about private sector issued stable coins, seller worked alongside with circle to go ahead and issue private sector stable coins bringing for there'll be further announcements around a digital version of Bermuda dollar. But this represents the future and the reality is this is not the government. It's the private sector leading working concert with the government of Bermuda to go ahead and support this ecosystem here on island. And you are correct because the benefits that it does have as you say the last mile I see the team for the Bermuda Economic Development Corporation there partners in this initiative have been going doortodoor with vendors in the community making sure that they go ahead and get signed up and registered and yes so when we're talking about the access that Bermudeians will have that they don't have you know with merchants uh saving

on transaction fees enhanced savings and rewards for those monies to automatically be invested you swept I remember last year with the uh you know our our fully compliant airdrop that we did last year I was at a meeting the other day and someone was talking about the yield. Yes, you can say that in this country by the way. There's other countries you may not be able to say it in but this one you you can but the yield that is earned is still accumulating inside of their digital wallets. And this is the reality. This is the future. Digital finance is going to change the way in which the world works and it is important that we demonstrate what that means to persons here. In addition, as you said, improve financial access for persons to have access to these products. The promise of digital finance has always been that it

democratizes financial but um access but a lot of that stuff goes over people's heads but you know Bermuda is a a sophisticated international financial jurisdiction. We all know what sophisticated investors are and there's some products that you know if you don't have $100,000 you don't have access to those products. But of course with tokenization with democratization of financial access you can have that with just $20 and be a part of that with a lower level of um friction. That is the promise. That is what we're delivering here. But also what's important from a government perspective is that we can then go ahead and deliver those dollars and the monies of which we use. So we put out financial assistance payments.

We put out payments to vendors. We put out payments to support for person inside the economy. If you're able to do those, if you're able to use programmable money to do that, you can broaden the amount of merchants that you can do it. So right now with the assistance payments in which we give, they're only accepted at two major supermarkets. But if there's vendors who are receiving these digital dollars that can then be able to use them at different places because they're programmable money, then it broadens the the um I guess I would say the entrepreneurs that have access to those services and brings it closer. So that is what we're looking to do and I'm very excited to be working along uh with you know with seller on this particular matter.

>> Yeah. And I wanted to hone in on this one specific point which is really you've been pushing this private sector uh innovation here which I think is phenomenal and I think you just were talking to this but why the private sector is so important to this digital vision. Obviously we're working with a number of different partners here and pulling them all together. Um and you have made such a critical investment in ensuring private sector comes in like what can can you maybe hone in just a little bit tighter on like what is what is the reason that you think private sector is important for for for Bermuda? Well, I think from the perspective of when it comes so governments I'm going to get in trouble saying this essentially I'm on my way at a cabinet meeting governments are not always the best when it comes to

implementation and what you don't want to find yourself you don't want to find yourself in technology lock and you don't want to go ahead and take on that risk and I remember you know early you know pre- pandemic I view everything you know before and after but pre- pandemic there was a view and a vision that you know Bermuda would you know issue um digital currency, etc. And there were persons who said, "Wait, don't do that. Give it time for the private sector." And that's the reality. You don't always have to be first. We're not going to come here and say we're the first. No, we're not. But we are the country that is going to do it right and to demonstrate that this can be led from the private sector side because they're real concerns that people have when it comes to, you know, digital currencies,

about security, about privacy, about those type of items. And if those things are being done in the private sector with choice under regulated environment and the government is basically saying that if you are regulated by the best digital asset regulator on the planet, the Bermuda Monetary Authority to issue your stable coins, we know that they're backed. We know they're verified and we are happy to accept those and you're able to use those transactions or or those currencies inside of our particular markets and transact. I think that is important. And so we're going to support the digital Bermuda dollar from the very beginning. And as I said, we're going to be going find a way to use that to go ahead and distribute um to disperse government services. You talk about the fact of um the universal basic income in Marshall Islands. That was one of the things that I was very excited at

the World Economic Forum when we uh first met and I said, "Okay, this is good because you've done it before." And so we're happy to have partners that are coming online with a vision of which we're trying to press forward here um in Bermuda. So that in itself is exciting. >> That's great. >> It is. So here's my question for you. You see, I've got my cards. I'm all ready. I'm all lined up. [laughter] Um, so we know this, but what does Stellar bring to the table? Why do people care that Stella is here? People are like, why are these two guys up here on stage? Why should Bermudians who are in the audience care about Stellar being here?

>> Yeah, and I think we were starting to allude to this and and again, thank you so much for having us here. I think when we met in at the World Economic Forum, I think there was just a real tight vision alignment and the reality is we have a track record that has demonstrated the ability to deliver these capabilities at scale in real world applications and I think that has been the thing that we have very much focused on which is seller is a network that is purpose-built for everyday financial services. Everything that you've seen over the last, you know, dozen years around Stellar has been how do we actually go ahead and deliver real usable digital assets that actually help uplift and bring, I think, the capabilities to people who are going to take advantage of it. And so, um, you

know, there's a lot of space for a lot of different types of things in the broader, let's call it, crypto industry. When we think about what we're trying to affect, we're trying to affect people being able to leverage, you know, uh, dollar-based savings accounts to offset currency or inflation like volatility risks that we've seen in many parts of Latin America. I think that was one of the initial primary use cases. We we've worked with a lot of these different aid agencies for delivering aid into different places. And, you know, I I don't want to confuse the idea that seller has worked with aid to be that Stellar is an aid-based blockchain. No, actually I think what we've tried to demonstrate is that in the most difficult to reach payment seller can be able to deliver that at a cost that is

0.00001 cent per transaction with settlement that is 3 seconds at a global scale. I mean, you're effectively looking at the most efficient payment architecture. And I think that's what we really focused on. Coupled with over the last dozen years, we've had effectively four fives of uptime. And so when we have an opportunity to communicate with folks like yourself, um, institutions at scale, I think the ability to deliver infrastructure that is stable, scalable, and has that track record is absolutely critical. And this is the type of solution that was really important when we were talking to some of the different governments. So the Marshall Islands I think is a public example of something we recently launched which was the design of a universal basic income uh

solution to be able to deliver to a distributed set of people across you know there's I think the Marshall Islands has something like 1,200 total islands where people live on and if you collapse all of those regions together it would be the the size of Washington DC but it's distributed over the size of Mexico. So imagine being able to get dollars between each of those different doiciles and that would have been impossible but for the innovations that we've seen that we support on the stellar blockchain and so I think these are the types of track records and experiences that have been super valuable. Um I've mentioned you know some of the key areas that we've seen a lot of growth in but you know we have just shown and demonstrated explosive growth particularly over the last year.

You know last year Stellar had about $55 billion in total payment volume on the network. In Q1 stable coin payment volume has grown 72%. So a lot of trajectory there. Real world assets tokenized on Stellar has effectively 3xed over, you know, the last quarter. So we're at $2 and a half billion dollars of it. And so I think what we're seeing now is a lot of recognition for this type of stable infrastructure and it's starting to scale. And what I'm really excited about working with you guys on is being able to have Bermuda being able to tap into that global network and really be able to extend that capability of, you know, a a a digital asset that is generated from Bermuda and the implication of that, I think, not just within Bermuda, but also as it connects uh into kind of global

trade, which I think is very very exciting. So, um, you know, I would love to I would love to maybe, um, talk a little bit about the announcement of this digital Bermuda dollar. I think this is one thing. Getting it into the hands of people to actually use u, is another challenge. How do you think about addressing that sort of problem? >> Well, the only way you do it is by consistent education. And it goes back to the things which I said before. This is not going to happen overnight. You know, people have their credit cards.

Their credit cards work fine. People have their cash. They like their cash. The reality is it's not it's going to take a while for people to realize that, oh, I don't have to pay the transaction fee. Oh, this is going to happen a lot quicker. Oh, this goes I hearken back to one of the things I said at Consensus. Do any of you Well, some of you I'll talk about the older people. People are as old as me or older. Do any of you um Yeah, I'm an old guy now. Yeah, I used to be young. >> You look great. You look fantastic. >> Thank you. Thank you. Anyone over the age of 50 remember the f the feeling the first time they sent and received an email? I literally remember the first time I sent received an email and I was like oh my gosh cuz I used to write

letters like kids nowadays don't even know about writing letters to put in the post but the reality is the change of which that represented to people was significant and the the talk about the transfer and value of which this offers is going to be significant and it's going to take people a while. Remember, people still write letters. People still wrote letters for a long time. People still send out posts, whether email, but it's going to take a while. So, I don't want this to be looked at in the frame that, oh my gosh, things have to happen right quick. And if everyone's not using a digital wallet, then it's a problem. But I also want people to recognize that this can work. And so we're going to demonstrate at scale at our vendor market uh tomorrow where people can actually see we'll see everyday Bermudeians receiving digital currency

receiving digital assets being able to use to spend to invest and to understand and to get educated and that's how it is. So one person will tell another person will tell another person etc all the rest. So from that perspective it is going to be good and as I said we're going to show in the future how we can use these tools to help and assist with uh government uh dispersement. So, we're looking forward to it. And just as a note for any of the people who are checking, there is the fact that this uh airdrop that we're doing tomorrow is fully compliant with our local regulations. [laughter] Very important because I always something that we have to say. So, um I guess I'll say we're we've been talking kind of long so we're low on time. Um so, from my perspective,

>> what do you think is next? How do we go forward? >> Yeah. Well, first off, just so I will say um I'm super excited to see the airdrop and the assets actually operate. Like it's it's fine to talk about this stuff. Actually seeing it operational, I think that's a whole another story. And yeah, and and that's one of the things I think we're super excited to help uh with that is important. The technology is getting easier. We can't fool ourselves in this industry that this stuff has been simple for people to use. It has been complex. And if it's not as simple as, you know, sending a WhatsApp or doing something else, if people have to go through multiple different steps.

So, I'm sure the process this year will be better than it was last year. I'm sure the process next year will be even better as well as we continue to build and develop on this. But the important thing is that we're building and developing that here and work with partners here so people can see what takes place. And I always remind people, companies are not going to come to Bermuda to make money off of our 65,000 market. They're not. But the vision has always been that companies can innovate here. We have the best regulator on the planet and the types of things of which they are able to do here, they cannot do anywhere else. And I think that is the value. That is what it is. And so we want to remind you if there's something that you think about doing, you can do

it here. Trust me, have a chat with the Bermuda Monetary Authority. As many of the people who are in this room right now who are sponsored this organization, they will say they were floored and left the meeting with the Bermuda Monetary Authority looking like this. I didn't know a regulator can do that. >> Amazing. And I think from from my perspective, we're super excited to help support the airdrop. Um so for folks who are here and are going to participate, um Circle is a deep partner of us for many years. We're going to help support USDC, which is their digital asset deployed into Decaf wallets, which is another partner that is here as well. and we're actually going to demonstrate the ability to accept those dollars and then actually offramp them into a moneygram location. We've the decaf team has also been working with local

vendors. I understand that some Bermuda shorts may be available for purchase. I will say that I was not as brave as John Darcy a little earlier to actually uh wear those, but I'm excited to do that a little bit later. So really excited to help support that and really help I think uh meet that vision that you have articulated so well and so deeply in such a profound way. So really really excited. And so I think with that I'm going to leave you with one last question which is with all these exciting announcements what comes next? >> What comes next? So allow me to say this. Um when we tested that moneygram solution I told you when I saw you last week I was cried like literally because you know it's hard when it comes to unwrapping and off-ramping and different

things like that. that is the one place Bermuda has not been able you know to fully but with partners like the Bermuda commercial bank and others who are working to make sure that we can get these solutions done um and pushing forward and also with the uh partnership that Stellar has with Moneygram and the locations here I'm very um excited for how we press ahead because the reality is a lot of people say oh well there are not you know the banking rails in Bermuda well that's not true we're developing them we're pushing ahead with the various partners what does the future uh hold the future holds that we're going to continue to innovate We have this Bermuda triangle of innovation where industry goes to regulator and says we need this particular clarity.

The regulator puts out its uh proposal uh to uh the community. The community comes back and they comes to the government with legislation ready to go ahead and to advance. Uh the ministry of finance reviews that and we go ahead and pass it and there's a number of things which we're doing. So the digital Bermuda dollar is without question uh just the start. We know that we can use that to support our onchain economy initiative and we're very excited that that's happening. We we speaking about that. But next is around tokenized investments. It's really around that Bermuda wants to make sure that we are the home of tokenized investments. I was telling someone last week um at Consensus, you know, they were talking about tokenized real world assets. I said, do you know that it was possible to tokenize at real world asset in Bermuda 8 years ago? And they looked at

me like yes, from the very beginning the digital asset business act had that. And so we know how this works. And the message that we give to industry, the message when we travel on the road is there's no guessing games with our regulator. you're going to get an answer and they're going to be able to design or to give you feedback uh to build this. And so from that particular perspective, tokenized investments are particularly important. We recognize that from uh Bermuda being an insurance jurisdiction that it'll be very important from that particular perspective for the industry to understand how these uh digital uh finance can work in order to manage their balance sheets more effectively in order to manage their reserves more effectively in order to make those transactions as well and possibly future becoming uh part of their dispersement

mechanism. And then of course as we all know I can't believe it we went through an entire meeting and no one talked about AI but I'm going to break that um artificial intelligence and agentic finance is also happening and one of the things the Bermuda Monetary Authority and one of the things of which the government is looking into from the innovation side is recognizing that financial services may be uh transacted by agents in the future. How do we look at that? How do we regulate that? How do we talk about those particular things? And so that's what um an onchain economy looks like at scale. That is what we're planning on building here in Bermuda. I'm certain that the vision is someone had asked me a question because they're like, you know, oh my goodness, premier, you know, next year, how are we going to

have a digital finance forum if you're not going to be here and all the rest? I said, number one, I'm not going anywhere. Just so you're clear, you know, I may not be the premier of the Minister of Finance, but I'm not going anywhere. I'm still going to be a member of the legislature. Still going to be supporting legislation that is going to advance Bermuda's digital finance interests. But the other thing is the industry is already baked in. The ecosystem is now here. We have a number of companies that are providing feedback to our regulators continuously at all time. We're continuing to make sure we advance and that will just continue to happen. So from this particular perspective um you know thrilled to have Stellar as partner, thrilled to have everyone here at the digital finance forum and I sincerely hope that you enjoy the next two days. It is going to

be incredible. Actually sorry not two days today, tomorrow and Thursday as well. the next three days um of um what we have here on offer. I promise you the weather will clear up tomorrow. These are showers of blessings today. There's many people in Bermuda who are very excited that it's raining. Very [laughter] very excited that it is raining. Uh these are showers of blessings. But what I would say is um to you Raja um and to all the teams. I do have a closeout tomorrow so I won't say my farewells as of yet, but it's just an absolute thrill to have you here and welcome to Bermuda and thank you for being a part of what we're building.

>> Premier, thank you so much for sharing your vision of the onchain economy. It's amazing. [applause] [music] Great stuff. We're not slowing down. Up next on the Stellar Main Stage, Clarity and Beyond, a policy conversation with Coinbase. Stick around for this one. >> [music] [music] >> Good morning folks. Thank you so much

for being here and I want to thank Bermuda and the Salt Ventures Group for inviting us. My name is Nick D. I'm with CoinDesk. Thrilled to be joined by Farer from Coinbase about clarity and other regulatory issues. How are you? >> I'm great. Happy to be here. Um, it's amazing to be at a in a place that's so uh onchain forward. So pleased to be here. >> Let's talk about that. Uh, so we just heard the premier talk a little bit about his efforts to move Bermuda into an onchain economy. I know you are working on a pilot program later this week airdropping USDC to uh, I think a thousand residents. What can you tell us about that?

>> Well, it's worth stepping back for a moment. So our international exchange is based in Bermuda and we started our relationship with Bermuda and with the premiere probably about four years ago where we sort of ambushed him at a conference in Europe as we were looking at a place to to host um our exchange. And in talking to him, we were um we were surprised by how sophisticated he was about digital assets assets and then even more surprised when we met the head of the BMA um who is uh on the weekends does some onchain coding of his own. Um, but one of the things that we realized with with the experience that we've had in Bermuda is that there's not only a commitment to use Bermuda's regulatory strength uh to encourage digital asset

companies like all the ones here to run businesses out of Bermuda uh but also to transition the economy inside Bermuda uh to move on chain. The premier just talked about that and one of the things that we wanted to do was to help be a part of that catalyzing of consumer adoption. So, we're doing the airdrop that you mentioned on Thursday. Uh we've helped onboard about 35 uh uh premier merchants in t in the c in the country uh who will now have point of sale terminals um base pay uh working off the the base app uh uh pay terminals so you can use your phone uh and to stimulate all of that we're doing an airdrop and so people here for the for the uh festival on Thursday can get uh $50 and

you can use it at the merchants at this uh at the festival and and going forward because they'll have these uh point of sale terminals integrated into their systems and I think that's been the hard part about crypto adoption is not has been uh for trading purposes for institutional purposes for uh wholesale payment purposes um I think um the capacity of the users is sort of demonstrated itself but for the regular uh kind of main street consumer uh that adoption historically in payments has been a harder one and we're trying to stimulate that have it happen more quickly.

>> To that end, what will the user interaction look like if I'm a, you know, Bermuda resident, I'm getting this airdrop. How's that going to differ from if I were to use a credit card or a debit card or cash? >> Well, the goal on crypto's always been to make the user experience uh as good if or if possible better than the than regular payment mechanisms. So consumers um you know and sometimes I think everybody here understands is lulled by the existing payment systems even in the places like the US where the the payment infrastructure is quite antiquated uh to have sort of the the impression that it's a seamless instantaneous uh process when in fact the plumbing behind it is quite cumbersome and so in Bermuda the way it'll work is that with

the if you download the $50 on the airdrop onto your base app you just tap your phone against this point of uh device that these merchants have and the money transfers instantaneously. So it's a very very easy seamless experience. But for the merchant I think the processing fees for credit cards here are something like 4 to 6%. Uh for food service the average profit margin something like 2 to 3%. So you're talking about transformational impacts for uh merchants and then the savings of that uh translates into uh lower prices um more more workers that they can hire and then ultimately either better service or lower prices for the consumer and it becomes a virtuous a virtuous flywheel.

>> In terms of expanding access, you know, we're talking about a pilot program on Thursday. What will it take to go from a pilot program to something that you know something that's accessible to the entire country basically? >> Well, part of it is what the um premier just talked about is to make uh government payments using um to you know tokenized uh stable coins um accessible. And so we're trying to get at this from the from the kind of the retail consumer side. the government's doing its part to stimulate stablecoin payments uh from the uh from the governmental side and people will begin to you know um download uh the um our app or other apps to have uh stable coins embedded in it

and then start using it as a norm as a matter of sort of regular uh course that process of adoption is actually quite hard. We talked about this backstage even for touchless payments in the US. It took COVID before people really adopted touchless payments. So, it's a much harder process to get people to um adopt a new payment mechanism because they get into the habits of the old. Uh cash is still king here in Bermuda. Um I think all of us who try to take a taxi kind of saw that. Uh so the the adoption process is one that requires some uh commitment and we're part of that commitment.

So looking beyond Bermuda just for a moment um you know one of the kind of interesting issues about crypto is this idea that it can give people access to capital who don't otherwise have that access and you know you've spoken a little bit about that just now but from kind of an investment standpoint and I mean here investment in expanding access what does it take is it just you know partnerships with the Bermuda government and other governments um is it something private companies can take on on their own how do How do you even start to answer that question?

>> Yeah, it's a it's a question we love. I mean, we Brian Armstrong, our CEO, always talks about economic freedom and we try to sort of lay out what exactly that meant. One manifestation of that is or one sort of dimension of that is the fact that if you look at societies, it's true in the US, it's true in Europe, it's true pretty much anywhere where the returns on labor for the average person are far outstripped by the returns that you can get from capital. And so you have this kind of huge bifurcation that's occurring in our societies where the owners of capital uh earn something like 2x the returns on their investments than people who only bring labor to the economy. And so what you're seeing is

what you saw in the US uh in the in Europe you're seeing this sort of play out where people get a sense that they're losing out that their ability the social political compact that they had has broken down. they provided their labors, they got returns from and so technology, globalization, all these things change that. Uh crypto can actually solve help address that problem through tokenization, tokenization of uh equity investments crypto other things. Um and then using that tokenization to do fractionalization and then give people broader access. Um um um we now provide tokenized access to stocks. Others I know do do as well.

with that you can start doing fractionalization and start breaking down the barriers. So the difficulty that a typical European has to invest in some of the high growth American stocks or vice versa or people in developing countries who want to access mature market stocks. All of that can be facilitated. Some of that is a technology solution, some of that is a regulatory solution. But folks like us are pushing very hard to uh make that change. uh it's important for those of us who believe in crypto, but it's really more importantly something that needs to happen from a societal perspective because you're seeing the kind of the the churn and the dislocations in all of our societies and people get a sense that those systems aren't working for them.

>> So, I want to switch gears for a little bit. Uh obviously, one of the big things that you've been working on for the last couple uh months or centuries, depending on how you look at it, is the US Clarity Act. >> Yeah. >> Uh we're getting a markup. We have the text now. Just to start with, what are your expectations for Thursday? >> Uh, well, we're very excited that we're finally here. Um, a lot of us were pushing very hard back in the spring of last year, uh, for the, you know, Congress to pair up Clarity and Genius, the stable coin and the market structure bills and move them together. Um, and we push for that exactly for the reasons that we're seeing right now. I mean, here we are 12 almost 12 full months after the House has passed the the

Clarity Act. So, um but nonetheless, we're here and so we're almost u the bill has gotten through the agriculture committee. It has to now go through the banking committee. Um it's been a journey to get to where we are. Um there's been a lot of opposition from traditional incumbent in uh financial institutions. The banks have had a furious attack on the bill. uh the big broker dealers, SIFMA and others have been trying to do their uh part on on the legislation. Uh the bill just came out like at 2 am. Uh we've done a quick review of it. It actually looks really strong. A lot of the big issues that um we flagged at Coinbase uh the last time they were trying to get it through the banking committee that caused them to potentially kind of reschedule the

market have all been addressed thoughtfully. Uh so we feel really really good about it. Our hope is that you'll get all the Republicans on and that you'll get a good number of Democrats. Uh it's a very bipartisan piece of legislation. Huge numbers of of um compromises in there um at the request of different members of uh of both sides of the aisle, but particularly Democrats who wanted changes in it. Uh so it's a really it's a really strong bipartisan bill and hopefully the vote will reflect that. In terms of the banking industry's opposition, uh there was a letter on Sunday by the American Banker Association CEO asking bank heads to call their lawmakers. We saw a letter last week laying out specific edits they

want. Just given how deep into the process we are, do you have any response to this effort now to change things again or continue changing things? Yeah, look, I mean this the whole process has been I would say puzzling if I were to say it nicely. Um, this whole deposit flight risk thing, there's never been any sub substantiation of it. It's a it's it's it's something that, as far as we can tell, it's totally made up. It was all based on um um a a a report that was done by a bank uh advisory group to the Treasury Department where they just hypothesized $6 trillion of of uh stablecoin um you know adoption

by some indefinite date and all of a sudden without any evidence substantiation or what have you and that all of a sudden became kind of the urban myth that was flying Washington um that there's going to be somehow $6 trillion leaving the banking system. There's about $19 trillion of deposits that banks have in the US. So this would be, you know, fully a third of that. Uh uh there's no evidence of that. Most stable coins adoption has been uh outside the US. There have been a number of studies we've done. The White House has and others have done that shows the

impact on community banks has been um non-existent. In fact, as stable coin adoption's gone up, uh deposits have actually commensurately gone up. Uh so it's been it's been a matter of kind of fighting ghost. Um there was a process. I mean, the irony is that the banks were very active participants in negotiating genius. They then turned around, you know, three, four months later and and declared that there was a loophole even though they signed off on the language that was in the Genius Act. Uh the White House ran infinite meetings with the bank uh groups. Most of them u wouldn't participate or sent junior representatives who sort of sat stonefaced in the meetings. I was in some of those meetings. Um and then now they've turned around and saying, "Oh,

well, senators didn't understand what they were doing and here are some edits to fix it." I think they've test they've sort of um run the patience out for uh the senators who wanted to be helpful to them. So I'm hopeful that issue is behind us and this is sort of the last gasp of uh of their efforts to try to block the legislation. >> So in terms of process, um we got the text last night. I think we're expecting amendments by the end of today, I'm sure at 2 a.m. again. >> Yeah. >> Uh what else is going to happen before the hearing on Thursday and then what's going to happen during the hearing Thursday?

Right. So, the amendments will go in today uh by the end of the day. The the chairman will then kind of review them and decide whether he's going to accept any of them. I suspect he won't accept any of the amendments since with since uh everyone on the committee's had a full, you know, 11 months now to uh negotiate provisions of the bill. uh they'll vote the bill out um uh hopefully on Thursday and then at that at that point the ad committee and the banking committee have to take their respective portions of the clarity act merge them and then it'll go to the floor which we expect will happen in the second half of uh June there's a big uh foreign intelligence bill that has to go through the um the um the floor which

will be take up the first half of June and this will be um this will be the second half of June >> in terms of this you know floor fight. Um once we get through the banking committee and you mentioned the agriculture committee we know that two different groups have to merge their bills. Uh what else is going to have to happen before this gets to the US president's desk and you know becomes a law or potentially becomes a law? Well, it have to go through the Senate, which you know, the Senate processes are such that any one senator can potentially hold up any provision and you need 60 votes to overcome um an effort, you know, an opposition by a single senator.

So, there'll be my guess is there'll be at least 12 votes potentially more necessary over the course of those two weeks. And each vote by the Senate rules has to be preceded by a period of debate. And so you'll see it'll be just a sort of cat-and- mouse game by the opponents who will object to everything. And then there'll be um you know uh votes that they'll have to take and hopefully get 60 members. You have 53 Republicans. You need at least seven Democrats to come along. Um you know in the Genius Act, the stable coin bill, there was five Democrats on the banking committee who supported the bill. All five of those

walked u on the early procedural votes when the bill went to the floor. So what everyone thought would be a kind of a fast process ended up taking two weeks on Genius, which is a less complicated, less controversial bill. So my guess is this will be as complicated, but I think everyone's exhausted. They kind of know it's going to happen. The Democrat, there's a core of Democrats who really want this bill to get done. I do think the people are also looking at the election cycle. You've got three million grassroots advocates in Stanwood Crypto. you've got this is a resonant political issue. So my guess is it'll it'll take two weeks, but we'll get we'll get it through.

>> And then on the House side, uh I would say the US House has struggled a little bit to pass anything the Senate sent it recently. >> Yeah. >> Um any expectations for what's going to happen there? Well, I mean, fortunately, Frank Hill, the chairman of the U. Financial Services Committee, which is the, you know, the House counterpart to the banking committee, uh, just said the other day that he has his catchers mitt ready to take the Senate bill. So, that was actually very welcome news. Um, I think they understand that this is it, that they, uh, you know, putting this, uh, trying to go to conference and get this through the Senate again is just much too hard to pull off. And so um it's not just French Hill's call, it's also the A chair on the House side, but

GT Thompson, the House Committee chairman, and French Hill have worked very collaboratively and very closely together. So my guess is um the Senate has done a good job on the bill so far. If it stays mostly intact, the House will will accept it. So talking or looking at kind of this broader global uh you know question, we're seeing governments around the world, Bermuda for example, looking more to crypto. Uh we're seeing even regulatory jurisdictions that had created crypto rules, the European Union for example, start to revisit some of those. Um how do you view this kind of broader, you know, is there a global harmonization happening around digital asset

regulation? Yeah, harmonization is a funny word. I mean, in a way, you want what's happening now where you've got pathfinders, jurisdictions that are kind of doing the in, you know, the innovative thing. Uh the US was a lagard and now it's a pathfinder. And so on crypto and then uh core crypto regulation, but then on tokenized markets. Um, I think part of the importance of the banking committee vote on Thursday is it'll potentially unlock the the SEC, the Securities and Exchange Commission issuing no action relief for tokenized equity markets uh to to go live in the in the US. And so um you know that that kind of the the change

that that will catalyze will then be a forcing function in other jurisdictions. I think what the government is doing here is you know it's obviously a smaller economy but it's a very well- reggarded economy with a very high regulatory um you know reputation and so um harmonization is good but I think we're too early for harmonization I think we want to see a bunch of pathfinders um test the limits uh because I think what's happened I mean from my own view is the whole thesis the whole thesis of tokenization is now widely accepted so tokenized payments were the first thing and then tokenized financial instruments are the second thing. I think all of that people kind of accept is going to happen. The hard part is how those things get transferred whether they

happen on permissionless uh decentralized smart contractbased networks without intermediation uh or or not. And I think that's the fight that we're in and that's kind of part of the fight that we went into with payments. I think the banks want to do tokenized payments but they want to do it through their rails. The big broker dealers want to do tokenized um financial equity markets, capital markets activity, but they want to do it with their intermediating role preserved in some fashion. Um we think there's a whole sort of range of financial services that can occur on a decentralized smart contract base on contract basis on permissionless networks. And that's the epic fight that we're we're going to be we're in the

midst of now, but it's going to amplify and will be the big issue that we're going to debate. So when everyone says, okay, we you know um this big financial traditional financial intermediary is tokenizing their their um you know their um their inventory of assets or this um hedge fund is or what have you is doing that. I think that's really really interesting. But that's almost kind of the settled issue. The harder issue is can those funds then be transferred on a peer-to-peer basis in a fractionalized form on a borderless basis with with embedded supervision and smart contract based um um you know u sanctions um uh controls for example and that that and

and and the um market surveillance type stuff being done through blockchain analytics rather than traditional mechanisms. That's where it gets harder, but that's kind of where we're pushing at Coinbase and um I think is going to be the big fight for the next 12 months or throughout the Trump administration. So kind of jumping on that, how do you then as you know a centralized company that has you know these payment tools USDC the point of sale project that you're working on this week how do you look to expand that just like on a pure like from a Coinbase perspective uh beyond Bermuda beyond the US to different jurisdictions where right now those rules either haven't been written

or their regulators are waiting to see what other countries do. >> Yeah, it it requires a different strategy. So, we we [clears throat] have diff I think we have about 12 different uh business lines that earn uh over a hundred million dollars annually in revenue. So, we see ourselves as being the whole complex of uh the crypto ecosystem. So, you know, we're the largest custodian, a very large spot market exchange. Uh we have a, you know, the base um app um and the wallet, the self-hosted wallet. uh we have based uh you know our layer 2 protocol which has uh gotten wide adoption. We have x402 which is the um agentic payment uh mechanism that's now been adopted by

AWS, Stripe, uh Visa and other kind of uh major payment processors. And so we sort of see ourselves playing in the in the market in different ways. So, our core business is the the centralized exchange. Uh, but we're doing more and more um providing more and more services through the base app. Uh, where people can on a self-hosted uh way access the broader kind of crypto tokenized ecosystem. And then we're trying to, you know, provide access to things like tokenized equities, uh, tokenized commodities like silver or gold, uh, oil futures for example, uh, prediction markets. There's a range of things. So we're creating what's known what we call the everything app. So you can sort of

stop at the app and do a whole range of financial activity and the in the the markets are down on crypto somewhat but the adoption on that we've seen has been extraordinary and we're we're quite excited about it. >> Gotcha. So we just have a handful of minutes left. Yeah. Um, we've been talking about a little bit about this whole concept of an onchain economy and I'm just curious kind of what does that really look like for everyone in this room? Um, is it just identical to the existing economy just now the you know app on your phone is different or is there something more you know fundamental to it than that?

>> Yeah, I I think it's um it's a really good question. You know when the the way to look at it is the way to look at the internet. You know when the internet came around I think the first experience most of us had was to send an email and it was very intuitive that an email had advantages over paper correspondence because you know you wrote it yourself, you sent it on your own. You didn't need an intermediary to transfer it. The recipient got it almost instantaneously. It cost almost nothing. Um and it was a really kind of transformational moment. But the early thesis of the internet was just an efficiency thesis that you could send um data on a peer-to-peer basis through a decentralized protocol for almost no cost and almost

instantaneously. I think that's the moment we are in crypto right now where people are like, "Oh, stable coins are amazing. We can send them instantaneously. They're cheaper and faster than traditional payments." What happened though with the internet is that the the first generation was efficiency. The second generation was programmability where you could take the data and program it into things like video conferencing or you know development of AI eventually or all the other applications that we're all used to. And I think that's what we're going to see on payments. Uh the value um uh crypto allows you to do peer-to-peer transfers of value on a decentralized basis. And the reason why we fought so hard on on um uh protecting open permissionless networks and and

developer rights and and uh not applying centralized rules to decentralized applications is because the real use case of of crypto will be in programmable value programmable applications using value. Uh you know there's some estimates that say 80% of payments are going to be done through agentic mechanisms. None of that will be possible if old rails are mandated with the with tokenization. And I the one thing I would say just to do a plug, I think, you know, President Trump when he was running for office, he said a bunch of things that everybody heard.

He said, "I'm going to end the war on crypto. I'm going to make the US the crypto capital of the world. I'm going to fire Gary Gensler." You know, he said all these things that, you know, we all heard. The one thing he said consistently every time he spoke, um, which I thought was the most important thing he said is he said, "I will write to fight for your right for self-custody." And so there was a big effort by the big kind of global standard setters and financial uh institutions, the IMF, the BIS and others to essentially um prohibit the um permissionless networks. So the Basel capital rules for example that applied 100% capital waiting on crypto assets were actually 100% capital uh uh waiting for uh crypto assets from permissionless

networks. So this was a big um frontal assault that was going on over the course of the Biden administration that the US was u egging on against decentralized permissionless networks u with the president campaigning on the right of self-custody implicitly the right of uh open permissionless networks that fight has largely been lost and I've you know talked to the Bosel committee and BIS and others um so it's a much it's a it's a much more it's a much bigger thing it's something we at Coinbase have been fighting furiously in a way that most people didn't pay much attention to because the focus was always on kind of the US stuff uh which is you know obviously hugely consequential but our ability to build the infrastructure of future finance and the programmable sort

of application on permissionless networks is something that was not a given is something that I think we're now sort of uh have established and well protected but it took a lot of work and uh and I think it's exciting to see what everyone's going to be be able to build on top of that infrastructure. >> Gotcha. Uh unfortunately that is all the time we had but this was a great conversation. Uh thank you all for sticking around and thank you Salt and Bermuda for hosting us. >> Thank you. [music] Now that was a fantastic conversation.

We're keeping the momentum going this morning. Coming up next, capital markets convergence. An outlook from Kraken. >> [music] [music] >> Yep. All right. Again, welcome everybody here to Bermuda. One of the blessings of the rain is that you're all here inside watching our uh our content. So, uh great to have you here. But I'm really excited to have the opportunity again.

It's the second time we'll have uh interviewed Kraken co-CEO Arjun Cely on stage at a salt conference and excited to do it uh in front of you guys here in Bermuda. It's Arjgin's first trip to Bermuda. So uh welcome him uh if you see him. We'll get him some Bermuda shorts so that he can look the part uh later in the week. But Arjun, great to have you here. Thanks for being here. Um hot off the presses yesterday. I have to ask the question. And CoinDesk reported that Kraken is again back in market raising or I should say Payword is back in market uh raising more capital at a $20 billion valuation. Um feel free to comment on that or not.

>> No comments on >> No comment. All right, next question. Um >> actually I don't even know if this is working, but yeah, no comments on it. >> It's working. It's a no comment in case you guys didn't hear it. But I mentioned Payword. So, Kraken, uh, for those who have been paying attention to the industry, uh, but really its parent payword has been on an M&A binge. So, uh, Kraken has gone from being a crypto exchange. It's sort of your your crypto trader's favorite crypto exchange, your your power trader of crypto assets, but the company has evolved and grown to be much broader than just a cryptocurrency exchange. And part of that has been through organic growth, and part of that has been through an M&A binge. There's been several transactions that you guys have engaged in over the last 12 to 18

months. Um, what's the strategy there? The rise of Payword, I call it, where you have this parent company that has all these assets underneath it, but what's the strategy behind, you know, getting that Payword brand out into the marketplace a little bit more and taking this approach of broadening your business? >> Yeah. So if you if you take a look at um the company over the last 15 years and and especially in crypto, a lot of what you build is pretty much vertically integrated, right? Where you're an exchange, your infrastructure, um you're creating, you know, sort of digital accounts depending on the jurisdiction or or where your customers are located. [snorts] And so over the last 15 years, we built our own first party applications. So, Kraken uh Pro,

which is for professional traders. So, that's more like interactive brokers. Kraken Consumer um that's you know more akin to you know Robin Hood and Coinbase in terms of you know I'd say you know retail and consumers that um you serve and then we built out the institutional house. All of those products were built on top of our own set of microsru uh microservices and infrastructure. And so what we had decided to do over time is say great well we have a very specific mission which is like how do we think about um open rails global permissionless and and I think there's a lot of companies that say that but then don't do it and [clears throat] we wanted to make sure that even the competitive landscape in terms of other

fintech apps or vertically integrated applications that were building out either the brokerage model or wanted access to crypto or eventually now you know tokenized real world assets. that we could provide it and providing that means access to liquidity, money movement, FX, etc., etc. Um, and so the it's it seems like we're on a binge. Uh, but that's not the case. There's there's one uh you know set of infrastructure that really matters is just global licensing. And so the more in which we can add license to our licenses to our stack, we can promote that for our first party applications, our customers, but then also anyone else who wants to um hook into our rails. And then what we

can do is we can just continue to drive the price down for our partners where they don't have to build these rails in every single jurisdiction, which has been, you know, the problem for uh a lot of folks that are out there. The the great thing about crypto and and DeFi has been you're able to build permissionlessly as quickly as possible. The problem is that you run into something in each jurisdiction depending on what jurisdiction you're trying to serve the client. Um so Payword u is the brand that we elevated in order to partner with um other exchanges, other fintech apps, other banks, other larger institutions um that might need those services. So we have forward deployment um engineers now going into larger institutions so that we can essentially

serve anyone who wants to be able to you know enhance their products through crypto rails as as you might call it. >> So you talked about building both the technology stack as well as getting licensed around the world by every relevant regulator. I want to talk about two recent uh M&A transactions that you guys have engaged in. >> To be clear, I think every uh regulator is relevant. It's just that who do they serve at that given time. So I mean over here in Bermuda um like they're they're a large part of you know what we do to serve clients not just you know within this region but like worldwide in terms of the types of products that we offer.

>> Yeah. I mean Kraken has always been a firm very focused on compliance and you know the BMA if I want to editorialize is is one of the most diligent uh and responsible innovators in this space. to the fact that Kraken uh is regulated by the BMA here with its entity I think is a reflection of its commitment to uh regulatory compliance. But uh two your two most recent transactions uh two of them both in the $550 to $600 million range. The first in April was Bitnomial. It's a CFTC licensed derivatives exchange and then most recently in the last couple weeks reap which is a Hong Kong based uh payments infrastructure platform. what will each of those companies under the payword umbrella bring to your suite of services?

>> So for Benomial it was just enhancing the stack um in the United States. So today through um acquisitions and just um applying we have um ironically we've have um two FCMs um two DCMS and one DCO um it's for and it's for different reasons you know Benomial had already spent their time thinking about what perpetuals were going to look like in the United States and for some folks that don't know what that product is you [clears throat] know it's it it is different than what you would look at from a you know traditional futures contract um you know uh longdated with an expiration versus like perpetually um time duration and so it's actually a

really easy product for people to understand outside of the United States. A lot of people use it. >> What's the volume of of perpetuals in the crypto market globally? I know it's a significant portion of the market. I mean, if you add derives and perpetuals, it's like like 90% of all volume. Uh, which I think is important because it's just it's a it's an extremely important product that people care about and and it's a part of overall risk management that I think you know professional traders at least that we serve um in institutions really care about. It's not it's and then over time actually I think it's just a easier product to understand than options for for consumer retail.

So, we'll be rolling that out um over a period of time in the United States. We already have that in Europe and other jurisdictions. But but I think what was important is that this also leads the way not just to perpetuals um for crypto assets. It's also um you know traditional equities. And what about reap? Reap for us as I mentioned was we had um elevated payword for in terms of infrastructure and services to um as many partners as possible. Um so exchanges, fintech application, uh fintech apps um that are serving clients worldwide. When you think about uh what do you really want when you are serving any of these clients, especially consumers all over the world? Um it's it's what we're used to at least in the

United States, which is onboarding and offboarding, treasury management, expense management. Um now we're not getting into, you know, B2B expense management businesses, but we want to be able to enable that depending on who the customer is. Um and so reap's primary customers um Asia, Latin America, and Africa are all fintech applications. So they're enabling more digital applications through card issuance and treasury management. And so for us that was, [snorts] you know, a pretty easy way to think about what the addition was going to be in terms of APIs and solutions for partners across the board, including again our competitors. Um and so we want to be able to continue to serve that.

So, Kraken Financial is your Wyoming based entity, and it was the first crypto company to receive a Fed access to a Fed master account, which was a huge stake in the ground for this industry, the digital finance industry, and I think it sent shock waves through, you know, the traditional banking system. We co-host an event together in Wyoming that if you guys are Bermuda based, I would highly encourage you to to come to this summer. Um, but the innovation that has taken place through Kraken Financial, your your entity in Wyoming has been tremendous. Talk about that process of getting that uh Fed Master account, why the Fed ultimately decided to do it and why it's important for your business and important for the reshaping of financial infrastructure in the United States.

>> Yeah. So, we started the application process before my time actually um full-time Kraken. >> Come on, take credit for it. Come on. >> While I was at the board, but you know, Jesse and Ton are the two co-founders. They I mean they to give them as much credit as possible, they had the foresight to think about um what crypto was going to look like. And part of it was um how do you bridge the gap between you know traditional banking and um you know digital assets and what the rails were going to look like and so one of the bets was that okay well how do we actually in some cases be a part of the banking system but in a way in which we can innovate. So the SPDI in Wyoming was um one of those first bets. that's not going to be our first. It's going to be

the first of many when we think about, you know, worldwide jurisdictions and what banking means in each market. Uh but the US specifically has the dual banking system. And so, um the first [music] [music] Welcome back to AI Supercycle, our [music] premier AI show airing every single week presented by Near. We cover the ins and outs of decentralized AI, privacy, and the future of this massive technology.

>> Near is the blockchain for AI and the execution of AI native apps. You can check out Near's latest AI product at near.ai. Sit back, relax, and enjoy the show. All righty, guys. Welcome back to the Bermuda Digital Finance Forum. Day two. Here we are live for our weekly premiere AI show, AI Supercycle, episode number 33. powered by our friends at Near as you can see here here at the event powering their ironclaw product as well as Near.ai and their inference product with the work they're doing here with the Bina government that will be talked about soon. We are here with the Venice co-founder and now recently announced based AI founder Tina Baker Taylor.

Tina, welcome to the show. >> Thanks guys. Thanks for having me. It's a awesome conference. It's fun to see you here. >> Yeah, it's intimate. It's a good crowd. How's the island treating you? Yeah, the island's great. It's been been a little rainy the last couple of days, but it's uh good for us to be able to focus on them on the conference and >> yeah with each other. >> Let's not bury the lead. The folks want to hear about Venice's recent success. They want to hear about based AI. Um, obviously this kind of this niche of decentralized private AI, specifically private inference is really really gaining traction as the kind of world wakes up to the potentially dystopian future that we're snowballing towards. I would just love to hear your high level

kind of foundational viewpoint on why this is such an important uh challenge to tackle. >> Yeah. Well, you had Eric on a couple months ago, so um I'll probably echo a lot of what he said. I think when we founded Venice, the premise was that we've both been using AI really um finding a lot of advantages um and just the magic of what it was able to do, but quite concerned about some of the things the model would say, some of the things the models wouldn't do. Um and equally like where is all this stuff going, right? Um and both of us coming from a crypto background just didn't really feel the trust me bro vibe, right? and thought, I would rather not have to trust you. I would rather just be able

to access this magical tool and not be worried about um where my data was going and how it might be used against me in the future quite honestly. Um so yes, I think two years and two and a half years into Venice um the platform has gone from strength to strength. over two million users um launched the token a year ago. Um which I think people are really starting to understand the value proposition of being able to buy an asset, stake it and then receive that inference which is private or end to end encrypted. There's a variety of options um on Venice. Um or equally access a frontier model in an anonymized way. So it might not be completely private but at least you are abstracted away from

your prompt. um but be able to access that tool and that inference in a perpetual way. So you're making an investment once um and then you're able to stake that and use that inference um every single day without having to keep paying for it. Um, so I think that has been a really unique product market fit, bringing crypto and and AI together in a space um where it's meaningful, it's tangible, you can use it. And I think that's been a challenge for crypto for a long time. Like what is this good for anyway? Um, and AI really is an obvious use case. Machines know how to work with other machines. They can transact with each other. We're seeing that advent and the rise of agents. Um, so Venice's got

to solve that challenge for the consumer, being able to access AI in a private way that uh has a lot of those dystopian concerns removed. Um, and so for me, looking at this from a business perspective and an enterprise perspective, we've seen kind of the the rise of agents almost overnight. I'll be honest, it happened a little faster than I expected that it would. um and the ability for those uh agents to undertake tasks on their own and act autonomously and couple that with you know primitives like X42 and stable coins now they can not just do what you um do the research for you but they can execute the task

because they can pay for things. Um and so as you said the snowballing effect I started to become really worried about businesses just kind of sleepwalking into cloud code. Um, and then for me, I think when um, Pete from OpenClaw was aqua hired into OpenAI, I was just like, "Wow, okay, we have these cool open-source tools that people can use um, to deploy agents on their own, and now they're just being co-opted by these black boxes." And I was like, "All right, so Bennis has solved this problem for consumers. How do we solve this problem for people and businesses and enterprises to be able to deploy agents um to increase their workforce to automate tasks without being locked in to more big box or blackbox providers

and so that's what based AI is trying to solve. >> Amazing. And so just kind of double downing on the success of Venice, you guys are doing about 60 billion uh tokens per day in production right now. It's been a very steady growth curve. I think Eric put out a chart today about it. um where are you seeing the most demand come from in terms of that token production um what types of models what types of use cases are you really seeing for this kind of private inference private AI >> so I'm not day-to-day at Venice um currently um but the demand is coming from the API predominantly and a lot I think there's a balance between um agents human-driven agents some um

autonomous agents But equally um anybody that is trying to use a significant amount of inference and scale something. So there are small businesses, there are individuals that have different maybe hobby projects. Um but I think that people are now starting to deploy those agents personally um to undertake all kinds of things. Manage my calendar, book my travel. Um and some of them uh are maybe what we would consider mundane tasks. So it's it's simpler to or maybe not simpler but you're probably more likely to start with these kind of small things that don't have like a material impact right on if something goes wrong. But we're also seeing people

use agents quite a lot for um digital asset or financial service transactions, right? So these agentic wallets are able to actually transact for you. Um go and find me the best yield on USDC and use this wallet to stake 30 grand, right? Um and a company that based AAI uh recently acquired um Warden. So Warden Labs um has built out an entire uh agent wallet infrastructure that will conduct all those tasks for you. So bringing Warden into based AI is going to enable businesses to also have access to an Ajantuk wallet to be able to transact and undertake not just like give me

advice but actually so build me a website fine build you a website but if you want it to build you a website and then actually deploy the website like go get the domain get it up and running there's transactions that have to happen in there um and so agents are able to do that um obviously with some human supervision >> right Right. Um, and so I think that across the open-source space, um, I was just on a panel with Near and they're seeing basically the same kind of usage, right? People are starting to automate some of the mundane tasks in their life and I think that those tasks are going to become more complex and more important as we start to gain more confidence.

>> Definitely. >> So, there's [clears throat] two um there's two tracks here. There's the privacy track and Venice is, you know, proficient at that. Uh, they've been able to essentially turn every model private. Uh and then there's >> well they give access to um some of the found uh frontier models like you can access work rock um and it's anonymize some of those models are anonymized so be careful when you're scrolling through um some of them are completely private um you know TE enabled um which is you know a trusted uh execution environment um and some of them are just anonymized because they're >> there is a pass through to them >> and and actually >> but you're abstracted away >> I saw some people pushing ing back on that saying that look Venice isn't fully private like you can't call it a private

AI but >> but it depends on the model >> that's correct >> so could you just further exp so there's an anonymized version of models available and then fully private versions >> yes okay >> yeah so you can um what Venice is very cool um in that there are all of the open source models um and Venice can run those through very specific machines right that are able to um absolutely kind of guarantee you secure that privacy. But if you're if you're using Claude for example um and you're going through the Venice architecture, then you're going through basically a reverse proxy and all of your prompts are stored on your machine locally and they're not, you know, stored on on the the GPU at

the end, right? Um but in that case you uh your prompts aren't attached to you because within Venice like you are abstracted away from like you can use Venice anonymously right >> um and you get a limited amount of of usage if you don't sign up you don't have an account it is still available for you to use um so you can be anonymous and those >> those prompts would be anonymized um but the model cannot be guaranteed private because it's going through uh anthropic in Claude's case for example. So just but but it's very clearly noted. So when you're selecting your model, it will tell you right there um what what environment it'll be executed in, what your prompt will be

executed in. >> Got it. And so this is the [clears throat] the privacy track uh and it it is model dependent uh to some extent. And then there's the the open-source side of this uh which is more where based AI is focused. And there's also several open source models that are available on on Venice. And you do have some more customizability and privacy features with those. >> When you're looking at the state of open source in AI today, >> it feels contradictory because typically the, you know, US has been steadfast and forward thinking when it comes to open source models or at least the open source movement in general when it comes to software, but now we have China uh leading the way when it comes to open source models. I think this is fundamentally disconnected from the way that people typically think about software development globally. How do

you see the progression of open- source models? And do you think that there's a tangible path for an open source model to compete with these large models of you know the the largest private companies in the world? >> I do I do um and I think that that is going to be based on you know the rappers that are built to use them. So for example uh the first product that based AI is is launching is called higherbase. Um, Hirebase will allow you to hire um any AI worker across a variety of different um disciplines. So, they might be a sales person, a marketing person, content, um finance, uh HR. So, if you don't have that person

in your team already, let's let's say HR for example, you need some policies and you need some payroll stuff every once in a while, but do you have the um resources to be able to hire someone for 100 grand a year? Maybe you don't. So you can augment your you know CEO or CFO with a agent that is designed um and solely curated to perform those HR tasks. So if you're using claude or you're using GLM5 um depending on the task when you look at the performance of those open source models there are a number that are equally as performant right now that is not going to be true across every single task right there will be some models that are better for coding some models

that are better at math so better for finance some models that are better at creative writing so they'll be better for marketing activities um so some of that is understanding what those models are good for >> and pairing ing them with the um agent or the virtual worker so that that worker can be the most performant in that particular use case. Um and so with firebase um that's what base AI is trying to solve for either augment your team so maybe you need uh maybe your marketing manager needs some help with um performance marketing and they need to better understand where intentioned buyers are coming from. Right? So, they're placing the ads, they're getting all the dashboards, it's a lot of

information. You can use an agent to be able to put that into context for you and say, "Well, actually, you should be spending more money on AdWords because you're getting more intention buyers from there, right?" So, that's not replacing a human, but it's making a human much more effective so that they can spend that time that they were spending on reporting on something way more value additive for that business. Um so in those cases we're able to um identify the best model for that type of activity. Um and the key thing here is these open source models are just significantly more are significantly less expensive.

>> Yeah. And so what we've seen is people, you know, they get their open claw out and they hook it up to their Mac Mini and away they go and their agents off doing all this stuff and it's really cool and then, you know, Anthropic decides they're going to cut you off, right? Or you're they're going to completely throttle how much um inference they're going to give you and then they're just going to decide the agents can't use that anymore. Um but you could sign up for this other plan, right? and now you're paying, you know, per token. And then people get a 5,000,10,000, $20,000 cloud bill and they're like, whoa. Yeah. Right.

>> Um so the the margin to be able to deliver nearly identical, not always exactly as good, but nearly identical um outcomes for a significantly cheaper price. uh I think is going to make this technology way more success or accessible to um businesses big and small. Yeah. >> Right. >> And and one of the things that you mentioned on on based AI is that uh almost 70% of open model uh of enterprises are adopting open source models versus closed source.

>> You know again counterintuitive because you think these are institutions with bigger budgets. They can spend more on tokens. they can afford, you know, the the the high clawed bill, but that's not what you're seeing on the ground. >> No. Oh, and and I think a lot of that has to do with just data, right? So, the whole trust me, bro, uh analogy that I gave earlier and Claude is continuingly learning from everything that you put in, right? Which makes it a little bit more smarter, a little bit more performant. Um the context is is sometimes richer. Uh and so that's the key difference. The open source models are published on a date and that's it.

>> Right? So if you are a business and you're really concerned about your data being used to train models and you might be putting some client information in there, you might be putting um you know your your commercial strategy in there. You wanted to come up with you know a a marketing strategy, go to market strategy. Like that's really proprietary sensitive information. And if that's going to be used to trade a model or potentially get caught in something like we've had a number of um court cases in New York for example where the AG said okay I I want all of the inference from this period of time and you might not even be a party to that to that action but now all of your inference is is caught up in in discovery and you know

things get leaked and things get out and you weren't even like a party to this lawsuit. It's kind of nuts, right? Um so if you're using open source models there's it's just not possible to do that right the the model is done being trained so it can't use your data um to to further train now what we can do is take those um open source models especially in an agent context if I want an agent that is designed specifically for I want I want it to be a finance manager right so I I get the model that's the best for that and then I can fine-tune it with specific information and so for example it might be that I'm going to build an agent suite for a particular business let's say it's a

fund for example you know we're here in Bermuda and that fund will then give us their data that we can fine-tune that model to be very responsive to their finance team right and so that we can do that in a way that again there's no data leakage because it is defined to that client it's defined to that agent it's defined to that instance And you just can't do that with with a claude because it's always just going to be hoovered up >> into their training. >> Maybe this is a dumb question, but with open- source models, because they're they're released, they're done. They're not taking that data, training the model any further. Why is privacy so important when you're using an open source model?

>> Um, well, so there's there's always the potential. Um, and this is why inference tools like TEE are important. Um, so the the prompt goes to the machine, right? >> And the machine does what the machine and then it sends it back to you. So there's a couple points along the way where that could be intercepted, right? Um, and somebody at a data center could, you know, potentially break into the machine and get access to that data. And so something like TE prevents some of that from from happening. Um, and that would happen in in any case, right? I think the open source is especially helpful in that you're not going to be worried about your data being used for

training. Yeah. >> Um, which happens a lot or your data being used to >> um incept your thinking based on advertising that it might push to you. >> Yeah. [clears throat] Um, the other thing that I think worries me a little bit with the nonopen source models that are continually evolving and you don't know at what state that is evolving. Um, the responses that you get, like we've all had the response where like it's just flat out I'm not going to answer that question for you, which is a bit weird, right? You're like, why? Um but I think what is um most concerning is the nuance of the response that you get that might be um a version of the truth >> but whose version of the truth?

>> So you know what's in the system prompt? what has anthropics board said you can >> uh say about you know you you see questions I mean I don't I don't want to be demonstrative but like you know is a trans woman a woman right and and and a different model will give you a different answer right um and some of that is because of you know a safety feature or a board decision um where open source models tend to give you >> they just answer the question right um and again it it It depends on, you know, Venice is very committed to not filtering that intelligence. You're getting the intelligence back um as it was intended without any type of

curation. Yeah. On top >> and and I think kind of you know extrapolating on on that point, this is why the blockchain rails become important for absolutely >> this kind of primitive, right? We've been searching around for a really good use case and idea for like blockchain and AI, but it feels like this kind of censorship or this uncensorability becomes the number one primitive. And then also like Ne's working on like private enclaves in the cloud. So that becomes like another key point. >> Verifiability I think is going to become >> Exactly. And so maybe you could just kind of further define the the the core vision that you have for the intersection of blockchain and AI as it exists today. You know, you know, backpacking off this open source versus

closed source conversation. How do you really see whether it be tokens like actual assets, um the actual blockchains themselves, the privacy, the verifiability? what is kind of like the match made in heaven here for this convergence and intersection and kind of like how how how has this vision changed? >> Yeah, so I spent the better part of my crypto career trying to get governments and regulators and policy makers to understand like what is crypto good for anyway, right? What's the use case? Is it this is just a speculative asset? No, it isn't. And these are all the ways that this technology can improve the transfer of information, the tokenization of assets, the ability to create capital, like all of the things

that we talk about all the time, right? Um, and for the most part, until very recently, they just weren't buying it, right? They just they just were not buying it. >> Um, and so I think for me, the advent of AI makes it very clear to me that maybe crypto wasn't actually for people to use. Maybe it is a programmable um you know digital ready money could be tokenizations of funds. It could be I mean any any anything that you can tokenize >> um is now machine readable and is [clears throat] now able to be used by the machines and transferred by the machines. And so if you could take the humans out of that and I think that's where agents become really incredible

and they will provide that kind of service layer where it's been hard for us to to to make these things work interoperably and I'm gave the analogy earlier on my panel that you know few months ago I sent a whole bunch of tokens on the wrong chain don't know where they are never going to get them back and I know what I'm doing so imagine people don't know what they're doing you know how scared they are to use these things and and move big chunks of money equally if you extrapolate that up to like a business or you know a sovereign will fund um you know they have security concerns um they have regulatory concerns and so for me I just think that intelligence layer integrated into a verifiable blockchain infrastructure allows you to

tokenize anything and move it around and I think the AI will provide that that service layer where we're just checking what the AI is doing, but we don't have to worry. I mean, Near has near intents now where you can just send it and you don't have to be so specific of what chain you're using because the robot's going to pick it up and is going to make sure it doesn't make a mistake. >> Yeah. Yeah. You know, I'm curious specifically about the way that the Venice token model works. Do do you think that this model of tokens of staking the VV asset to to to have inference available and ability to prompt do you think that's scalable to to the extent that where you guys are trying to take Venice and kind of like where Eric sees is going like is that model sufficient for you know hundreds

and hundreds of billions of tokens being produced each day by users or do you foresee a different incentive mechanism needing to be im implemented there? Yeah. So I think what's been interesting with Venice over the last six months is people have really started to understand the value proposition of the VVV token and and by um >> by extension the DM token which is actually the token that gives you the inference and you stake VVV to be able to mint the VV uh to mint the DM um which is what you're using for inference. So it sounds a little complex. it it isn't quite as complex as it sounds but

>> um and so uh there is a significant amount of the VVV in circulation staked and I think that is a testament to the um that people believe that there is value >> um and then we're looking at how much DM is being used and again um that's also kind of a signal that that people >> think that the utility is there and they are using it. Um DM sits as a liability on Venice's balance sheet. So the amount of DM issued Venice must provide that inference. So you you have it on demand, right? If you hold the DM.

>> Um and so that scaling question I think is is going to um play out over time. Um, Eric is a visionary. Um, and he I would I would I would never discount um [laughter] >> his ability to ensure that um Venice is ready to scale. Yeah, >> it is a consumer-based app um and so the majority of the users that it's that it's facing off to primarily today are individuals, right? So there's there's still plenty of room to scale there. Um I think from a from an enterprise side when I when I look at what we're doing at based AI now um it would be difficult to uh have a a token

>> attached Yeah. >> attached to it. Yeah. And I think different market Yeah. [clears throat] It would be a different salary. >> Well, it's also just like a different Yeah, exactly. It's a different kind of like bet if you will like the the Venice bet is like almost piggybacking off the compute demand scaling you know equation and sure the based AI model is essentially the same but it's in such it's much more of a boutique kind of specialized fashion I feel like that you know is is could eventually surpass the demand from just the consumer side because businesses are obviously using a lot more power a lot more intelligence a lot more people in terms of actual like for um for a specific use case. But >> well, I I use I use Venice every day,

many times a day. >> Um but if I were a fiduciary of a public company or of a company that had a lot of customer data, so let's say I was a wealth manager or a financial adviser >> or a doctor or even like a personal trainer. It doesn't even have to be like a regulated business, but I have a lot of your information and your information. So, I have a responsibility to to protect that and secure it um and keep it segregated from my other clients data.

>> Um Venice isn't necessarily designed I mean it is designed to do that but um the business isn't focused on meeting those regulatory requirements that might exist um in a jurisdiction. So for example to be HIPPA compliant or um to be SOCK 2 compliant right >> um and so for based AI for us to serve those customers we will be right >> um and I would never dream of suggesting that that Venice should change its ethos and and and start to get on board with all of these government licenses right that's [laughter] completely the antithesis to to what Venice is trying

to do >> um so yeah that for for the enterprise I think we have to evolve a little bit and and identify that they have rules that they have to follow, right? And so we have to meet them where they are. >> It sounds like based AI is like an extension of Venice in the sense that you can use it to help achieve some of these compliance forms, right? That if you need HIPPA and and meet SOCK 2, there are certain privacy requirements you can use Venice as a tool to help fulfill those requirements for enterprise clients. Is that the right way to think about it? >> No. So Venice Venice doesn't have those um accreditations, >> right? Right. Um, so I think where they're similar is I obviously um was part of the design of what the power of

Venice would be like what is the value proposition and what's the problem we're trying to solve for people and that really was an alternative to chat GBT that wasn't going to spy on you that wasn't going to try and change the way you think through inception of giving you back some filtered version of the truth um that wasn't going to set you up to be you know the party to some lawsuit because you sent a prompt to chat to be three years ago and now your data got hoovered up in some action. Um and you know and you look forward into kind of the thought police minority report you know future you know just asking a question might become some kind of weird thought crime right um so Venice solves for that. So stepping back from Venice, I think one of the things that I thought

still bothered me >> and especially with the like I said the the advent of of >> the openclaw moment was all of these businesses were trying to plug in all of these agents and they didn't really know what they were doing >> and they weren't focused on security and they're putting their credit card details into, you know, just the the chat app. Oh yeah. And I thought, well, this is this is bananas. Somebody's really going to get sued. And so, it's it's the same ethos that uh we built Venice with, but stepping away from that into kind of a more enterprise mindset >> um and building something specifically for businesses that do have those

obligations. >> Um that doesn't mean we wouldn't use Venice inference, right? We could absolutely use um the inference that the rails that Venice has built, right, for product layers that based AI is is putting out to the markup. >> Exa Okay. Okay. Exactly. >> Maybe maybe that >> I think that's what I was trying to suggest in in the wrong words. >> They're two separate companies, but of course we would use Venice Inference if >> to help fulfill. >> Absolutely. >> Yeah. Very. >> What do you what what do you think about the the way that the whole kind of ecosystem has played out just kind of closing out? You guys kind of sat down a couple years ago. Look, we want to build an uncensorable chat GBT. Now you're here today trying to bring a much larger idea with based based AI to enterprises.

Obviously, you know, the Venice token has done well. The mind shares grown. People are excited about this private decentralized inference. Just kind of looking back, is this is this kind of what you guys thought was going to happen? Uh well I remember when um we went live with Venice. So Venice was I think we were probably five months in. Took us five months to build it out and we went live in May at Consensus and that was you know our big kind of out of stealth moment. Um and Eric and I were you know doing press and podcasts and talking to people and networking and trying to explain what we were doing. Um, it was kind of like Bitcoin, right, where some

people like totally got it straight away, but most people didn't, right? Um, and the product was really new, but Chat GBT was pretty new, too, right? Um, and so there were still some things that Chat GBT could do that fus couldn't do. And so, you know, there was it was it was really kind of bringing people along on the journey. Um, and I knew what we were doing was really important. Um, but it wasn't it wasn't like a viral aha moment, right? And one thing that I was really surprised by honestly was I thought that people would get the privacy um imperative straight away and they just didn't. Right. So in the beginning I think the uncensoredness of Venice was more attractive to people. It

was easier to see. It was more visible. You could ask the same question >> on two platforms and the difference in the answer was really tangible. Um, but privacy is a little bit more ephemeral, right? Um, and if you ask most people, do you value privacy? Would you invest in privacy? Do you act in a privacy important to you? >> Um, they'll all say yes. And then they'll do stupid stuff, right? You know, put their location on Instagram, right? Like obviously that's you're not really that concerned about privacy. Um, and so for me, I think there's a little bit of retraining people. And I think that has a lot to do with like social media where we think, "Oh, I don't have anything to hide." Um, but this is very different, right? You put on social

media what you want people to think and see about your life and and and your personality. >> The way that you engage with AI tools is deeply personal, right? It is who you actually are, not what you want people to see about you. Um, and so when I ask people, would you put your diary or you know your all of your, you know, financial statements on your Facebook, and they go, oh my god, of course not. I wouldn't do that. I'm like, well, essentially that's what you're doing when you're putting all this information into Chat GBT. It can be accessed and viewed by people that you don't that you don't and used against you, right?

>> So for me now in this moment, I kind of I I have a B2B background, right? I I I joke that I'm a reformed banker. Um, I've spent a lot of time with, you know, governments and policy makers working on crypto policy. Um, I built out some of the biggest exchanges. I was a head of strategy and regulatory affairs for Circle, um, during, you know, the the Mika licensing, um, period of time. And so, I understand what institutional challenges are.

>> Sure. um maybe more than I do individual humans because they continue to surprise me with the silly stuff they do. Right, >> Tina? You got a big big job on your hands. >> Yeah, >> you've got you've got a lot of private diaries to protect from enterprise secrets to plans to team management. On the Venice side, everyone's dirtiest, darkest secrets. >> Yeah, they're important and they're yours and they should be yours and no one else's. >> Thank you, Tina. Thank you. Hope you have a great event. Thanks for sharing some time with us. Ladies and gentlemen, that has been AI Supercycle episode number 33, our weekly premier AI show powered by our friends at Near. We are live at the Bermuda Digital Finance Forum, day two. We'll be right back with

our next guest after a quick standby >> transactions on Stellar. Uh, and the entire set of 50,000 transactions cost us a$1.13. So from $75,000 to A13. And that entire savings goes to the total expense ratio of the fund and goes right into your pocket. This is why the SEC has given Franklin Templeton the only permission to run our money market fund as a digitally native product. There are no off-chain records whatsoever. And as I talked about before, this has allowed us to have new kinds of functionality that

simply has not existed before, including and importantly for you, the ability to transfer your tokens peer-to-peer upon demand instantly. Right? And so I think it is the enhancements. It is the idea that we are putting into your hands the ability to run your financial life in a way that every asset you have can benefit you to the utmost potential of that asset. That to me is the excitement and the promise of this space. [applause] >> Yeah, I I couldn't agree more Sandy. I think efficiency and re recouping more capital to be able

to put that to work is the name of the game here. Um, and as it pertains to Bermuda, Sandy, I I'll throw this question to you first. You know, we have reinsurance providers that have uh, you know, capital afloat. There's banks who have funds that are offchain costing them more money than it might be. Can you talk to us a little bit more about uh yieldbearing stables and in thing in your money market fund and how that capital can be put to work even more? >> Yeah. So I think one of the most important developments that we have seen in the past two years has been this development of what we are calling at Franklin Templeton the universal liquidity layer. And by this what we

mean is there is starting to be this interoperability between stable coins, tokenized money market funds, tokenized deposits coming from banks, central bank digital currencies. All of these digital forms of money are starting to be able to be exchanged seamlessly between each other, which is creating a cash layer onchain for wallet-based investing that will allow us to have institutional quality cash management. Right? We don't leave cash sitting in wallets today.

uh we sweep that cash into a yieldbearing instrument. That is what we are building inside of the crypto ecosystem is this ability to move your cash seamlessly right up until the second you need to spend it. It should be earning yield and the second you spend it, any incoming proceeds you get should immediately be put into a yieldbearing instrument. you should not lose out on one second of yield with these new rails. And so we think this is an incredible opportunity particularly when you think about how the insurance markets work and the reinsurance markets work and the opportunity to create new assets here where a lot of the

difficulties that have limited the growth of insurance linked securities in the traditional space can be so easily solved with smart contracts and auto execution and these assets that can move immediately. and seamlessly based on specific data triggers. We think this is an incredible opportunity and we >> All righty, guys. We are back at the Bermuda Digital Finance Forum. It is day two here on the island. I think the sun might be coming out, Michael. I hope so.

Good to have you, man. Welcome to the show. >> Thanks for having me, guys. Really happy to be here. >> How's your How's your week been? >> It's been great. I mean, this is this is I've been to this this event a few times. Well, it's various iterations over the years. um been coming to Bermuda now for I don't know six, seven, eight years and and I love it. This is just this the spirit of this place is wonderful. Um >> yeah, always an eager returning. Yeah. >> How has this conference changed over the last few years? >> Yeah, really good question. Look, I think it's just it reflects the maturing broadly of crypto but also of the Bermuda ecosystem.

>> Um I I've sort of been involved right from the very beginning of this journey here. I've known the premier for right from the beginning of his of his digital asset journey. Yeah. and um you know you've you've started to see the sophistication with which they address the issues with which uh you know the the kind of companies that are now setting up shop here the foundations the others so I think that's captured in the in the conference it just becomes this this sort of deeper richer conversation and I think that also reflects you know an inevitable almost maturing and sort of uh uh institutionalizing of crypto generally right >> yeah we've got the tokenization Yeah, the stable coins, the regulations, it's becoming real, right? And and that's the

thing. And that is that that's for better or worse, right? Because it just changes the spirit of what this industry is all about. Um, and it's it's a new. That's right. It always is. There's very different perspectives on this. I for one am and happy. I've always seen the opportunity as being the transformation of finance itself. And uh whether we like it or not, we just had to embrace the institutions to be able to do that. >> Yeah. So, Michael, you are the chairman of Advanced AI Society. You're leading the proof of control initiative, really focused on human agency and agentic AI. Um, recently there was a agents of chaos paper that was uh out there in the wild.

Not sure if that was written by agents or humans, but maybe you can just talk to us about the deceptiveness of some of these agents, what you know, data leaks, task completion, um, lies, what is happening in the state of agent. Okay. So so let's bring this whole thing back, right? So, uh agent agents are constructed with a set of incentives. They've got their guardrails. They are trained on this incentive system like it's a it's a reward system. So, I I think we've we've we've we've made the mistake of anthropomorphizing AI to start with, right? So, we're like, oh,

it it it's thinking it's doing this, it's doing this. So when we think about this this that very question like oh my god they're lying right and lying is a thing that humans do. I I I think what what these things are doing are optimizing for an outcome that is is built into their training model >> and >> that's not a good thing. I'm not I'm not celebrating that but I'm saying we need to understand therefore what is the framework in which this this sort of stuff is happening >> and and in the agents of chaos is a really important paper right it just it it exposed the risks that we face by putting these things out into the wild without the kind of framework uh underneath it you mentioned the human piece of it I um I'm I'm sort of

advocating for a different language than what you typically hear people talk about there need to be a human in the loop right I think that the problem with that frame claiming is it seems like um you know the humans being consulted from time to time to see whether things are going on. I think we need this right from the very beginning to be humans in the driver's seat. So so that even though like within certainly generative AI the LLM you know the sort of the the most recent manifestation of AI in the last three years um you you have this problem. It's it's it's a probabilistic model as opposed to deterministic. So we you don't quite know what's going on under the hood. Um and and and that some people believe creates a problem because

if we're going to be able to trace and audit uh the performance of an agentic system, you know, how do we know that the human had this intention, this intent and the end result was that that's going to be an important question for any auditing aspect of that. But but notwithstanding that problem, there are all these different ways in which we can start to bring checks and balances and guard rails and so forth. And that in our mind is the framework that needs to be in place if we're going to launch ourselves into this this wild and woolly future. The opportunities for aentic AI are obviously profound. We all know the possibilities, but we have to be in control. So what we're all about is a proof of control. I can talk a little

bit about what that's all about, but it's a framework that uh ultimately enables that humans and the businesses that they represent are able to stand up the their ability to control these things. >> Yeah. Would wouldn't it be an easy argument to say that the entire direction of the inertia of the AI industry is simply going away from human control and such that fighting for human control is like um Seephus holding the boulder up just like trying not to die. So again, I actually think that sometimes the way that the language we use when we talk about this leads us down to that conclusion, right? So I mean I don't want to sort of throw rocks here, but um there are certain very large companies in Silicon Valley for

whom that narrative that they've got this big gigantic thing. It's it's it's going after AGI and and there's nothing we can do to stop it. And you know what? Whatever happens, you're going to make a ton of money if you invest in us. So, we're going to do a, you know, $300 billion raise, right? Let's go for it. Right. So, um, that presupposition that this is an inevitability is just not the right way to think about it. >> Yeah. >> Right. So, and and remember like at the end of the day, it has to serve humans.

What on earth is the point if this is not about serving the humans, the companies, the businesses? I'm not saying that we need to protect jobs or anything like that. Of course, jobs are going to go, but we certainly need to know that this thing is going to not only behave, but evolve because it's an evolution. It's an evolving concept. It needs to evolve in a framework that is serving the best interests of humanity. So my view is let's establish those frameworks um and and have a mechanism by which we can check whether or not this particular AI structure this agentic workflow whatever we want to call it is performing to that standard and if it's not don't adopt that model right is it is it absolutely vital that

we must use chat GPT it's not right so um there's there's and I think actually aentic the agentic moment is is a is a really unique opportunity Because uh before we got to this idea that there were going to be all these billions of agents everywhere, we were thinking as if the only way forward was to have these LLMs own everything and we just be piling all of our data into them and they're going to get bigger and bigger and more powerful. But now we can think of them as more foundational, this commodity layer. And it's the ability now to build on top of that agents that we control that starts to I think rescue some of that that narrative. So, no, I don't think it's sisph I I I get the idea, but um

we we we started this process. We should be able to to keep it under our control. >> I I think we'll let let's talk about proof of control next. But but but first, I'm curious what what you may think about the uh the story where I think it's Elon, he goes into, you know, uh he's hanging out with his friends and the and the head of Google says, "Hey, you know, >> fireside chat they were having literally around a fire or something that >> maybe it could be." and and he calls Elon a a specist. >> That's right. >> Right. Because he's he's advocating for human uh humans to ultimately be the benefactors of AI. Whereas I think the argument that uh the head of Google at the time I forget I forget which you know founder of Google it was but was arguing effectively like you know who's

to say what's better for intelligence. Uh maybe it's true that you know humans are holding back intelligence in which case those championing intelligence should you know pave the way for humans and those those uh or excuse me pave the way for these agents and and AI should be the one to to continue on you know this this spirit. Um, have you heard this story elitist uh privilege to be able to take that position, right? like ask >> ask the 8 billion people in the world what they think about that idea and and have a democratic kind of uh election on what their thoughts are and I think you'll find that most people are going to say whether they're informed enough and they understand this stuff and sophisticated enough and they I don't know but they're all going to say that humans I think the humans are going to

be on their side right so [laughter] so I mean >> like it's an interesting thought experiment right and and and it's clear that we don't understand what intelligence is and we don't fully really understand what evolution is we don't even understand what information is, right? And and the nature of the universe and all these things, right? So, not I'm certainly open to the idea that if we were to try to build some sort of law around what things need protecting and what don't that maybe there's some obscure argument about the greater broader nature of of of intelligence from a universal perspective, but that's not the way we think. That's not what who we are. This is not what humans do. And um it's just if we believe in the humanity that we're living and breathing and spending our

time with right now, then we should listen to what that humanity wants. And they don't they wouldn't agree with Sergey, I don't think. >> Yeah. >> Yeah. But what about the younger generations who are kind of grown up in this world, right? They have an LLM from the age that they're six or seven or eight. Their level of trust and understanding and usage of these tools is dramatically higher than any of ours were in our childhood. How do you how do you reconcile the change of generational passings as it relates to their their care of what happens or their or their desire to live in a post economic world.

>> Uh what I'm going to say might sound kind of like, you know, generationist in some way, right? Because I mean I've got children of my own who are in their 20s and they're so much smarter than me and so much more capable with with digital technology and everything else. But, you know, this is a generation that has grown up in the presence of algorithms that have manipulated their minds, right? I'm not I'm not and again, and we and by the way, we've all been under this. I'm not this is this is what I'm trying to say. This is not generationalist. It's >> um that is the very design of social media. And I I I don't know. I wrote a book uh with with a guy called Frank McCort that came out a couple years ago.

And Frank's a very strong advocate of putting the data that the internet was built upon. is actually a preAI conversation really um back into the hands of human beings and so that these algorithms are not there to manipulate us right but that's what they were constructed as right and interestingly the LLM were trained on that data so the LLM themselves are a function of a distorted set of algorithms that manipulated people um there's there's this woman called Anna LMK who's a brilliant um psych psychologist who who wrote a book called Dopamine Nation and she she talks about dopamine as the as the driving factor in so much of of our behavior. Um, and she's studied cocaine

addicts for um for years and and would understand what that what the dopamine cycle was all about. And she says social media via a phone is like having a hypodermic needle in your pocket. And the the thing is it's a cocen addict knows they're addicted, >> but we we think we're in control in these environments, right? >> There's a very strong argument to make and Susanna Zubof's wonderful book um surveillance capitalism deals with this idea that we've literally lost our free will.

>> We don't understand what's going on in that manipulative process. So, look, this is not to say we shouldn't all be using AI and and getting in and using the tools and learning about it and so forth, but the idea that I'm I'm the more comfortable advanced person because I trust this thing and it's behind it is a black box. It's built on a bunch of incentives that have got nothing to do with my incentives. Tina was on before this, right? She's talking how do we control >> our our data? By the way, just full disclosure, I'm I'm an adviser to to based AI. So, I'm excited by the idea we can actually bring capital and funding to these much safer models that put our data under our control. So, I don't know like I mean kids >> kids these days [laughter] uh I think there's a um

>> it's the classic line. >> It's the classic line. I I think they've got they've got to get into this space but I think we really should have every one of us whether it's younger or older understanding what's at stake when we when we give up our data and our control to these uh these machines. And then so starting from the premise of having uh you know the best interest of humans at at at heart um what is the right way to structure these models our relationship with these AI systems? You mentioned having a humor not just in the loop but in the driver's seat. What does that mean?

>> Yeah. Yeah. So, so I I think it starts um with a well the proof of control model, the framework that we're talking about. It it draws upon a range of technologies actually. You know, one of our roles at the Advanced AI society we believe is to sort of popularize this idea that it's an actually entirely new category of technology. And what we're trying to do is close what we call the verifiability gap that you know precisely as I was saying before because humans whether we like it or not still have all this structure that we have in place. not really going to be able to adopt or use this AI to the best of its advantage unless we can figure out how to verify what's going on. So to do that, we believe there's uh a number of different pillars that need to go into

it. Um you know, identity, identity, portability, privacy, uh and then there's these there's a stack of technologies that have the capability to do that, right? It can be decentralized compute, decentralized storage. There's, you know, various forms of confidential computing. We've got trusted uh um uh trusted execution environments, TE, you've also got zero knowledge proofs. Uh there's sort of models of of model verification. One of our members is a is edge and node. They're here in Bermuda and they they have a a dashboard that that that is gives you the capacity to track payments and activities of a of aic activity. So all of these things

come together and and we think give us a framework for this. And if I if I step back then to ask you a question, Robbie, I there's a certain principle that I think runs through all of it. Um and it's it's privacy on one level, but really it's also data sovereignty, right? the idea that that can I maintain not just control but the proof that that that my inputs into this system uh the data that I'm providing to it and the uh you know the the prompts the the the communication everything um is something that I'm in control of.

>> Um and so it's it's the that that sort of foundational thinking is is what's really important. Yeah, Mike, just kind of coming to a close here just generally, what are you really looking to like if you had to look back in five years from your work that that you're doing with proof of control in this kind of academic uh AI focused group? What would you like to really see as the as the outcome of your work? >> One correction, I wouldn't call ours as an academic f focused group like our members are all private enterprise. We've got a lot of um we do certainly work with various universities. We've got MIT and and and Stanford and uh Berkeley and others that are all very involved in this. But really the whole point is to bring a multistakeholder

approach to this stuff. So it's a governance framework that we think everybody from regular enterprise down to you know including the hyperscalers but also obviously all the blockchain providers are a part of this. So look, I think if I was to look forward and say what what did we achieve and what do we want to achieve, it is that there is this new agentic framework that looks a little bit like the principles on what the original internet was supposed to be. Right? So in some respects we could go both ways. We could just drive into some sort of totalitarian nightmare where everything is controlled by just a few very powerful machines owned by a very very small group of people. Or we can get back to what the internet was supposed to be which was an open access

where everybody had their data, their controls and their their ability to operate. And that is where the most explosive innovation is going to happen. We know this through history that if we open everything up, >> we're going to solve far more problems if we close it all down. So that's the vision that we we move to the internet of AI uh the internet of agentic AI >> and what what we mean by the word internet in that sense is this again open controlled uh system that everybody has has a stake in and an ability to to to access and use.

>> Michael, thank you so much, man. Co-founder of Advanced AI Society and uh advocating for humans in the age of AI loop. Humans in the driver seat in the driver's seat. There we go. Thank you so much for coming on. >> Seriously, man. Have a great week. >> Enjoy the rest of your conference. >> All righty, guys. That is the human in the driver's seat. Not going to make that mistake again. Leader of the Advanced AI Society, Michael J. Casey. I see our next guest is here. Ready to go. Michael, thank you for joining us. Uh, it's been a pleasure, sir, and have a great rest of your week.

>> Thank you. >> All righty, Rob. >> Yeah, we're going to keep things rolling here. Obviously, you know, we have to we have to play both sides a little bit. We do >> we have to get into you know >> you know specist not specist are we here for the humans are we here for the you know pure there's an argument and we didn't get into it but we could get into it which is that you know there's a lot of parents out there and you and I don't have kids >> no not not yet >> not not yet and so um a lot of parents out there you know they they love their kids more than they love themselves >> and in some way most parents do >> most parents I would that you know my parents it's a selfish thing to ask for

but a lot of parents do feel this way >> definitely >> maybe we I will feel this way when ultim you know potentially am a parent [laughter] >> regardless a lot of people are of the mind that AI is essentially the child of the humans >> right >> and if this is true and we hold this parental principle to be true there is an argument to be made that we should love AI more than we love ourselves that we should love AI more than we should love humans I'm not making that argument, but I think someone could make that argument for economic >> uh you know, CEO of a massive corporation >> like Google. There's uh there's people out there. Satillaa from Google is one of them.

>> Is that who it was? >> Uh it must have been him. >> Yep. That was who called Elon the specist >> post economic. >> And again, I'm not making that argument, but I think uh he and others could make that argument to advocate for AI in a world of humans. >> Yes. Yes. Hey man, that PPI came in hot today, didn't it? There buddy, [laughter] it >> certainly did. >> That PPI came in real warm, ladies and gentlemen. I for your risk on portfolio and this band of bandits out there. >> We've got Michael Stewart, the president at Casper Association. Michael, welcome to the show. Thank you.

>> Yeah, thanks for coming on. >> I'm digging this. I'm digging the sport coat, man. It's >> You guys take no breaks here, huh? >> No breaks here, man. We're having some fun. >> All gas, no breaks. How's the how's the islands treating you? >> You know, it's the first time I'm here and uh I quickly realized how little I knew about Bermuda. I came here first of all thinking it's going to be great weather. Brought my swimsuit and stuff like that. >> Also thought I was going to the Caribbean. Apparently, it's in the middle of the Atlantic. [laughter] >> Right. >> That also got me. It is a closer flight from New York. We're We were both in Miami for uh consensus and it was a much further flight from Miami than it was from New York, which is also surprising for me.

>> Yeah. No. So, it's been a it's been a learning experience, but uh the conference been school has been great. Salt is always fantastic. >> The show that Anthony and and John put on is uh I think the best in the industry. >> Yeah, >> it's very intimate as well. Uh I I've enjoyed Well, Michael, it's your first time on the show. I know you guys had a announcement yesterday or sorry, perhaps it was day before about what you guys are building at Casper. >> We are. Um, maybe just give us the quick and dirty here on your background, how how you got into this space and kind of what you're what you're building with Casperman.

>> How I got into the space? I mean, you got time. >> Sure. >> I've been in the space for uh actually about like 13 14 years. So, um, I'm originally from Amsterdam, the Netherlands. So I have not a fancy accent like the previous Michael but uh uh live in Los Angeles uh and was very uh active in the sort of Silicon Beach Santa Monica California scene where a lot of uh early crypto projects started so I got exposed pretty early uh I became a co-founder of the Casper project actually back in 2018 helped sort of develop the like the product requirements and and hired the original team uh but stepped away after about six months um and um mainet for Asper launched in 2021. 21. Um, and somewhere

about a year a year year and a half ago, the the board of the Casper Association, which is the the Swiss nonprofit that oversees the development of the network and the protocol and and the token, uh, asked me to come back in and and oversee the project going forward as its uh, president of the board and the CTO and, uh, as a obviously longtime supporter of the project, uh, I, uh, I did so. So um we announced this week uh what we call our Casper manifest which is a collection of uh initiatives really uh focused on uh what we believe is necessary to enable not just sort of what the next Chinese thing is in this industry uh but really the next 10 years of of I think the digital world right if if you look at uh adoption of uh web 3 I

think the numbers have been floated around at the conference there's maybe what like 500 million 560 million people who've touched crypto. Um there's how many people in the world like 8 n billion right? So we're we're at 5% penetration rate. >> Um which if you look at other technologies like email got there in like four or five years, right? So we're we're lagging behind a little bit and I think there's a bunch of things that we need to tackle as an industry uh in order to um to to catch up uh and and get that other 95% of the world sort of in the fold.

>> Definitely. >> Yeah. Yeah, just a real quick side note. Um, >> before we get into Casper, there was a rumor that the Netherlands was implementing an unrealized capital gains tax. >> Has that actually happened? >> You know what? It's a Yes, I believe it has, but I still read I don't follow it as much anymore because I'm not like I don't pay taxes in the Netherlands. I live I live in the United States. It's really nothing to me. But >> um >> it definitely got passed. they called box three taxes and uh and yeah, you would be taxed on your unrealized gains on an annual basis and obviously there's a bunch of upper around that uh so I don't know the current status of it but the rumor is true. It was definitely passed. Yeah.

>> Yeah. Yeah. >> Pretty insane, right? >> That that that would not go uh through in America. Um tell [laughter] us about >> make the right call coming over here. >> Yeah. Exactly. Tell us about the institutional work that you guys have done at Casper with part of this kind of manifest. what is the what is the kind of appeal or the operations that you guys are doing to kind of onboard whether it's tokenization platforms stable coin issuers kind of like generally what is that part of the business look like right now >> so as I mentioned I think there's a number of things that we need to tackle um and institutions is they have certain needs but so do users so do developers right and and so do machines AI I mean you just had a your previous guest on talk about sort of

>> the uh the advent of the machine econ economy, right? Um they they have their own needs. Uh they >> including the [laughter] the human in the middle, the human in the driver's seat. >> Um and on on the user side, um I think we still very much have a UX problem in this industry, right? Uh I don't know about uh your mom, but my mom is not using crypto and and won't ever because like she's not going to deal with uh recovery keys and and all of that. like the average user is used to clicking once doing the sort of Amazon buy the click once to buy experience. Um and crypto like the fact the number of hoops that we jump through to get anything done in this uh sort of field is uh still pretty staggering.

>> Yeah. >> Uh so there's a a friction issue that we need to solve on on the on the user front. Uh similarly on the developer uh side of things like the number of ecosystems all the different things that you need to know bring over like you work in one ecosystem you don't know how to do it in another um there's a lot of friction there. uh institutions have particular needs, right? So, one is if you are um an institution, you don't want your business data out there on a public blockchain, right? So, privacy is a is a big deal. Um privacy chains try to solve that, but it doesn't work without compliance, right? Private privacy chains are being shunned because obviously it's used for uh hiding things that shouldn't be hidden from the people that you're not allowed to hide things from, right? So uh selective disclosure

to uh regulators, auditors, uh tax agencies, etc. is something that's that's required. So I think uh compliant privacy is a is a big deal. Uh which is something that we're solving for um and um and machines similarly um to go back to your previous guest sort of argument the human in the end needs to be in control, right? So while X42 as the payment protocol that that we have announced we're implementing and several others are as well uh solves sort of the payment uh part of that uh it doesn't solve the control part of it right so uh if you give uh an AI AI agent an account um it can be an account with unlimited

access to funds or uh even uh an account that has unlimited validity right like maybe you want to give them an account for the next hour but not for the rest of your life. So uh sort of smart accounts where you can configure uh scoped permissions and and access to certain things and and uh a a daily budget for example uh or only trading in a particular asset. Uh those are things that uh I think we need to solve for the for the machine economy. >> Yeah. And and so with with all that um you know those are several initiatives that you've that you've got as part of this manifest uh you guys announced uh this week. Um and and ultimately this is about uh making Casper the place for regulated real world assets um and the machine toachine economy. I I'm curious

what makes Casper differentiated and uh you know the the the the leader in this in the sense that how how do you plan on um capitalizing on the machine to machine economy? You have several blockchains out there. What makes Casper uniquely positioned to succeed with respect to real world uh real world asset tokenization and the machine to machine economy? So what what puts us in a unique position is that we uh developed our blockchain in a way that uh the initiatives that we have announced here are not being tagged on as sort of afterthoughts or sort of smart contracts on top of the execution layer, but they're basically built in natively, right? So um for example, we haven't talked about quantum safety yet,

right? If you are an institution looking at your uh decade long road map uh and you read the same reports that everybody reads, it's like hey um >> quantum safety is going to be a real issue three four years down the road from now. How is this protocol going to solve that? Um so when Casper was developed what we did from the onset was uh pluggable crypto algorithms, right? So currently we already support two uh two key algorithms basically the crypto cryptography with which you sign your transactions. uh and adding a crypto a quantum safe algorithm is really just plug-and-play. So there's no um major surgery required to put it uh in those terms. Um similarly um we have um sort of protocol level sort of definition of

cost of things. So if we say well we're going to do private transactions and they need to be verified whether it's through ZK or other other means uh on different protocols it's always going to cost sort of uh much more than a native operation >> because it's running in the in the smart contract layer um it's uh it's dependent on how congested the network is etc etc >> uh we are designed in a way where say well it's always going to be X >> um so there's a lot of sort of advantages that we've put into place um in advance that puts us in a position now to really roll these things out for institutions and machines alike um to do this in a much smarter and uh sort of >> protocol native way than uh than you see on some other protocols.

>> I got to ask like what is your main edge here? Like what is your unique value proposition that other blockchains can't offer or that you have an edge on distribution relationships customers like what makes Casper something worth of an investment compared to Ethereum compared to Hyperlick compared to Salana? what makes Casper something that some that somebody would want to actually build on compared to other you know kind of private or public chains like what is your edge that is actually like a monetizable kind of moat that you've discovered and built. >> So I don't think I'm technically allowed to answer the investment question but I'll I'll try and answer the other questions. Um so it's it's a combination of those things that I mentioned right so if you are a developer um looking to build an application uh you want to have

a few things you want to have predictable cost right you know you want to be able to budget your your business and say that well if I have 100 users operations are going to cost me x not uh fluctuate between zero and a billion uh based on what other people are doing on the chain right um you want to have uh and this is very important in uh in uh real world assets particularly as the transaction sizes of the underlying assets get bigger uh you want to have instant finality um if you look at a lot of uh other chains you have probabistic finality right if you and I'm sure as as a user you know when you send uh Ethereum to an exchange it tells you well we've received your transaction now please wait for 64 confirmations before we're going to release the money for you

because we're not sure if it's actually going to be final or not right that's how probabistic finality works like it's based on uh the odds that it's going to be reversed, but because it can always be reversed on Casper, everything is final instantly. So once the transaction is sent, um it's fine. Um which uh again in in if you're if you're Black Rockck and you're sending a uh billion dollar real estate portfolio to a to a buyer, right? Like you can't have that asset live in limbo whether it's owned by the buyer, the seller, or sort of the ether. >> Yeah.

>> Um so that's that's a big deal. Um so there's a lot of advantages for developers to build their business on top of uh of Casper. Uh we also announced that we are uh so Casper originally is not an EVM chain. It is its own uh layer 1 protocol. Uh originally actually Casper was developed as a technology within the Ethereum foundation as uh their vision for how Ethereum was going to move from proof of work to proof of stake. Um we in 2018 saw that it was going to take Ethereum another five years or so to get there which ultimately is how long it took them right with uh with the merge as they called it.

>> Yeah. >> Um and decided that that was going to be too long. Um so we uh we took that Casper technology and and launched the Casper chain. >> Um but uh it's a WASM uh based u development environment web assembly. >> Yeah. Um obviously the the majority of web3 developers are in uh in solidity and EVM. Um while we strongly believe there are massive advantages to to WASM and web assembly and everything that we've offered there uh we want to be as inviting and sort of big tent to to everybody. And one of the things that we've done again uh with with foresight when we built this chain uh was the

ability to have multiple VMs on the same chain. So rather than uh having rollups or L2s or anything like that uh we are uh essentially plugging in uh an EVM uh environment that allows EVM developers to bring over their thousands and thousands of pre- audited smart contracts from the EVM world onto Casper uh and interact between the the virtual machines even uh with web assembly and other assets on on the chain. >> Yeah. >> Yeah. um given that you know you guys have this manifest uh we're also here and you know people like to talk about the convergence uh this is the convergence of traditional finance and digital assets uh and we see that with RWAS and tokenization uh we've also got you know the previous guest to you know

we we were talking quite a bit about AI we had Tina from Venice and and based AI and you know this stream here is is powered by Near who's who's our AI partner so we also have this convergence be behind AI and finance in general Um and again you know machine to machine economy and RWA tokenization these are the two priorities that you have at Casper. How and we and we've talked some about you know how Casper is uniquely positioned for you know the developer environment to come on onto this chain. How do you think about you know bringing agent activity onto this chain? You know as we talked through you know what AIdriven commerce could look like you know some of these some of these open source and private models ultimately using blockchain rails. How do you think

of, you know, kind of marketing the blockchain of Casper to AI agents as we, you know, continue to enter and and accelerate through this AI world? >> I don't think we're marketing to AI agents, but but their owners, right? Their creators, but >> the human and the driver should um even though it'd be nice if like the AI agents were telling their owners like, "Hey, I really should be running on Casper. >> We might get there." >> That's the dream. >> You got to train the models, right? >> Exactly. >> Yeah. Um, listen, it's interesting like I mean we started talking about how we're at like 5% uh penetration rate amongst humans, right? Uh, and that means that we still have about 8 billion or so humans to go. Um, but that's obviously not the ceiling. Like we're if you if you look at uh AI agents, the

ceiling doesn't exist. We're going to probably hit 8 billion agents before we hit eight billion um humans. And that may be >> next month, right? Who knows? at this rate. Um so obviously the and similarly with with uh with assets um everybody keeps talking about the and so do we about the $16 trillion RWA opportunity by 2030. Uh at the same time we're also talking about like the 30 billion or so that's on chain right now which is obviously uh like exponents different from from what we believe it's going to be. So there's a huge scaling sort of uh story there that's still going to happen. Yeah.

>> Um so it's all about putting the right sort of tools and and and rails in place. Um and um >> the fact that um we are uh sort of focused on those two drivers which we believe are going to define the next decade if not beyond um makes it so that that convergence uh is we believe we're uniquely sort of positioned to uh enable that convergence as it happens. >> Yeah. Great. Michael, how are you thinking about the kind of space as it is right now? Just from a kind of uh macro performance perspective, it's, you know, since October, the market's been down quite a bit, outperformed by stocks, commodities. Anything to do with this AI bottleneck trade has

outperformed Bitcoin and in the larger space. A lot of the tokens are down a lot. How do you how do you see a resurgence in the space coming about? >> The macro has been interesting, I think, right? because there's obviously a lot happening in the world uh that affects all markets. >> Um risk assets are always the first to uh to suffer under those uh and uh frustratingly I think for a lot of those uh who've been in the industry as long as as I have like crypto very much is still considered a risk asset even though like the the theory is that it's it's not right.

>> Yeah. >> Um and it shouldn't be. Um and obviously there's been a lot of capital going into AI. um for good reason because there's a clear sort of supply and demand uh sort of issue going on there, right? So, uh yeah, semiconductors and uh and data centers and and all that and energy are um probably a solid investment for uh for the near near term. So, that that's clearly impacting crypto because I think a lot of that comes from the same like every dollar can only be invested once, right? So, I think that's >> uh tapping the same dollar. Yeah, >> Michael, thanks so much for coming on.

Uh, absolute pleasure and >> have a great rest of your week here. >> Yeah, and it's uh been great to catch up on Casper and and and learn a bit and and talk about the convergence on on both fronts. >> Appreciate it. >> Congrats on the manifest launches. >> Thank you very much. Thanks for having me. Enjoy Bermuda. It's going to it's it's going to clear up. I'm sure of it. >> We got the sun peeking out a little bit. >> That's what the prime minister promised yesterday. >> Yeah, exactly. Some sun. [laughter] You heard it here. [clears throat] The president promising sun. The premier is promising better weather. Guys, we're going to pass you over to the panels and be right back with our next guest here live from the digital finance forum in Bermuda fight. And I think we're winning. I really do. We're past the

hard parts of will you survive and are you legitimate? And now we're in the different parts where we have to be a bit cerebral and take a step back and ask where are we going to go and how are we going to get there. And the good news is we have all the technology we could ever need. We now just need the will to get it done. So, thank you all for being part of this. The future will be decentralized. 560 million, it's not bad. Please help me get it to 5 billion. Thank you. [music] We're not stopping now. Coming up next, building the digital asset payments and

treasury stack. Another fantastic panel coming your way on the stellar main stage. [music] [music] >> [music] >> All right.

All righty. Good morning everybody. It's so nice to see so many people in here. I was like, "Wow, we have quite a crowd." And then someone reminded me it's actually raining outside. It's nothing to do with you. All right, fair enough. But it probably has something to do with my awesome panelists. Um before we kick things off, [laughter] um I want to maybe just go down the line real quick and just have everybody introduce themselves for the audience. I know it does say who you are up there, but I always think it's a little bit more interesting just to uh give a little bit of a line about where you work and you know what are you working on right now and uh you know what you're looking forward to out of this Bermuda conference. But we'll start with Olivia.

>> Absolutely. Pleasure to be here. Um my name is Olivia Vanderwood. I am with Avalabs supporting the growth and adoption of the Avalanche blockchain network. For those of you who might not be familiar with Avalanche, it is a network of purpose-built blockchains that offer sub-second finality and subsent transaction fees. Um, I am the tokenization lead, which means that I work very closely with the Black Rocks, Vanex, the Wellington managements, KKRS, Apollo of the world to bring their assets into the Avalanche ecosystem. But most of my time is really spent thinking through what you can do with those assets on once they're on chain. um connecting those tokenized assets with distribution rails like FinTech particularly in Latam and APAC and then

also deriving onchain utility for those assets um and really making them more than just a digital rapper. >> Thanks Olivia. Uh my name is Gerald David. I go by JD and I'm the CEO of Link Network. Um, link is a real-time settlement system that was created uh outside of the banking network. Uses a tokenized treasury fund uh to move on a tried and tested technology platform that was developed by a company called Tacit. Many of you may be familiar with the signature bank signet implementation. We use that technology. We replaced a tokenized deposit. We put a tokenized treasury fund on that and we created that infrastructure with some of our core partners including Avalanche, B2C2, Wintermute, Galaxy, Falcon X, Crypto.com, Fireblocks and others.

Will Clipple I uh am in capital markets at Circle uh specializing in clearing houses, FCM, swap dealers, broker dealers, tradi applications of not just circle stablecoin but also uh kind of the full stack infrastructure that we've built uh around um stable coins and digital assets um you know from ARC on down to uh you know CCTP and and other applications that we've built on top of uh of the circle product suite. Hey everybody. Um, round two I guess for me. Raja Chakravorti. I'm the chief business officer at the Stellar Development Foundation, which is a layer 1 blockchain that's purpose-built for everyday financial services. We're still flying high off of the announcement

earlier this morning when we talked about helping to bring the Bermuda economy on chain. And that's exactly the type of efforts that we really focus on. Certainly, payments has been deep and part of our core for the last dozen or so years. Um, and tokenization has just been an explosive area of growth for Stellar. And really, I think our goal is to help facilitate and support the adoption of that at scale so that when we think about financial services, we actually think about creating a much more efficient structure moving forward. So, great to be on the panel with you all.

>> Awesome. Great to have you guys. Um, I do want to start off just by touching on the latest news. I'm sure we've all heard that there's going to be a markup in Senate Banking Committee on Thursday for the Clarity Act. it will be round two. So maybe we'll get past the uh the committee this time, but uh we'll obviously see what happens. But I do just want to ask each of you and and feel free to weigh in um just any of you. But we've heard for a long time now that institutions are coming and arguably they're here, right? Because you guys work with them every single day at your respective companies. Um but you know with the Clarity Acts potentially starting up again in Washington, potentially getting passed this year, um would you say that's going to make uh a dent in your guys' business? I mean,

would you say between the Clarity Act and the SEC and some of the guidance we've seen from the agencies really being rolled out? Um what's going to make the biggest difference would you say to to each of the things that that you guys are doing in your various businesses? And feel free to weigh in any of you. >> Uh Olivia, go ahead. >> I can start. Um well I'd say first we need to look no further than uh Frank Shapero's tweets of the many digital asset post job postings um that are increasing by day and uh obviously TRDFI you know incumbents are getting ready for these regulatory unlocks um to take hold and are staffing up accordingly. Um but I would say and again we have an avalanche policy coalition um and our our respective uh you know legal experts in house but from my perspective um from

a business development side I'd say both matter but they unlock different things on different timelines and so I'd say the near-term unlock is and has been SEC guidance whether that be no action relief whether that be targeted rulemaking as has been um coming out since the beginning of this year. I know institutions need more clarity on custody treatment, transfer agent recognition for tokenized share classes or ATS rules for, you know, secondary market, secondary trading. Um, and I'd say that most institutions are waiting on a more clear answer about, you know, if I tokenize XYZ share a class, does my existing regulatory framework still hold? Um, and we're getting those answers, right? like the SEC and CFTC put out joint guidance earlier this year

about token classification or taxonomy guidance um in March. Project crypto continues to produce more targeted relief on tokenization and custody. Um and that's all helped. But I would just say, you know, Black Rockck's Bidd, Franklin Templeton's Benji, um tokenized treasuries and and credit products have really continued to be announced and proliferated um even under existing law. I think that clarity is the bigger structural unlock for us. Um and it's it's of a different category obviously like clarity resolves more questions around market structure uh what's under SEC versus CFTC guidance what um you know the maturity pathway from a security to a commodity is and and other questions um that are obviously very helpful for crypton natives that are

building but for Wall Street you know they've already been announcing tokenized treasuries credit funds um you know those are securities they'll stay securities and I don't think that the um you know Clarity Act will will change that one nuance I would flag is that even if clarity is passed over in a more accelerated timeline as I think we'd all hope um the rulemakings underneath still take 18 months really to go effective. So I wouldn't say that passage is you know the moment that the the damn burst as you had said before before this panel. I think the moment the damn burst is really uh when the rules are live and the agencies can you know process registr you know registrations at scale.

Yeah, I mean I think that when I think about myself and how I look at the way that regulation has unfolded and I'm by nature not a patient person um and I thought originally when we started starting started seeing you know kind of that cry from Wall Street saying we need to have clear rules we need to have a clear framework we need to understand what we're operating under um like Livia said you know kind of we started seeing uh regulation and legislation that ultimately has passed um but I think the big question now is you know what happens in the intermediary period of time between the 8 months 18 months or 12 to 18 months whereby you know rules have been finalized, they've been set, there's clear rules regarding, you know, DeFi, there's clear rules regarding interest payments, there's clear rules regarding who can do what and when they

can do that and what happens then. And I think that the at least, you know, kind of what you hear anecdotally on the ground from others in the space, um, are that people are moving here, you know, with rigor. Uh, and by here I mean the US, not Bermuda. Um, you know, one of the big themes, I think last week that many were hearing was that the exchange base is going to get very, very crowded in the US. um that there are you know um no less than than half a dozen exchanges overseas that are moving to the US. Some have announced already, others have not. And I think that that's an anticipation of the rule making that's happening right now ultimately coming to fruition.

clear rules bringing institutions and I think that's what what we're seeing right now in the US specifically is that the uh framework is there or almost there I should say potentially almost there but once it is um there's going to be a giant um scrum as to see who can actually attract the large scale institutions that we've all been waiting for to be in the space in a meaningful way. Mhm. Well, I feel like Genius was probably a little bit more pertinent to Circle as a company, but Clarity will obviously unlock a few more things for you guys. We saw the stable coin yield debate play out on Capitol Hill where banks are, I think, still pretty unsatisfied about that compromise. You know, how do you guys at Circle kind of feel about how this is all shaken out and and where we're headed coming into

this week? Yeah, I think you know all all kind of joking aside like having clarity is is a fairly big piece of the equation, right? So whether you know however it all shakes out um traditional financial institutions don't work well in ambiguous situations, right? And so ultimately we did see it first with with Genius, but enshrining kind of circles way of doing business into into a legal framework that traditional financial institutions can then follow was a huge unlock. And so we saw an immediate ramp up from that. You know, less talked about, but uh in December there was uh no action letter 2540 which gave guidance uh essentially a green light to FCMS to be able to now

accept uh USDC and other stable coins as um as eligible collateral for IM and VM. Uh and so we see clarity as kind of the next iteration where again removing that ambiguity is just going to continue to allow traditional financial firms which let's be honest are not the fastest movers out there um to continue to plan forward. Now I do think some of the other panelists made great points that even if clarity gets passed which we hope it does and there are now rules in place it will take 12 months 18 months to really start to see this this come to fruition. But the big, you know, banks, clearing houses, FCM, swap dealers, broker dealers, they're all planning today and hiring today for that future state. So, I do think it's coming. I

think, uh, what we're seeing is circle's way of business, the way that we've built our business is being enshrined, um, now as the kind of, uh, standard, uh, in the US certainly. Um, and we're, you know, we're excited about that. Yeah, I would just maybe simplify it because I think there was a lot of great points that were made here is um you know I think of clarity as like the playbook in the SEC guidance as the permission slip for us to move forward and in terms of brass tax I mean I spend a lot of my time working with financial institutions and we've seen a tremendous ground swell of momentum because I think there is a more significant belief that things are moving and Therefore, as

financial institutions looking to launch digital products, they feel that they can do that. Um, we actually announced a partnership with US Bank earlier this year. Um, and that is a top. All righty guys, we are live here with Premier Burge and Abby Sheek, CLO of Near Foundation. Gentlemen, how is the two-day conference treating you? How are you guys feeling? How's how's the how's the vibes? >> This is my third conference. Third time's the charm. This is the best one yet. Uh congratulation to Salt uh Bermuda government and uh you know one of the silver sponsors near Foundation for for collectively putting on a great event and also to the rollup for doing some pretty great work here. I heard you

almost got to a million live viewers yesterday. So all in all a pretty incredible event. Uh and uh again third third time here. So uh it's it's it's a real pleasure. Well, I will just say that the event has been amazing. Um, has exceeded our expectations. Um, it's great to have you join us this year with your massive army online getting to learn all about Bermuda and the stuff of which we're doing inside this jurisdiction, but the reality is that Bermuda is the most forwardthinking jurisdiction when it comes to digital finance on the planet. Um, and we close out our session today with a wonderful session between the CEO of the Bermuda Monetary Authority who um, actually was the author of our digital asset business act. So I can say without question that I have the only head of the regulator

who has actually written legislation for digital assets and understands that. So from our perspective we are thrilled. Um it's lovely to have a continued partnership with the other sponsors but also with near and I'm so grateful that near brought the rollup down because you know the first time I had got to sit down with you was at Nearcon in San Francisco and now we get back again. So I hope that you have you I'll switch up the roles. Have you enjoyed your limited time in Bermuda? >> I have. I have. My my dad grew up here for five years. >> Uh he was actually adopted at St. Michael's Church over in Pagot. >> Wow.

>> So, just like about 10 minutes from where I'm staying. So, it's kind of a full circle moment there. So, I've enjoyed it. Sent my family a bunch of photos. Going to go to the church, see if I can find some old baptism certificates and things. So, I'm enjoying it. >> That's incredible. Wow. >> So, gentlemen, AI and digital assets are permeating the world at light speed. Bermuda is being a very very very forwardthinking jurisdiction for these asset classes that are growing and kind of engulfing the entire world. Um whether it's the recent recent I believe there was a report or a paper on tokenization within the BMA or the positive regulatory action. Bermuda is just consistently at the front of this.

>> Premier, why is this so important for you as you are on the last year of your tenure here? What kind of legacy do you want to leave as it pertains to innovation in this country? >> Innovation is in Bermuda's DNA. And if you are an island in the middle of nowhere, 700 miles away from your closest landmass with no access to fresh water. You have to innovate to survive. And that's what we've done uh since uh there was a shipwreck when they were sailing over to Jamestown to try to rescue uh the colony way back then. But where we find ourselves today is, as I said, on the forefront of regulation.

Bermuda has always been a place where innovation happens in financial services. Our main industry has been insurance. All the major insurance innovations have happened have come out of the Bermuda market. And now what you see is we're building a market for related to digital finance. I put it more broad because it's not just digital assets. It is all the things that are around digital assets. It's about insurance, about regular investment business, about the tokenization items and also it's about the artificial intelligence items, automated agents, agentic uh things that are coming online. And so from that particular perspective, I guess I would say the legacy, the future, the vision is making sure that industry plays a role. That's the beauty when it comes to Bermuda. We have this thing called the Bermuda Triangle. People know about the ruda

triangle, but it's not that triangle of what you're thinking.