Sandra Ro is a banking OG, serial founder and now CEO of The Global Blockchain Council and leading advocate for, and enablement of, the rapidly maturing crypto industry. We discuss the evolution of attitudes within financial institutions towards crypto as an asset class and the trading life-cycle in places like CME (Chicago Metals Exchange) where she created their Digitization department and pioneered research into cryptocurrencies and innovative products in Cryptocurrency Derivatives Contracts, and Bitcoin Pricing Products as early as 2016.
- The socialisation of crypto within banking
- Building a genuine Crypto Industry through community
- Increased institutional adoption of public blockchains
- Understanding the full crypto trading lifecycle
- The global regulatory crypto spectrum
Okay, so today I’m really happy to welcome Sandra Roe and CEO of gbbc, the global blockchain Business Council, as well as co founder of proof of art and grow markets. Welcome Sam.
Thank you, Jamie, delighted to be here.
So, I would describe you as one of the first institutional players into crypto digital assets, at your time at CME and of course, beyond, and now in your role at gbbc, helping drive the professionalisation of the industry and engage in a number of different stakeholders. But, of course, you’re also a co founder, as I alluded to, and so you have kind of a unique perspective as somebody that’s transitioned out of enterprise and into you know, the startup lifecycle, but of course, you still kept one foot in both worlds, I guess. So I think that’s going to give you a really unique perspective on web three. So just as context for people that don’t know, global blockchain Business Council, you’re one of the leading industry associations for blockchain Of course, globally. Hence the name. At gbbc. You are developing the next as you say next trillion dollar industry through education, advocacy and partnership and we’ll get into what that means a little bit later. As I have it the folklore of the organisation was it was launched in Davos in 2017. But after meeting on Richard Branson’s Necker Island, bringing together innovators thought leaders from what is now over 50 countries to inform regulators, business leaders, policymakers as to the benefits and applications, so stuff that is sorely needed in the space. So as I understand it, the the kind of mission that’s articulated is that you believe in blockchains technology’s ability to create more secure equitable and functional societies around the globe. Probably a great time to be thinking about this stuff. But of course, The work that you’re doing there extends well beyond financial services. And you’ve looked at a number of different use cases, smart cities, and even things like the convergence of blockchain and VR. And you’ve got this great initiative called Open Source idea series. And so the reason why I wanted you on the show was, as I said, You’ve kind of made this transition from an institution into this space. And I think just by the mere fact that you so many of your credibility and background has effectively dedicated your career. The next phase of your career to this domain is a huge validation to the space. You’re, of course working at the intersection of policy enterprise capital markets and startups. And I know you’ve got some really fascinating insights into how different regulators are getting to grips with digital assets. And then of course, looking at innovations like leap And central bank digital currencies. So I’m looking forward to discussing all this with you.
Well, thank you so much, Jamie, I think you’ve covered it all. I think we’re done.
Yeah, that’s right. I mean, to be honest with you, this is one of those episodes, which we probably need two hours for. So we’re gonna, we’re gonna have to probably get you back on. But of course, the wonderful thing about the space is It’s so fast moving and evolving. I’m sure whatever we talked about now is going to be outdated in a couple of months. So there’s not gonna be shorter visas to get you back on again. I
completely agree. This is a fast moving
industry and it’s what keeps it exciting keeps us on our toes, right. That’s right.
So if I tried to summarise your background, contextualise you for the audience you studied at Yale, and really interestingly did a BA in history, focusing on the history of biological and chemical weaponry which is quite specific
Yes, I was quite a nerd and weirdo fully own that.
Yeah, but I guess, potentially quite relevant to the world that we were now inhabiting. You did various associate inter level roles at Morgan Stanley in the 90s and early 2000s. You did FX structuring at Deutsche Bank, MN a FX structuring 2004 to seven. Then back again at Morgan Stanley, where you were Vice President, event driven m&a, and again, FX derivatives, global capital markets. And then you moved into CME now actually, I guess it was at your time doing effects and derivatives, I believe, some time spent in London, at least engaging with London office where you first came across crypto, right?
Yes. And I’m not sure it’s well known. Amongst the crypto crowd how prevalent Bitcoin actually was. Amongst the trading set in in London in particular, and I recall, there would just be these meetups random Bitcoin meetups in dodgy dank little pubs in the city. And I would meet like hedge fund guys and I would meet other traders in the city, who just we’re curious about this thing called Bitcoin and I know a lot of people, you know, dip their toes in bought some, obviously read the white paper, but really just tried to figure out like, is this tech, something that could actually disintermediate banking and trading all together? That’s the angle I came from, which was this is really cool tech. And if this tech really works globally, it will change the face of financial services.
Yeah, and so having been based in London, where we’re HQ to outlier, and as a partnership, many of our partners were ex bankers, recovering bankers as they like to call themselves an act of angels and so I think they There was some of the first people to see the potential disruptive and transformative potential, I guess on blockchain and within that digital assets. So you then went to CME, you worked on FX, metals research and product development. And then around 2011, you ended up launching digitization within CMA. And then there were a raft of industry defining leading initiatives, some that you managed to get off the ground and others not. I mean, to be honest, I’m amazed that you managed to get even half of these on the table let alone that progress progressed. So in summary, we had launching Bitcoin pricing products and futures products, which still trade today and CME explores cryptocurrency derivatives that was in May 2017. And CME Group potencies derivatives within Bitcoin mining. we’ve engaged the UK government on a Royal Mint opportunity which for various reasons, didn’t quite take it off the ground. And then you developed kind of these crypto facilities, again around Bitcoin pricing products. And I think it was within that that you decided to pivot or dedicate 100% of your time to blockchain.
Yes, absolutely. I was very fortunate to be running r&d at the time when I could talk cryptocurrency research under effectively effects and we didn’t really have a home but I was like, You know what, it’s kind of related to payments and money. So I’m going to do some research on that. And we created a small group internally. And I actually I credit Rumi Morales for helping us to bring this ragtag group together and naming it after Milton Friedman, so it was called Project Milton, and we had internal email district group distribution group, and that’s how it started. It was just random people that we found inside the firm who we knew were interested in crypto. And we put together just information sharing. And that grew to looking at crypto mining. Little known fact, we actually proposed CME in one of our kind of new business pitches to actually start mining Bitcoin in some of our data centres because there were all these servers and we’re like, let’s just put them to use. I do recall being kind of unceremoniously kicked out. And that being killed on the spot, but hey, yeah, we try. We tried a lot.
Well, it’s interesting. So for those that don’t know, Ray Morales is actually a partner outlier. It’s how we’re connected. And she also worked at CME in the venture division, which again was relatively new, I believe. And CME made a number of investments into digital currency group. ripple. So, you know, some really quite edge stuff considering considering it was within CME and an institution like that. So, clearly there was something in the water at CME that kind of brought you guys together and allowed for you guys to, I guess push stuff within what would have been a fairly conservative environment normally.
Yes, we, at the time, Pinto Gill was the CEO. And I distinctly remember having a conversation with him in a London pub. He was visiting London for a conference and I remember saying to Gil, we really need to think about innovating more. And he was like, Well, if you have ideas, just do it. And I said, well, Gil, I need some financial support for this and he’s like, Okay, well then put a proposal together and make it happen. It was just like that and it was like alright, let’s get going. Now ventures have already been created. And roomy. Obviously running ventures helped a lot. Lot gave us exposure very early seed round. Can you imagine for ripple like digital asset DCG? Like these were companies we got in at the ground level. And as a strategic venture firm, I mean venture group to do that. It was pretty forward thinking, and we ended up doing a lot of symbiotic crossover. So we would run into crypto companies or blockchain companies, I would let Rumi know and vice versa. We had a really good sort of synergist genetic, you know, information sharing back and forth. And that helped us a lot.
Yeah, well, I always say all the best conspiracies start in an English pub. So there you go. We I’m off for that.
evidence that further. And so from there you of course, were personally investing so I don’t think you were ever a no coiner. You set up back to crypto capital, which gave you exposure to some Angel and token investing. He said he had 12 exposures. To 12 different assets.
Doesn’t no guns. Yeah, in my holdings right now, I was part of a lot of the early early Ico, you know, invest in a bunch of besides obviously the Bitcoin and ether. I definitely went in on some of the early Icos, but it got pretty messy, at least in my mind pretty quickly, and I just stopped pretty much I think, September 2017. I just stopped,
So then you transitioned into, I guess, your first founder roles. So you had proof of art in 2018, which is still something that you’re involved in. And that’s really looking at the gig economy and the circular economy through tokenization. And you did a number of advisory roles alphapoint Global digital finance bit give while your advisor and board of directors And you also founded grow markets, which is focused on supply chains. Kind of Did you say African specifically? Or is it kind of emerging market farmers,
it’s small shareholder farmers. As long as there’s a shareholder farmer, we’re pretty sure they’re getting screwed. So we’re trying to help that segment of the market. I find it amazing that the farmers are some of the hardest working people on earth. And yet they get the short end of the stick when you think about the supply chain.
Yeah, so that’s supply chain provenance and stuff like that, that you’re looking at, not just with blockchain, but that is kind of one of the guests the stacks that you’re, you’re using. And then in 2018, you formally became the CEO for the global blockchain Business Council. I think you were already involved in it. Prior to that, so from 2016, right.
I was a founding board member, so I’ve known gbtc since its beginning. See, but obviously now I, I’m part of the interworking by being the CEO.
And so how did that transition happen? How did you make the call to become more actively involved and ultimately lead the organisation?
I’ll be very frank with you. And I’m very public about this. The CEO, the CEO left very suddenly, and everyone looked around the boardroom and said, Hey, you, you can do this? And I said, No, I can’t. I’m very busy right now. And the part time role became a much bigger full time role. But I do believe I’ve benefited greatly from the role and hopefully I’ve added and grown and hopefully shaped the role as well or the organisation as well to be what it is today. I feel very fortunate for the access that we get, and we can talk a little bit more about that.
Yeah, absolutely. So I definitely want to go into exactly what that means and the various activities. So you know, you said when you were doing the effects stuff prior to see me I kind of saw a quote somewhere that you said, the thing that drew you to this wasn’t the kind of speculative nature of it. But that there was this potential to build an alternative system, alternative financial system, I guess, and to navigate around the financial crisis that we were still in at that point. It wasn’t the beginning of it, but we were kind of, I guess, midway through and to build something that was better than the current system, and specifically to allow for the cheaper movement of money. Well, here we are in the next financial crisis, and what do you think’s different?
So, I will be frank, being in the middle of the storm of the financial crisis in Oh 809 at Morgan Stanley in London, was very scary. I think for me, when you asked what are some of the pivotal moments in your life when your worldview changes? That was it for me in the sense of the trust that I have And institutions to run things properly, really broke, at least from my perspective. And that’s when I realised we really need an alternative way of looking at how we move money around. But beyond that, it’s how do we now move data around that value, right? And we have this opportunity to create these alternative rails. We are now in a kind of thought the financial crisis of Oh, wait. Clearly, that’s not it. We’ve got something worse now, because and if you look at I’m sitting in New York at the moment, and we’ve got a crisis on top of a crisis on top of a crisis, and it’s really bad in the US, but globally, we’re all suffering from not only the pandemic, but then the global economic fallout from that. In the US, obviously, we’ve got the additional tensions of you know, social injustice that have been going on for decades, if not hundreds of years. All of this together. I feel like you could you could have two mindsets. One is the world isn’t imploding, and it’s all over. And it’s Apocalypse, right? Or the other side of it is if we can get through this period of really just sort of Rocky, shaky bedrock, we can actually, if we survive and manage, we can actually formulate, and have the best opportunity for change. And we can architect a future that we actually want. Sometimes you do have to hit rock bottom. And I firmly believe that in many ways, perhaps the US and other places, we’ve kind of hit rock bottom in a number of different categories. This is our opportunity. And I think the blockchain community really has the ability we are so global. I’ve met some of the best people I know as humans, like really smart, good hearted humans, who want a better way of us treating each other and expanding the opportunity set. democratising the way people have access to things, whether it’s water all the way through to, you know, just more money, insert in people’s pockets, I think we have that opportunity here. I don’t think we should lose sight of the potential power we have as a group. I think people step up.
Yeah, no, I think it’s a really important point. So you could definitely say we’re at crisis squared at the moment. And you’re right. I think often this is one of the reasons why I wanted to the podcast with the whole Ico mania that happened, where, as an industry, if you can call us that at the moment, we’re often quite misrepresented. And there are there’s a great brain trust of people that are often guided by things beyond just profit, and that’s sometimes overlooked. So as somebody that’s come from the kind of institutional world of that world, but you know, clearly now you refer to yourself as the blockchain industry rather than as perhaps your past and to perhaps to some of our lives. Is that we think is antithetical that banks and institutions should and can and should be engaging with an alternative financial system and alternative asset class. Why do you think that’s not true? or Why do you think having them engaged is critical to its success?
So I am, and I know this is not a neat way of classifying things or the world, it’s much more complicated. But if I were to boil things down, in countries and in places where there is no really strong existing financial market infrastructure, for example, then you’ve got Greenfield, I think that’s wonderful. If you have internet access, you’ve got electricity, you’ve got the basic stuff, you can build the digital superhighway of the future and it’s amazing and you can leapfrog all the crap that the developed world that has the entrenched legacy systems have to deal with So in that category of countries and groups and places, I would say go for it go all out if you can, right? Take advantage of it. For those of us who sit in countries and in locations where there are huge swaths of concentrated power, resources, and established ways of being you can try to work completely outside of those realms. But the reality is, is that scale matters, resources matter. And unless you can be relevant, you’re either going to be dismissed as nothing, and just the establishment will go on. Or if you if you become large enough, you can either be an asset or you could and an asset for change, or you could be considered a threat. And my view is we kind of need a mix of both. We need the people who are going to poke the bear Go for it. But we also need people. And this is the role I play, which is the people who understand the way the establishment works, but then can translate back and bring in those who are pushing the envelope and creating the alternate systems to work together. Because we do need that middle ground at some level when you’re talking about legacy and existing systems. Don’t get me wrong. At some point, I would like all of it replaced. But you can’t rip out the piping of the US financial services and global capital markets overnight. You just can’t.
Yeah, right. And we’re quite close. Right. So we’re going to really get into some of the detail a little bit later, but at a high level. Do you see that there will be parallel systems? Or do you think it’s much more integrated than that? And where do you think the innovation is going to happen? Do you think innovation is going to happen in this supernational permissionless environment and it’s going to be retrofitted into the legacy world, or how do you see that interplay happening?
So I’ll give a couple examples of what I’m already seeing from even five years ago, which to me are very positive trends. So let’s talk about open source and permissionless. And public blockchain versus the dreaded private and permissioned blockchains. It’s usually a little bit messier when you’re talking when you get into the enterprise space. But think about like IE why launching nightfall, and IE why Microsoft and a whole bunch of companies backing public chains as vocally as they have is a departure from some of the rhetoric that you heard five years ago even around? Well, no, you can never use a public chain because what about privacy? What about confidentiality, you can have stuff out there. That dialogue has moved completely in the direction in favour of public I’m not saying that. We’re going have complete public chains. But I think people are recognising the value of public open source and permissionless chains, and that there is a huge role to play there, I think we will always have a mix of a whole lot of different chains. The reality is as much as I would have liked us to have a couple standards and everyone on it, I don’t think we’re there. Everyone wants their own chain for some odd reason. And frankly, it’ll be Messier for a while, but eventually, eventually, there will be a number of chains that will dominate and prevail, and there’ll be the pipes. And do you even need to know at some point in the future, I think success for us should be as an industry, nobody knows what pipes they are, but they want and they run on everything. You know, everything runs on it. And I hope that happens. Another example I want to give is around the banking sector in crypto when I think about the market, so we have a group called the post trade distributed ledger group. It’s a terrible name PT dl under GPC and that group is only regulated did sell side and buy side institutions. And that group got together in November of 2015. Again in London and I know this because I was there with Barclays and London Stock Exchange group and State Street and you name all the big behemoths got together and said, Hey, what is this distributed ledger or blockchain thing? We got to get our heads around this because it did disintermediate. us. That was literally the thinking back in November 2015. And we got together at London Stock Exchange group for our first meeting. Long story short, you couldn’t even utter the word Bitcoin or crypto back then today, that group talks about the entire lifecycle of the trade. So pre trade trade post trade. And let me tell you, stable coins, crypto, that is discussed as well. I’m not saying they’re at the place where it’s crossed over and it’s all integrated into trading systems. But that dialogue is very different than even five years ago.
Yeah, really interesting insight. So, now I want to get into a little bit about the work that you’re doing it gbbc. So you break it down into advocate education, advocacy and partnership. Can you kind of walk us through those things? So maybe the advocacy part first, what is it that you’re advocating for? And I guess from a partnership perspective, that refers to the membership who to who the kind of members?
So, on the advocacy point, we are advocates for absolutely anyone and everyone who is trying to solve a problem using emerging tech and I know the name gbtc is blockchain. Yes, the bedrock of what we talk about blockchain, but we look at other emerging tech as well. We don’t think blockchain exists in a silo or its own island. We advocate for businesses that that want to grow. We help with the partnership. We help collaborate, it’s business development, it is partially helping to grow the multi trillion dollar industry set that we believe is happening. It’s happening. It’s just a question of, can we bring the right actors together to make it scale faster. And so we tried to help with the acceleration of that, whether it’s government meets an academic meets a lawyer meets a, you know, we often also because we’re looking at things at a macro level, we’re able to see the same use cases over and over and over again in different countries. And what we try to do is say, Hey, guys, sitting over here in the Middle East, you want to go talk to the guys over sitting in Arizona or California, because they’re doing the exact same use case or very similar use cases, you might want to talk to each other and see if you can leverage each other’s expertise. And we do a lot of that it’s behind the scenes. We don’t obviously talk about it. And we do our best to try to make the connection. So we really think of ourselves as building bridges and helping people just accelerate what they’re already trying to do. Just to be clear, we never advocate For a single company or a single blockchain technology, what we’re saying is, here’s the opportunity set here are the credible players in the space. And we’re going to do our best to help support them as they’re trying to build their businesses. We want tonnes of unicorns everywhere. I want to see unicorns out of Southeast Asia, Africa, South America, as well as Europe in the US and Russia and China. We really are passionate about democratising the opportunity set. We’ve got startups out of and just talk about membership a little bit. We’ve got startups out of Ecuador, we’ve I’m talking to, we just had maryclaire from Morocco join just the Moroccan Stock Exchange CSD. We just had the Central Bank of Sudan join, which is have we really are trying to go out and find anyone and everyone who sits in a position of either problem solving or influence, who cares about this tech and wants to learn about this tech and bring them into the fold. And we vet every startup who comes into our network because also We want to make sure that if we’re going to introduce them to a fortune 500. We feel that with confidence that we’ve done our homework in terms of their credibility and their ability to interact with that enterprise. But we do a lot of that to this
particular worldview because obviously,
blockchain crypto can be quite politicised. And so is the What does success looks look like? Is there a particular shade of success that you’re, you’re focused on? And yeah, is there? What does that what does that world look like?
Success to me is a world where we have a bunch of us in political positions influencing legislation in in a pro, not only pro tech, but with a mindfulness to our society and community. Success to me is putting a bunch of us who are entrepreneurs in the billionaire seat. I don’t have any issue with billionaires. I I do have an issue with how the resources are allocated. So those who are conscious about giving back to society, whether it’s a company that they have our doubt, I don’t care what the structure of the organisation is, I just want people who are going to be mindful about creating Equal Opportunity sets. It’s an unfair world. We all accept that. But we don’t need to accept that. Some people have no opportunity whatsoever, just because they were born in a certain area, in a village in a certain country. That should not be the reason why you don’t get educated. And you don’t have the ability to be an entrepreneur, successful entrepreneur. To me, when we have this community and plus, plus our friends and supporters, we need to in my mind, we need to transfer of power as well. We have a generational issue at the moment, I think, in most countries where we can’t affect the change that we want, because we don’t hold the seats of power that we need to hold. Don’t get me wrong, we are influential many of us are influential in our own spheres, but We need to kind of take this opportunity, I think, to take it to the next level.
So is it about kind of a better distribution of wealth creation an opportunity? And is there something within that maybe to pick up on a point? Is the Do you think there’s an opportunity to replace shareholder supremacy with something else? Is that an objective as well,
I think everything should be on the table, the processes that are good, the governance that are good, keep them. But the stuff that doesn’t work, either we find a way to reform them or just get rid of it and start over. I know that sounds really easy to say it’s a lot more difficult than that. But if we’re not at the table of places where we need to influence, we won’t even get to say and do what we can. So my point being is we need many of us and I think there needs to be a more strategic thinking around this as a community. How we get ourselves to a place where we can affect the changes that we want. So think about what we’re asking for, we’re asking for deep, deep rooted societal changes, that means we’re touching upon some of the most coveted institutional, or institutions and institutional establishment. And that’s, that’s scary to some people.
Yeah, I mean, I guess if to summarise if I could it would be to transition from a community, very disparate community to an industry, right to have an effective industry voice to overcome, you know, many of the misrepresentations and misunderstandings, I think people outside of the space have, and if we can do that, well, then we can attract more of the brilliant people that we have in the space to the courts. And so within that, of course, there’s this subset of stakeholders, regulators, policymakers, I know that is a big part of the people that you engage with How do you strike the balance between encouraging innovation and the guardrails to protect retail investors and everything else? I know that is a highly, highly regional thing, you know, who can participate in this? And at what stage and with what level of risk?
Yeah, no Look, I mean, so let me just start with like the really low hanging fruit. What we really are concerned about are countries that have outright banned any kind of crypto whatsoever. And let me make another point about Icos. I see a 1.0 did not go off so well, but Ico 2.0 should be better. And we’ll keep getting better. I like the model. Personally, I think we just need to refine it for a world that does safeguard against the unfortunate bad actors that are out there. So how do we work with regulators? My view is look, we start with the ones to me, the ones that are most concerning are the ones who just say no. And so you got to find out why are they saying no? What are some of the concerns Because if maybe you can start chipping away at some of the real issues, then maybe you could get them to back down. Right? That’s kind of like one bucket of a group of regulators. The others actually are probably the majority fall into need to be educated. And that’s where the very beginning of GVC education was, like, the top of the three things that we do. Education was the number one thing that we did. And it’s just literally sitting down with government officials and regulators and just explaining why this is not such a scary big, bad thing. Don’t get me wrong, I don’t think it’s right to misrepresent. But I do think it is fair to say, these are the pros and cons of what this industry or this, you know, technology is doing. And these are the things that benefit you. But to see it from their perspective. My view is very simple. So he’s great. Yeah, sorry, guy, then they go. Now, I was gonna say technology is great. But we often forget that people are involved, and people usually mess things up. And so the key is for how do you move work with each other in a way of understanding why the other person may be doing, what they’re doing and what their motivations are, I think goes a long way we do really need to understand what motivates the regulator or the legislators to do what they’re doing.
So if we could, like illustrate that spectrum, so we had pretarsal garvis of European Commission and leads the digital single market initiative, very pro innovation, very unformed. I’m always very frustrated at how little people understand how Europe is, is its attitudes act both the the kind of regional level and at the national level to crypto assets, have a very nuanced understanding, very pro innovation. But then if we look at the other ends of the spectrum, you have relatively small environments Switzerland, Liechtenstein and Malta, Singapore that are seeing this as a, I guess, an opportunity USP to move move quickly. But in reality, the ones that people care about, it’s the US, right? And as much as in Europe, for example, it’s very pro innovation. The problem is from a venture perspective. Most VCs here, irrespective of what they think can happen in Europe are looking to what happens in the US because that’s where they think the majority of the venture money historically is going to come from for startups and have that as a challenging environment than the startups can’t grow to a unicorn scale. So, you know, can we talk about that spectrum, some of the different models that are being deployed to illustrate how different regulators are approaching the space, it’d be great to go a little bit deeper into the US I know they have slightly confused conflicting interpretations of just even what digital assets are under his purview they sit.
Yeah. Now, you’ve said a lot of really important things here. And I appreciate very much that the EU has led on the innovation front. And I do agree with you, but that doesn’t translate into skin in the game and money being put into startups. And I feel like the culture of risk aversion is very prevalent in Europe, having spent over a decade in the UK, I think the UK is probably a little bit more risk tolerant, at least the VCs in London, but there’s still a risk tolerance level that is higher, or a risk aversion level that’s higher than in the US. Where Don’t get me wrong. It’s not like people are just handing out money on the streets, but your access points in New York and Silicon Valley. Are there so if you can get in the door, you’re able to pitch it is available. And I think that is eroding. I think it is actually starting to erode. I don’t think Silicon Valley is the centre of what’s going on in blockchain and crypto, I actually would argue they’ve missed the boat for the most part.
Nobody wants to try No. Right. So I mean, you could argue that Europe and the USA kind of the inverse of one another, because in Europe have a very pro innovation regulator but a very conservative venture market.
Yeah, in the US,
you know, they’ve been lobbying the SEC with safe harbour safe harbour safe harbour memos and what have you. So it’s the the regulator that’s been inhibiting innovation whilst the venture market is very bullish. And so, you know, what is what’s going on at the SEC, right? I mean, they it’s not that they don’t understand the space. But why are they Why are they a laggard,
So I spent a great deal of my time, as much as I despise politics trying to understand the various pieces of institutions. I mean, the US is very fragmented, and it’s actually decentralised in many ways, which is kind of a good thing. It’s a federated model, right? So you’ve got different groups of regulators monitoring different things, and they enforce different things. I don’t know how many people are aware in the US markets, there’s always been a tension between the CFTC and the SEC. So this is no different. When you carve out who is going to regulate crypto assets. It’s actually not that simple. You could argue well, yes, derivatives go to the CFTC because that’s their purview. The reality is, is depending on how you classify it, it could be not regulated or it could be regulated. And the cash markets or the spot markets are actually a bit of a conundrum because they’re classified as two Different things, depending on the regulated entity, IRS thinks it’s different than the CFTC. Does. We haven’t even gotten that. Right. Right. In terms of agreement on that. Here’s the reality. We have lots of issues in the US. We have states doing different things. I think it’s great for certain states to be so pro crypto, but the federal matters the most, and the federal I don’t I do not think we’ll have a cohesive pro crypto view until we get past the elections. And I don’t know, depending on when the election what the election results are. I do not know if we’re going to end up with a very pro crypto friendly environment or not. But it will mean like, just for example, if there is an administration change, we will see potentially different people running all of these departments, and we’re gonna have, you know, massive handover of power to another group. People, which is frustrating because if you think about it, you’ve laid your an association, you’ve laid all this groundwork with x y, Zed Commissioner, and then that person goes and moves off and start over again with a new person. Maybe if you’re lucky, you already know that person.
Yeah, I mean, the political cycle is a very challenging thing to wrestle with as, as an industry as an industry body, I’m sure. And, you know, I think, certainly in a European context, there is there is a bit of a burning platform, maybe an existential threat, which is,
you know, for a long time now, in Europe.
If you look at the current paradigm, web two and platform monopolies, there have been many reasons why Europe has wanted to limit them could tell them break them up and have them act in a more socially responsible way around data GDPR. And because it’s seen as other you know, this is a Silicon Valley invention. It’s it’s it doesn’t marry well with European culture and politics. And vice versa. They kind of see coming from the east, this kind of alternative internet, which is perhaps more threatening to them. So there is this impetus to support an alternative web, whilst I guess in the US. It benefits and wins from Silicon Valley, generally speaking, and as a consequence is less of an incentive to change the status quo.
Yeah, I think there’s some of that dynamic. But also, let’s face it, I will give some optimism for those who think I’m being very negative on the US. We’ve had discussions with, for example, the US Department of Commerce, and they are very aware, especially on the trade side of the importance of a digital strategy, including blockchain and crypto, they are aware of that and they’re becoming a bit more vocal and public about that. What’s important is that we have things like blockchain and emerging tech put me to agreements. I think what people miss. And for those, I’m not a policy person. I’m learning this stuff on the fly too. But from a policy standpoint, written references to blockchain and crypto assets that didn’t happen before our wins. And these are wins as they become more prevalent, and in the US that is starting to happen. In one of the FDA reports for COVID. I don’t know that many people even knew this, but blockchain managers are considered essential. It actually says it in the report. So it just goes to tell you that a lot of the work that people have been doing, whether it’s a startup educating different elements of the US government, these things, these seeds have been planted and they are growing, and I think that’s a positive thing. But the reality is, is we’ve got to keep in check that the US is a confused place right now. It’s not focused on digital, anything really, it’s not it needs a serious upgrade. We’ve been pushing hard for there to be a more cohesive strategy. The only one other strategic element that I think will get the US to move. And this is absolutely no disrespect to what’s going on in China. But what the Chinese are doing with respect to blockchain will obviously have an impact on how the US looks at
blockchain. So that’s a perfect segue because my next question was going to be, you know, looking at cbdcs Central Bank digital currencies. And obviously, the one that gets the most headlines is, of course, what’s coming out of China. Can you tell us a little bit about what’s happening in the space, the different approaches you’re seeing, and how effective you think they’ll be?
Yeah, um, so I we have been liaising with a few touch points on the ground in China. I think China’s always a difficult one in the sense of, you know, that when they when they can skate, they can start like nobody else can really I mean, let’s face it when they want to put something together, they can get 300 programmers overnight and they’re working on it. I think the issue for us as a as a global community will be as if China, they’re going to launch a digital currency, they will have the BSN blockchain network before China, if they go to export that and internationalise that as the standard for the digital infrastructure that we’re all going to be using. I don’t think we should roll it out. I think that could happen. But the question is, what will the governance on that look like? What will be the surveillance, data ownership? Just all the questions that we bring up right, and especially in Europe is sensitive to what happens when all the African nations are on it? All the Southeast Asian nations are on it. You know, parts of eastern Europe start to get on it. My question then becomes, do we allow it just to grow organically or do we have a direct dialogue with people who are creating the BSN, and other, you know, initiatives and make sure that we grow this together, or do we allow trying to just build it and then all of a sudden, we’re either going to adopt it or not. And it becomes a US versus China thing. I worry about that. And I think the EU in particular, could play a huge role in being the buffer, and the sound mind and rational mind in what I think are going to be conflicts.
Yeah, I mean, it’s really interesting, because of course, you have to see this in the wider context of effectively a growing Cold War.
it’s interesting, you look at something like this as a kind of digital single belt road initiative. alongside some of the proposals that have been put forward by Huawei, for example, to the UN, about fundamentally rewrite, rewiring the web. So it can be You know, leverage things like 5g more effectively, but of course, to at the cost of decentralisation and some of the things that were core to his ethos when it emerged from from the west coast. So you know how we as an industry navigate that because China has a billion people, he can’t just ignore it. And we had a really interesting episode with dovie, who was talking about in the crypto industry, you could argue with China made. And so of course, not only innovation, but the birth of it as an industry from mining to exchanges and various other things. So it’s not so easy to untangle and it I think it will become increasingly challenging to navigate, both at a policy level but also just as a startup and how you want to try to expand
of course, one of the most famous well known Initiative’s alongside all that is Libra. And I’d be interested to get your perspective on the Libra effect. So when it first came out, I think
on the one hand, I felt that it gave validation because after the Ico
boom, the industry was kind of written off as a failed experiment. And then all of a sudden you have an organisation like Facebook, pretty much putting their neck on the line. With with this with this play, I also felt it might be net positive because they bring a lot of legal firepower to save us all the burden of having to fight those fights with regulators to set precedents. But interestingly, I’m starting to see a lot of negative effects. So because of how this has kind of got wound up, perhaps as a consequence of how they played it, I don’t know but interesting to get your perspective, a lot of enterprise and out of saying, Park anything to do with a token. We don’t need that. headache. So what do you think the Libra factors?
Yeah, it’s, um, you know, if we want to think about step changes, the Libra announcement was a step change last year, it completely turned. Some of the conversations we were having, all of a sudden everyone’s interested in central bank, digital currency, like honestly, been around for years, and everyone’s poo pooed it, and then all of a sudden, that’s the flavour of the year, or maybe next few years. I think Libra one, from a benefit standpoint, has upped and accelerated the conversations around the world. That’s one. It’s also brought to the fold something I think is interesting, which is the power of people and social networks. Putting aside Facebook for one second, I know, it’s hard to do, but let’s just think about 2.3 billion people connected to basically if Libra fails on day one To get 1% or less, it’s still 23 million people on day one. I would love that if I were a founder of a startup to have that many users on day one. And that would be considered failure on the part of probably Facebook. So the question I have is for future for our future do we want? Do we have social networks actually competing against sovereigns? And this is where I think we could get some really interesting results. Because what is the sovereign to do about 2.3? You could try to break Facebook up. But if that platform works in any decent way, how do you control that it’s like whack a mole, you really going to try to kill off it kind of like the way people try to kill off Bitcoin. It’s just like good luck. Once it gets enough traction, and it’s out there. People will adopt it. And I think what’s freaking out governments is really around the power of these social networks. It’s not just Facebook, by the way. It’s WeChat it’s You know, there are others that are rising, we could have multi billion people, social platforms, or networks that are connected. And that buying power, that power in general, is more than any sovereign really.
It’s a really interesting
way of framing it, there’s actually a book called the stack, which is like as thick as the Bible. It will take you It took me at least a year to kind of get through it, the name of the author escapes me, but I’ll put it in the notes of the podcast. But it talks about it talks about sovereignties the sovereignty of the citizen user talks about sovereignty of platforms states. And so whether it’s the intrusion of the sovereignty of the individual by the platform and their privacy, whether it’s their refer to the first sign of Google war, that kind of broke out and so now these different sovereignties navigate one another. And you’re absolutely right. If you think about something like Libra, your bigger global population than most countries, that of course then represents this systemic risk if for whatever reason its design goes wrong. So how do you think whether it’s Libra or any other protocol that aspires for that level of scale? And how can you possibly design for a decentralised instance without all the various breaks and everything else that you might have with meet with people to intervene? How could how do you how do you make design choices that can carry that economic load without bringing entirely new levels of risk into the financial system?
So I’m going to put my project or sorry, product, you know, development, hat on how do you develop a product and if it becomes wildly successful? How do you provide different breaking financial services or a specific market It’s it’s about monitoring and one designing it the best you can at the time with the information that you have, and apparently, you know, involving the correct regulators and whatnot. And let’s face it, the Libra white paper 2.0 is the direct result of the engagement that they’ve had with others, aka central banks and regulators. And it’s a different version, right? So there we are, before it even launches. It’s a different version. Okay, that version launches, if it does, in fact, start to get real traction and adoption. There needs to be a work plan of the risk tolerance and, you know, sort of how does it roll out and and can they actually manage that and control that? Because if you can tweak as you go along, knowing that some things are going to break, I think you need to always assume when you launch a product, things will not work out. Things will break. How do you minimise the risk The whole thing just blowing up or you blowing up a market, and there are ways to do that. I don’t think it’s about boom, it launches in 2.3 billion, pick it up overnight. It doesn’t happen like that nothing happens like that. Even WeChat grew over time to WeChat pay, and are we pay is it. So I think we’re gonna see gradual adoption, we could get lucky and see an explosion, but it’s Libra Association, his job, my in my view, or at least the people who are safeguarding it to manage that risk process and have a roadmap for it, knowing that things are gonna go wrong. I don’t think there’s any other way to do it. Really.
I mean, I guess you’re right. Somebody like yourself coming from institutional banking, there have been plenty of products that have been launched into the financial system, that with various outcomes, it’s not a new thing to launch a product that has the potential to blow up a market because of things that you haven’t planned for. Right, especially as these become increasingly automated. So
You also need to know can you put the brakes on something if it really goes wrong? I mean, like there have been financial products that just, like, for whatever reason, go completely, you know, U shaped and wrong. The question is, Can you pull the plug in, in old financial services world you can. But in this new world, can you actually once it’s out, can you actually bring it back in, I think that’s a bit more difficult.
So, it’s been a pleasure having you on, we’re definitely gonna have to get you on again, as the world evolves, I’m sure as ever, the next quarter, two quarters, especially in the current context is going to be as crazy as ever. At least it kind of keeps us on our toes. We sadly didn’t get to talk much about your your startups that you’re founder of. But again, I hope we get to have that privilege at some point in the future.
Jamie, it’s been a great time talking to you and absolutely thank you so much for the privilege of being able to spend some time with you guys.
Right. Was there
anything that you didn’t say that you want to say? You want me to ask you a question? You’re good?
No, I think you know, I think our macro level discussions were probably beneficial for this period of time, because there’s a lot of change coming. Yeah.
Yeah. Awesome. Sandra. Great to chat. Hopefully we get to meet in person at some point, maybe in a public.