What's the Next Big Risk in Crypto?: Tim Rice, Coin Metrics

Transcript

it's a pleasure to announce our next keynote Tim Rice from coin metrics he's going to be speaking about the next big risk in crypto and I can't wait to hear about it Tim thank [Applause] you so let's have a little fun here um kind of raise things up so um what's the greatest risk in crypto see if I can get my clicker working okay so what is the greatest risk in

crypto um as a data guy you're probably looking for me to apply on volatility risk Network downtime 51% attacks and we have a lot of lovely charts that show all of this um but I don't believe any of that's the biggest risk to crypto the greatest risk to crypto is its popularity its persistence its inability to be easily shut down it makes people feel threatened it makes governments feel threatened they can't control it Banning it doesn't work we've seen that every place we've tried to ban the asset it just doesn't

work what happened when China banned mining it moved to North America so what can governments do if they can't get rid of it they really have only two options they can come up with sensible regulation but it makes it safe for the masses and gives it the chance to succeed or they can let it burn so let it burn they cannot ensure it they cannot take care of the masses and they can just watch it burn because of the startup culture where need better risk controls and risk management practices internally so I probably sound like some weird conspiracy theorists but I've

actually been doing this for four decades now um I'm the CEO and co-founder of coin metrics we started five years ago I've worked at places like Thompson Reuters and trade web and market and other places and I cut my teeth in crypto by spending two years with the team at consensus in 2016 and 17 where I feel I've got a pretty good handle on how to bridge the gap between crypto and traditional Finance over that 40 year four decades I've been doing this we've seen a lot of Crisis across the traditional financial sector and while many they have many things in common one of the things but not all of them is there's poor or no

reg no regulation so think about 2008 where we basically had the banks were regulated but the MBS Market was not well overseen and that caused tremendous crisis Banks created people got greedy we had risky products we destroyed the economy um we blew up jobs we created you know really tremendous turmoil for the entire Financial Community across the globe unemployment spiked from 5 to 10% trillions of dollars of investor assets were lost on public stock markets real estate crashed we got some job backs afterwards they weren't great jobs weren't quite as secure but we're

building back into it but in crypto in the time I've been here we've just exploded on the number of Crisis we've run through but the difference is the government didn't come in to create regulations in order to provide guard rails to make it safe safe excuse me for the investing public to work on these so what did we end up with instead of the government showing us what to do they enabled this guy to get to high places let's dive into FTX for a minute this thing was not a us thing wasn't regulated by us Regulators because you can't register in the

US instead what we ended up with is sp SPF hob noming with politicians lauded by the mainstream media as some wonderin and so what do you end up with you end up with a venue with no risk management controls no best practices and no guard rails to keep us safe as investors this ends up spending months and months in the public media and stuff that I pH still feel the industry is suffering in dealing with from an image perspective so what have we done since then well we locked them up to Great American phrase We love using that um it's a good start there was been somewhat uh cracked down and restricting

us investors from investing in non-domestic um us domestic exchanges but of course we're creative and we go find dexis and we learn to trade in other places um we um haven't been able to get exchange disclosures that are appropriate for exchanges to get listed we haven't enabled the largest custodians in the world to custody this asset we've really struggled to create things afterwards um on top of that you know we have recently repealed Sab 121 the president vetos it last weekend why wouldn't we want the most trusted people safekeeping these assets

why wouldn't we want guidelines and outlines by the government to help provide that um getting back to why is this a big risk The Logical conclusion is that we'll see an FTX redo we'll see a teral Luna repeat only next time more people will be more negatively impacted by the events that'll happen within cryto crypto this is concerning and may exactly be what certain governments want they want us to implode on ourselves and blow the industry up so what do we need to do so obviously we need to push for some

common sense regulations we need to engage we need to vote we need to work with our lobbyist to create the right things the thing that I found refreshing is crypto startups come in and even though they aren't forced to do things they do do the right things they create things ahead of Regulation so what is that leave us to do we need to regulate ourselves yep there it is it's a big job it's been done before we can certainly figure out how to do this um self-regulatory organ gations are successful across the globe the most one that I know closely is finra um finra does a great job basically regulating brokerages and exchange traded markets

in the US um it creates trusted practices it enforces ethical Behavior it creates a set of rules for its participants to behave correctly in that environment so maybe it's time for Dar or something similar I was talking to Josh last night at the event this is not easy and the problem that I've seen in the decade or so I've been in crypto is there's too much turnover in the people that are here plus there's not the respect for the amount of funding that this type of organization takes my company would love to be involved in it do I have hundreds of thousands of dollars to throw at these things probably not there you get the self-fulfilling prophecy of why we can't get our act together on

this but we are big enough now there's $54 billion in these Bitcoin trusts maybe it's changed since yesterday but there's a lot it's big and it's getting real and it's no longer just a cocktail party and our dinner party conversation we need adults in the room focused on how we regulate this industry ourselves instead of waiting for someone to show up to help us so where are we today everyone in the US that follows crypto keeps asking themselves why is the government wasting time tormenting the ETF issuers these firms have proven themselves as a fiduciary for PE for investors for years let the big Banks do custody of

crypto it makes sense they've done it for centuries they have the best risk managed practices of anyone provide common sense guidelines for exchanges to be able to regul to be regulated and finally I saw some presentations this morning provide a stable coin framework a stable coin is not a CBD DC they aren't similar we need some Frameworks around these kinds of things so it's clear control so they're desperate to not they're desperately afraid of losing control of the monetary system so they hope that the technology will implode on itself users will get stung so hard this time that they'll be

so beaten down that they'll quit startup Founders will just have had it we'll walk away from the industry it's expensive for us we've invested time and money into the category so it's really important that we move this along it's becoming clear that blind opsins is at best becoming politically inconvenient at worst it's becoming bringing out the crypto armies to attack innovation in crypto and it's going to create election losers potentially so who knows maybe politics Will Save crypto there's a first time for everything I suppose but the people are speaking and I think we need to band together to get this done so thank

you I'd like to buy the world a home and furnish it with love grow apple trees and honey and white turtle I Like to Teach the World to Sing Sing me [Music] thank you so much Jim for coming all the way from Boston