Sheraz Ahmed and Jérôme Bailly at TEK Terrace, Montreux Jazz Festival

Transcript

Welcome on the tech teras. Today is uh day three already where uh we're going to dive more into digital asset management and AI and we are very glad to start with a first discussion about the crypto valet and how uh actually the crypto valet started how it was created and how it has evolved so far and for that uh I have I think the panel ever with Shaz and Jeron that will introduce themselves just uh after with my first question. So my first question relates to day one.

The first interview actually that we had with with Mark Piranu who is an historian about the Swiss Financial Hub. one of the few person that spent maybe 40 years of his career researching about um this uh how the Swiss financial sector started it's linked to diplomacy and what we highlighted during this conversation is that the Swiss financial sector increased and grow against or with political shocks and outside shocks and I have the the feeling that actually crypto valet didn't start [laughter]

like that that it was more like an inner initiative uh based on some Swiss fundamentals and um and so I would uh I would very happy to hear your view on that what was the fundamentals that made the crypto valley started what what Switzerland had at that time or view at that time that others didn't and please introduce yourself when you answer the though. >> Fantastic. Mark, thank you so much for having us. Thank you so much for putting this together. I mean, being from Montro, it's really great pleasure to be here uh with you all. Um, so I've been involved in the digital asset, crypto asset space for the past 10 years now.

heavily involved in kind of the early days of the crypto valley ZOG ecosystem and then came back down actually to Montour to found Storm Partner as a strategic advisory firm and then later down the line post pandemic we thought why not develop a little bit out the crypto digital asset ecosystem out of Geneva in the Hondi so we founded decentral house a space for people to connect and communicate uh and that's a little bit where we're at today um to respond quickly I think to to some of the parts of your your question I I think there was a legal and regulatory aspect to it. Uh however, I mean the cyberpunk movement has been going on for decades and decades. Um there was definitely um a a desire I think globally for this type of innovation to

come about. There were fintexs like you know revolute monzo of the world that were slowly starting to push the boundaries of uh financial technology. And you know I think in the early days for me I didn't necessarily see uh the crypto world as so adjacent to the finance world. I saw it as okay you had certain assets certain tokens that of course you could transact with. So as soon as you talk about transactions you feel like it's financially uh based but actually um for me that was the assets and their underlying and their utility were actually unlocking a different world towards that that was uh that was financially uh driven but then I do think if it wasn't thanks to the

openness of the canton of Zoo related to the the establishment of the Ethereum Foundation in Zoo I'm not too sure if Switzerland would have become such a a significant uh hub for uh for crypto assets. But yeah, happy to hear Jerome's perspective on that and and and start from the beginning. >> Thanks J. Um thank you Mark for organizing this uh amazing discussion on a amazing place. Uh really unique to be able to to talk about our industry in this um iconic place. So I'm Jeron Bay.

I'm president of the crypto association uh since last year but involved in the association since 2018. Uh I'm working at at No. We are a cyber security and a software engineering company mostly working on banks and fintech and digital asset in Switzerland. Um so yeah I think you you pinned the the the the right day one. uh it was the ECRM ICO uh which was the start of all the crypto valet trend at that time we didn't got the name we didn't even got the association it came a bit later but like end of 2013

beginning of 2014 that's really when everything started and the teleiparian team choose choose ch through zoo uh to do their ICO first ever ICO thanks to um openness in of the zoo uh officials uh some of the lawyers locally who had the idea of using the foundation Swiss foundation for this ICO and then the rest is history other foundation uh followed the movement and then the ecosystem started to to be created uh with uh uh developers, lawyers, tax specialist uh finance experts

everything around Zoo um and it it span of on the whole country uh of course and that's when the association has been created was 2017 so a few years after we it took a few years to create this ecosystem and and create the association in um in 17 out of zoo now the association everywhere in the country from Lugano to Geneva and Montro today uh and also also abroad because oneird of our member are uh are are coming from from abroad and yeah one last point another key key key timing for us was uh I would say 2018 2020

I would I call it the really the golden era where all the stars aligned. So we had political support up to the federal council. Um Ulie Marind Raman were already pushing Switzerland as a crypto nation that they use this term. Finma up to the CEO was also pushing uh crypto and a few like Zuk not only were so uh pro for crypto. So that really where we were pioneers. We had we had lows um DT laws and >> and yeah that was the important time and then we talk later about the current

situation which evolve a bit and um but it's important to remember that it's possible to align the regulator the political uh at the federal andal level. It's we did it so we can do it again. Yeah. So it has evolved now and um but what you said Jerome during one hour of our last conversation that you are still amazed with the resilience and how the ecosystem has matured.

So uh how how after all these different cycles uh what is today the the the state of the crypto ballet it has expanded. We will maybe talk about that later about the different uh regions. But um yeah, today how how does it look like what are the the what is the the philosophy and um what would you describe as um at the resilient factor around all the cycles? What does it how could that not fade and it's still it's still um the spirit is still alive?

Good start. >> A good start, huh? [laughter] Um, yeah. Look, so to complement I think uh Jerome's uh previous uh answer, I I think the the the initiation of the crypto valley was very human, right? If you speak to some of the the uh Ethereum co-founders, they do say that it was also thanks to, if I'm not mistaken, their fiduciary that let them stay in their garage for some times because they were entrepreneurs without any money. So this kind of like warmth of the the the Swiss just a human person uh random citizen that wasn't like he wasn't involved in tech etc um to just the openness to being able to create something like that was fundamental and I think will be fundamental in in in the

future and I think is what is keeping us resilient right I think the people that have been here for for for 10 years now you know Jerome we've known each other for quite quite some long um there's a lot of volunteering that you do within this uh uh within this industry let alone let's say the board memberships that that we have with regards to crypto association is is is purely pro bono but a lot of the work that you do with regards to the communities within the Dows uh when you're involved in it there's a certain part of personal curiosity and passion it goes further than just professional commitment and I think that's what's going to keep Switzerland and the Swiss let's say ecosystem resilient is that we started off not necessarily doing this

professionally we started off from the ethos from the vision and so the roots I think in Switzerland are quite deep um and uh yeah I mean I don't know if you want to to compliment on that point but >> yeah your your your first question was current state uh of CVA 9 year after uh inception um because 10 years is next year is 10 years anniversary um so I think 250 corporate members around 900 uh individual members um still growing I think we we are close to the maximum numbers uh that we got u not only in Switzerland once again onethird of our member are abroad um and we passed like the whole

industry we passed several cycles um the initial cycles were mostly driven by the price market price uh so of course during um during bull run uh it's easier to attract members and sponsors But um during the the different bare market that we had since 9 years I would say maybe three um we were very resilient very resilient because this community honestly is uh is really amazing to see them are most of them are still there they they did not quit for AI or other fancy uh they are pure believer um and um and they are here to stay u they are still here to build Um

maybe the the current cycle is a bit different. Yes, we are a bit in the bare market but we are facing two headwinds. Uh first of all more and more uh international competition when it comes to uh region. So we see for the US for the last 12 16 months being very pro crypto which is good. Um but you know the size of the US uh it attracts a lot. Middle East also really uh innovative when it comes to regulation [music] uh more agile uh and and few apps in in Asia, Hong Kong and Singapore. So that's the the first headwind we are facing and the the second one unfortunately is coming from within Switzerland. Um it's

coming from burn or the the regulator the FINA and the political support that we don't have anymore. So remember back in the days uh the golden golden years we had all the stars align now the stars are not aligned anymore but that's part of our our role also as an as an industry association is a is now to work together to in burn uh and do the lobbying that we we have to do to get back a line. Um, and we know we did it once, so we know it's possible to do it uh again. But yeah, let's be honest, it's a it's a challenging time, but um I don't know if you noticed during the last crypto conference uh the I think you also posted that on on on LinkedIn

and I felt exactly the same. The most striking feedback I got from the flagship event we organize every year very positive and optimistic uh mindset of the whole community. So we are still there um and lots of things to do but we know what what we have to do. >> You said just before that the crypto ballet now spans all over the the country from Zurich Geneva uh Lugano and today Montro. Do you notice some differences in the with the regions in terms of business community in terms of expertise in terms of um

what um what the local community builds? >> Um yeah definitely I think uh the local communities are biased by the traditional organizations and the support that each one of those kind of businesses get. Right? I mean if you look at Lugano, Lugano is influenced by the positioning of Tether and the significance that Tether has had in the in in the region Nhatel is quite bitcoin focused uh centric even Maxi you you you may say there's a lot of like the like let's call it the early bitcoiners cyber punks that that are there and then Geneva is quite influenced by some of the wealth managers there's the UN

organizations there's a variety of let's call it geopolitical influence as well. I think one of the the the the things that I've seen with regards to uh Geneva and one of the reasons why it may not have kind of had the the uptick that Zurich had being at proximity with with Zoo is that with the Libra and DM uh project that unfortunately or fortunately maybe didn't come into play when they wanted to create a stable coin, you know, quite some years ago that happened in Geneva. They made a big kind of announcement. and it was quite a big movement and then when it kind of faded and didn't work out it burnt a decent amount of hands locally politically as well Geneva moves quite slow even I think slower than certain

other cantons and so they were inflicted or impacted by that kind of let's call it pain and so it took time for them to kind of rethink about this uh this further and then you know I've spoken to a lot of bankers and and financial institutions in Geneva they practically all consider themselves smart followers. So, the fact that they're smart followers means that they have to follow someone, which is not necessarily a a a bad strategy. It means that you don't have to invest so much in frontier R&D. You can essentially see, okay, what is working? And then we just double down on that, put our budgets on what is working, and then they're extremely successful, but they're also extremely successful at wealth preservation, right? You rarely come to Switzerland to grow immensely your capital. We're quite

risk off. And so I think that also gives a little bit of a feeling to what this wider Swiss but also the Geneva community is a little bit like preservation risk off. Let's see what we can do. They will they are definitely now joining the trends but they're joining it towards what um makes the most sense to them which is the tokenization side of things on financial products is giving certain exposure to their clients following those trends. But again still you know uh slow and steady wins the race.

Yeah, just two more point. Uh the I think the beauty of Switzerland is this distributed uh cont say very diverse and complimentary. We we need all of them. Uh you maybe forgot one uh which is Zurich. Uh of course um everything started at least for us in Zoo. Um, Zoo is still very important for the crypto community when it comes to the foundation, the the innovation, the start of the entrepreneur. But now recently we've seen that um our industry is clearly pushed by this institutional adoption by traditional finance and yes uh private

bank and wealth management is strong in Geneva but Swiss banking is is is headquarter in Zurich. Uh so that's why now it's really where us the crypto assocation are pushing much of our effort. Uh we did our first ever Zurich based flagship event in March, the web3 banking symposium where it was really connecting this this crypto native with the Swiss banking because we believe u the future of our industry, the future of Swiss banking and the future of the country relies on the fact that we take back uh come back at the forefront of uh financial innovation and keep Switzerland as being one of the leader worldwide when it comes to uh financial

system. So that's why we will do more and more uh activities events in uh in Zurich uh for the next uh for the next month. That is actually my next question. If we can [laughter] maybe a little deep dive in that is uh how we go forward now. And uh I think we all kind of believe that the future is the interface between the tritfi and the crypto um ecosystem. And um and so what do you you do in a way as um as board members of the number one crypto association to make things going

forward and what is uh so to speak your agenda to strengthen and even develop the ecosystem knowing that the future is probably in the in the interface between the traditional and um the digital assets world. >> Let me let the president answer first. >> [laughter] >> Let's switch. Yeah. Um, okay. So, I think first we had to change a bit our image that the perception of the cryptoization by by this new target which are Swiss bankers. Um, you know, back in the days and still now just the

word having the word crypto, >> it's a it's it's a word that some of the bankers don't even want to use. uh so it could be perceived as as a bad word. Some people say change the name of the association to digital asset association. I don't think we'll do that now but we are trying to be closer to them like in Zurich um organized u this type of event banking was uh sponsored by Franklin Templeton for example like one of the biggest asset manager on the planet 5 trillion US dollar they were the the the direct sponsor we for the first time ever we had UBS on stage I was asking them to be on stage for the

last four years and Now finally they decided to accept common stage because they they they they realized that we are not only uh pure crypton natives uh only uh but we are also here to help them adopt this new infrastructure. So get more banker friendly uh when it comes to communication image um make them understand that we are here to help them and of course it will help help us if um if we succeed uh to to create that bridge. Um so we are here to present our members the innovator the entrepreneur to the bankers and also let's look at

what what has been done in Switzerland already more than 30 banks three zero 30 banks have already proposing digital asset to some some extent either being an investment or tokenization project if you look at whole Europe I think we are still number one um so let's look at what we've done and um and and and let's look at what we we have to do now because uh things are moving fast and this international competition US, Middle East, Asia is clearly the the the new market where we have to keep being uh at the at the forefront. So we hope we are in the right direction. We see more and more bank joining us as a as a corporate members like Swiss Quad,

Postfinance, official corporate members or sponsors. Um and uh yeah is clearly what we will keep keep on pushing for the next 12 months together with the with the other board members and the whole association. >> Yeah events you organized. >> Yeah for sure. I mean I discussed a few things I think. So firstly I think education is continually important. I think it's something that we've been mentioning for the past 10 years, right? But also with regards to to ourselves, right? There is a lot that is changing on a day-to-day basis even regarding stable coins where you accept them to be stable in their nature, especially also in their function. Um, we were just

analyzing this week uh within our firm the different subsegments of stable coins related to ones that are going to be a bit more yield bearing, those that are going to be used for custody, that some that are going to be used more for the ability to transact internationally. And so you're even seeing developments in areas where you didn't expect either. And so for us it's important to stay educated and keep a perspective but also to continuously support uh the traditional institutions and uh individuals here today giving them perspective around what's new and what's happening. It's also one of the reasons why we're doing the onchain leaders gathering in Geneva. Um there was a lot of demand uh from asset managers, family

offices, etc. where they, you know, often don't come to Zuk Zurich uh and take the three-hour train down there. there's a lot of local desire for for innovation and uh you know even moving 5 10 minutes can be proved to be difficult sometimes and so doing something locally showing that well we can bring some of the the greatest minds of the digital asset space uh to Geneva to think about innovation and to bridge these two worlds together was extremely important so yeah 8th of September onchain leaders gathering it's going to be great Jerome will be on stage again uh and it's going to be a fantastic fantastic one so yeah we keep on building, we keep on growing.

>> Yeah. Here uh I confirm that here in Mont since today's education is the number one word [laughter] actually. >> So maybe to conclude the the last day will be about um what it means uh for the wealth management industry to be in 2035. What is a vision for Swiss financial hub in 2035? So my question is quite simple. What is your vision for the Swiss Financial Hub in 2035?

>> Well, if we're still around by then, um uh look, I I think 2025 is approxim Oh, 2035 is approximately 10 years uh ahead. Um if I look back uh 10 years, uh it's it's incredible how far we've come with the usage. I think commonly now of of Chachi BT or Claude, everybody is kind of less, oh, Google it. They're always like, oh, Chachi BT it now. So, that change of billions of people in in their in their mindset is is crazy. I see more and more people with um their um meta kind of ray-bands on and they're recording different things going on. I think virtual reality was a bit difficult from a hardware perspective,

but uh augmented reality is starting to become more and more of a thing. And I think, you know, we're becoming much more of a digitally native species, right? I mean, we're we're kind of edging towards that. So, I think the concepts that were more difficult for us to grasp not having grown up with such technology, such connectivity, I think in 10 years, for the generations that were digitally native, did grow up with it. uh and when they start graduating, they start kind of entering into the the to to the workplace, I think we're going to start seeing certain things that we are still a bit disconnected from with regards to, you know, uh digitally native assets and and and the likes and products and usage, etc. just become um

yeah, just like so so easy to use and much more much more fluid. So, look, I I don't know if it's for for the good or for the bad, honestly. Um because I think there's still ourselves 10 years ahead, 20, 30 years ahead. You know, if we're still around, um we're going to want to be maybe more connected uh into the human. We were discussing this the other day. I mean, the in-person events are becoming even more important because we're stuck behind our screens so much. We want to disconnect. And I'm seeing a lot of let's call it the experience world around me is is talking more and more about disconnecting. They're even a lot of the phone making companies are bringing out phones that uh only have certain standard applications, don't

have an app store and these things. So there's even like a divide of of of demographic in a certain way. So >> um let's uh let's see. But I I definitely think that the digital native side is just going to become a part of us and maybe not in 10 years but in the not so far future I think we'll become a bit cyborg like. So uh let's uh let's see what that uh what that brings. >> So yeah we'll reply for our mission at the crypto association over the next 9 years will be to come back uh at this golden golden age 9 years ago where we had all this star line. So we are remember regulator political uh federal level and political at um at the

everyone cont level. I I will add one more star is the the Swiss banking. Um so what I really hope is that we we we come back uh as as as the leader that we were. Um and uh and we we do this uh this um this combination uh with uh with with Swiss banking. Uh that's really what drive us. Um let's hope we achieve that maybe in less than 9 years, but uh that's a that's a good objective to to use that 9 years already.

>> Nice. Well, let's uh let's hope for the stars to be aligned then. [laughter] Thank you very much. >> Thank you. >> Thank you all. Do you have uh some questions? No questions. So um let's uh continue with um next panel. Thank you. [applause]