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thank you for having me patrick excited to be here my name is johannes schmidt i'm the director of banking and payments at kraken this is a global team that manages our existing banking and payment partner relationships around the world and uh i've been with kraken since uh december 2013 shortly after the 2013 bitcoin all-time high i enjoyed the company so it's been a while and um yeah before before bitcoin i was in in philosophy we have a phd in philosophy still i'm originally a philosopher well i'm originally an accountant so we're not all perfect and that's the and i got into bitcoin fantastic to have you here uh johannes um oliver if you could tell us maybe perhaps a little bit about yourself and the uh bcb group thanks patrick um i'm oliver lansberg city i'm the ceo and founder of bcb group we set up a shop in 2017 looking to improve uh some of the infrastructural elements of this whole kind of crypto ecosystem where we've landed at uh today we are um a business banking partner behind a bunch of crypto major crypto venues that you'll be aware of um we primarily process payments as a kind of a payments institution and we also have an otc function for uh facilitating liquidity in all sorts of you know cryptocurrencies and stable coins and digital assets in general um yeah uh we um we feel strongly that um this is uh you know this this market has a long way to go before you know this truly global scale adoption and we're keen to build as many of the tools as we can and lay as many of the foundations as we can to make that easy and to really uh accelerate that adoption that's our mission it's fantastic to have you here thank you so much and last but not least alexis if you could tell us a little bit about yourself as well as solaris bank yeah absolutely thanks a lot patrick for having me so on my side my name is alexis managing director of our digital asset unit uh within uh solaris bank uh and typically for the one who don't know solaris bank is a tech company with a banking license so we are based in berlin so we have a food banking license in germany uh and what we do is contextual banking so we offer api for companies that want to integrate financial services within the offering uh so you know on the crypto side we offer banking services for crypto company for example many uh neo bank or exchanges are using our services and now we have decided also since one year to expand our product offering on the crypto side uh by also for example offering uh wallet as a service so if you know neobanks want to add crypto functionality uh within the offering we can support that as well that's fantastic and i really appreciate you all uh kind of joining us here as always we're probably going to do maybe i don't know 40 45 minutes of conversations we have a whole bunch of questions lined up around crypto and banking in general uh that we're going to be asking of the panelists and for the last 15 20 minutes or so we'll open it up to the audience for some q a so keep those questions coming in uh make sure that you add them in the chat on the right and we'll make sure that we get them or as many as we can to our panelists before the end of the evening um i'm just gonna start uh with you uh johannes you unfortunately for yourself are in the top left of my screen here so we're gonna begin there um i mean kraken is one of the largest uh global crypto exchanges it has a wonderful brand recognition uh i think and correct me if i'm wrong but i think it's the longest existing exchange that has never been hacked uh and it's probably the only exchange meaningful exchange that hasn't actually been hacked you've carved out a nice niche for yourself in crypto and a lot of people in crypto are anti-banking to a certain extent right why on earth did kraken decide it wanted to go off and be a bank what value in having a banking license was there for kraken yeah thanks it's a it's a great question for sure um certainly the entire the entire space has evolved a lot since i just mentioned i joined in 2013. um we've come a long way right and in 20 2013 the you know the usual relationship between a crypto exchange and a bank would have been mostly adversarial right there wasn't a lot of close collaboration cooperation between banks and crypto exchanges um they've been um there's been i mean very very few banks have been willing to to even bank crypto exchanges at the time was it was a big deal i think it was only maybe a year a year and a half ago um i remember it was like big news and i was kind of ashamed of it that it was big news in crypto that uh jp morgan had accepted coinbase and i think like one other company as a banking client um and i was like why on earth is that such a big deal that kind of seems like a no-brainer but there has been always that animosity right that's right i mean uh so that's that's a good point i mean at some point it became like a headline in the in the crypto news that bank sorry exchange xyz landed an account with um bank abc right that so that kind of that kind of um thing which seems like a very boring kind of item right for traditional news is is always is still i think to a certain extent a big deal in in crypto so um just just like based on like looking at that kind of narrative and how that unfolds i mean for us i mean banks not only exchanges changed a lot in in the in the last seven years um in many many ways right we've all grown a lot all the crypto exchanges that survive the 2017-2018 bull run have have to to adjust to that and grow right and there's of course been regulatory pressure um and certainly just a challenge for these exchanges to hire people who have the relevant industry experience to build compliance teams that are with with like subject matter experts that have a deep understanding of regulation and the kind of compliance that is is needed to survive in in this in this regulatory forward world and so we've we've done all of that right um over the years it took us a few years um to to to get that to finalize that and for us the logical the next step was to see to see if we can actually break into banking right why not i mean it doesn't need to be just for ideological reasons it's it's kind of it would be very smart to say oh no we don't we never want to touch banking because there's no aspect of banking that's interesting to us so we've we've taken the opposite approach we've said okay let's look at banking as a range of services and products and see where we can enter this market and wyoming just happened to be a very i almost want to say a unique opportunity where there's a very interesting regulatory framework or regime and um just just just a a good kind of atmosphere for um you know innovation friendly um and that was the first the right step the right first step into this into this um industry and that certainly makes a lot of sense um i mean you're not the only ones that have jumped into banking certainly not from the crypto space there are others that are probably working on this um but if you look at one of the hot trends uh just from silicon valley tech companies a lot of them are now getting their feet wet in a banking capacity to a certain extent certainly facebook has this with libra and they're working on integrated payment systems you have uh apple with apple pay apple card a whole bunch of other integrated systems and a whole bunch of rumors that a lot of the other firms are thinking about entering what used to be the one group that you would never get into and that's banking um oliver i'm going to kind of turn it over to you here uh now we're going to pivot that conversation a little bit i mean we all are familiar with cryptographic technology we as crypto natives are familiar with it um on a very detailed very intimate level and what its value ads are what its benefits are from your perspective what are some of the benefits that crypto itself um offers for uh the banking industry what are the benefits of this technology for banks this that's a kind of it raises quite a a notable paradox in the whole crypto space which is that uh you know if you um look at bank as a as a facilitator of moving money or as a as a place to store value uh you know these are two things that bitcoin itself was designed to do um bitcoin's not doing so well as um a means to move money um but it's certainly you know shining as we can see in the charts as as a place to to store it and watch it grow you know volatility aside so it's um it's i think where this needs to go is uh is is somewhere that's in between the you know the extreme idealism of what bitcoin is built for and where the established banks are and that is to have um you know the the cryptographic and the kind of redundancy and and kind of security and independence that the whole blockchain space offers but also with the you know the controls that exist in in the traditional banking world so yeah i don't actually think that um you know we have landed on the right system of electronic money just yet um but what we are witnessing is an evolution and we can we can trace the trajectory of that evolution to a system of money that will work that's that's that's one of the main reasons why i am very long this whole industry and it's going to be very interesting because i definitely want to evolve into the future of money and particularly cbdc shortly um but alexis i'm going to turn it over to you you kind of come from a little bit of a different side than uh the crypto group um obviously coming from berlin you're a tech native a fintech native in particular but solaris business model was built around servicing banks large german financial institutions what's some of the feedback that you're seeing from them uh in relation to uh crypto and the offerings that solaris is making for these larger banks [Music] yeah definitely so it's very interesting to see you know the development in the crypto space we've seen the space mature as well uh so you know when we started to offer banking services to crypto company already two years ago uh that was a very different uh targeted group there was no clear regulation uh in europe so all the traditional banks uh were a little bit careful uh in the topic uh but now we have any bank ask themselves if they should or if they can continue working with you uh because you started servicing crypto clients or was that never a part of the conversation no i think it was never part of the of the conversation on our side because you know we are fully compliant we have a license in germany uh so obviously you know we have all the the regulatory control uh in place uh on our side uh so we take it very carefully and i think you know that's why we do it uh pretty well because we have the the right mindset to be able to control the risk and you know to make the regulator uh comfortable with it as well uh so definitely that was a never an issue in that regard uh for us but come back you know to your initial question on the uh not the appetite of traditional banks uh to move into the space that's definitely growing uh since the past i think six to you know uh 12 months we've seen like you know definitely a huge increase in interest from banks and you know for some of them is doing a pilot it's a bit testing the water and so on uh so it will still take time i think you know to have the full adoption for traditional uh institution but it's moving there and you know what we see a little bit more is fintech moving into space they're a bit more agile flexible they have less sometimes you know uh regulatory constraint to be able to move forward um and that's also you know our original market uh where we are enabling a lot of like neobank neo broker uh different fintech and there there's definitely a huge app attack and you know we've seen that also with the paypal announcement uh so yeah definitely a lot of a lot of traction there with them yeah i can certainly imagine because this has become a very very hot topic in general particularly around um what types of services these different banks might be able to offer and you and i uh coming from the german background here well of course i'm not german background but we're both uh with companies based here in germany uh one of the things that we're seeing take effect this month is the boffin's new crypto custody license this has been legislation that was passed last year it's something that every company could apply and grandfather into earlier this year but now we're effectively seeing it become active where this month every one of those groups will have to have had their application to become a cryptocustodian uh applied for and approved by boffin to continue to offer those crypto custody services but unique in this regard is that every bank in germany is already effectively licensed to become a crypto uh custodian um do you see this as a positive uh or do we see this as a potential overall negative um as far as crypto innovation goes so um i think there's always two side uh of the you know of the coin in that regard so on one hand you know obviously some license and regulatory requirement might you know push away a bit of innovation for some player who do not have the capacity you know to be able to tackle that on the other way around it might you know push some institution to move forward because then they are comfortable there's a license so they know you know they can enter the space uh so i think there's always two side of uh of the coin here and on our side we try to help and facilitate also both sides because you know we are an infrastructure provider then can uh empower uh different type of business models so even if you do not have your the license you can benefit from our regulatory uh empowerment there so i think that's helpful for pushing especially for example in the institutional market um but maybe you know for other business model uh it's always a bit tricky with the uh with the regulatory uh aspect might push away as well you know some of the projects we were also not so legit uh i wouldn't is uh uh focusing a lot on consumer protection um and then it's always you know the big philosophical question you know how much regulation is helpful that's just uh not but i think you know that's that's at least that's moving forward and uh hopefully we will we'll see some results in the next couple of months i certainly think so i mean one of the things particularly kind of piggybacking off of what you just said there how much regulation is proper um one of the big issues that we've seen on a global banking perspective is particularly around aml laws not disputing the merits of aml laws at their core but rather we've seen them become over restrictive where hundreds of year old family accounts with banks are basically now being told you actually have to go now bank elsewhere we don't want your assets on your balance sheet and this is particularly becoming a problem in the eu uh i'm just going to kind of open this to anybody that wants to ask this do we err to answer do we see uh any opportunity with crypto to enable us to maintain aml laws but make them a little bit more innovative in forward thinking and less restrictive because we have better technology at our fingertips yeah if i just jump in here i i think um eventually yes i think very much so i would like bet big money on this but uh not in the next two three years i think like um i think for now it's just the traditional kind of aml rules are imposed on the crypto businesses right um there's some innovation here and there some pockets of innovation but essentially it's the the old rules being rewritten in in a crypto language maybe um and then applied right and yes there's of course there's um there's there's problems with that i mean as much as we like to uh um comply with existing email regulations um certainly there's there's it is unfortunate that sometimes um certain financial privacy is is endangered by by these efforts right initiatives um and that's something certainly we value as a as a crypto company right the financial privacy of our clients for example um so i think there's a tension definitely here and i think it will be a result there might be a blockchain native solutions to aml um being going mainstream in five years maybe in 10 years and i really as i said i really hope for that to happen but right now i don't you know short term i don't see it so that's it's actually something interesting that you brought up there um i mean if we let's think about uh cbdc's uh for a quick second here um i mean one of the things that we obviously want to see is a crypto finding its way to work within current existing regulatory infrastructure and if we look at cbdc's it kind of makes sense oh we should have a digital dollar we should have a digital euro something that is transferable settles immediately and we're able to move it around in a private fashion um the truth of the matter is though is that similar to aml compliance uh a cbdc has to fit in with the current infrastructure not only of the uh regulation of cvdcs or of money in general but also from a power perspective a control perspective because the entities that are issuing these currencies whether it be the federal reserve or the eu they have extra mandates on them rather than just having a currency that's kind of floating around this is tied to inflation tied to economic growth secondary layers unemployment etc are we kind of seeing the opportunity here that the core spirit of crypto uh privacy anonymity decentralization is effectively becoming bastardized by central banks or is it of risk of becoming bastardized by central banks maybe i'll take that one yes please um i think this speaks to the uh one of the fundamental properties of cryptocurrencies is the decentralization of trust um so when you put a you know a digital currency in the hands of a government then you're moving the trust away from the rules of the software of the protocol and giving it into the hands of the government um so maybe that's okay if you trust your government but it's you know it's not not going to succeed in countries where there's less public trust so i think it all you know it it it all uh hangs on the balance of where that um you know trust works and where it doesn't and um it also introduces very interesting uh paradox like um uh you know cryptocurrencies generally seem to be you know very libertarian uh uh uh um assets um but um uh you know i think um uh i i lost my throat on that now i'm gonna hand straight back to you patrick no not a problem at all um maybe perhaps it's been a long day does anybody else want to pick up where uh oliver was heading there yeah maybe happy to to come in there uh please i think you know it's uh definitely you know the long-term view of cryptocurrency uh is to have this decentralization part as an oliver mentioned uh but i think what is also interesting about crypto and blockchain in general is it gives you the option right and then the consumer can choose or the user can choose if you feel more comfortable you know using a digital euro which is issued by a central bank uh or you know a pure cryptocurrency which is decentralized or even you know uh libra you know which is from the private sector uh then it gives you options and then you can choose you know from what you want to use and what fits your use case and you know progressively you know you could see how the this is going to evolve and potentially you know when cryptocurrency really become mainstream like you're getting paid in crypto and so on people might choose you know to to rely only on that i think it's going to be gradual like you know the the evolution there it's a bit like you know how internet uh transformed the way you get information uh didn't mean that newspaper disappeared right away uh so i think you know uh it will get there but it will take time and you know more option you have for the end user you know the best it is so yeah yeah i agree and i think in the short term we'll probably see greater adoption and success in the stablecoin space which is uh you know i guess uh cbdc's but in the in private uh you know issuance not as decentralized but you know tons of traction i mean with usdc at nearly three billion dollars in issuance uh versus two billion a month ago i just can't wait to see the first stable point backed by a cbdc it's inevitable i guarantee you some wendy and crypto is going to try to do it for sure uh johannes i think you were uh looking to see i know i just wanna i 100 agree with alexis the the point that you know that we will have cbdc's eventually hopefully soon um and stable coins along and and and other crypto assets alongside existing alongside each other there is no need for competition there right i mean there will be some form of competition of course right the market will have to decide like what what kind of asset is your demand for right but um i think i think i absolutely i mean i don't i don't think that cbdc's are going to replace you know say other stable coins or um other crypto assets so yeah there can be a pluralistic way of um you know making room for all these assets and i certainly think that we'll even see uh it'll take a significant amount of time before we see cbdc's effectively replace um physical cash the dollar the euro uh r b whatever it may be uh specifically because i'm not yet convinced that people are going to be or the central banks themselves will be moving cbdc's into the m1 money supply so for those that are familiar with money supply you have m1 supply which is basically all uh notes that are floating around your cash dollars your cash euro sitting in your bank accounts m2 gets a little bit more restricted this is that's uh sitting in deposit accounts within banking infrastructure and then m3 is basically just interbanks more or less i think that we'll probably see cbdc's rolled out first on the m3 level uh for inner bank settlement between overnight lending markets between uh central bank markets with uh local uh participant banks i guess we call them but that kind of triggers one of the key value drivers of crypto in general and it's the immediate settlement of any of these inter-counterparty or inter-bank uh types of transactions uh oliver maybe you could uh speak to this what is how why is that so important to have instantaneous settlement of assets uh it's um if we look at it from a market economy uh point of view it's uh you know whether you're at a trade like a business end um you know buying and selling goods or services or whether you're looking at from a you know buying and selling the underlying cryptocurrencies themselves um uh it's um you don't want to be waiting traditional cash takes you know ages to settle you know swift or sepa and there's great innovation in in the separating space as well but um if you look at the crypto markets for a start they're extremely inefficient there's massive gaps between exchanges simply because relative to other asset classes in the world it's still relatively thin so the only way that those inefficiencies can be addressed is through arbitrage you can only do arbitrage if you can move money quickly so you know from a market's point of view um efficiency of moving money is extremely important um and from a business and trade point of view you don't want to be sitting at um at a costa trying to pay in some uh you know funky new currency and wait for 10 minutes for a block confirm so um yeah it depends on how how fast you may buy fast bitcoin is fast if you're sending a million pounds but if you if you're buying a coffee for five pounds two pound fishy whatever it is uh you know that's not fast but um market efficiency i think is the bottom line uh it's um at all levels of the market so my hypothesis is that if we can uh significantly enhance settlement um and i look at this from an asset management perspective and we start speaking about capital markets and settlement of assets and trading for fiat i mean you have t plus two settlement it's an absolute nightmare uh and it's very self-evident the benefits that cryptographic technology can bring there particularly around tokenization um but if you look at it just from a pure cash layer i remember the first time that i used bitcoin to buy something it was at room 77 in berlin uh alexis probably knows very very well it's the local berlin bar it was one of the first bars in the world that was able to accept bitcoin for payment for beer unfortunately they closed down uh because of the code yeah yeah you know it as well too johannes yeah it unfortunately closed down recently much to uh our chagrin but i remember that i had to wait for about 30 minutes uh for the bitcoin uh beer that i had bought to come back to me and at that point all my friends at that time had already participated in about three icos this was back really in the heyday so it was absolutely crazy um johannes i'm going to turn this one over to you um i mean one of the things that we're starting to see is yourself and other crypto firms and the silicon valley companies that we mentioned before i kind of get into uh the banking sector specter are we starting to see some of those larger financial institutions also get into crypto uh because for instance we saw uh we talked earlier about how coinbase and i think it might have been gemini had become clients of jpmorgan uh jp morgan now has its own jpm coin but do we really see a bank that's going to enter into crypto in a meaningful capacity yeah um happy to try to answer that one so um i think alexis a few minutes ago said that like uh the big talking about the b2b client segment um for solaris said that like the big bangs right are not not quite ready yet to to commit to maybe offering some some cryptocurrency product to their clients right that seems to be also i think looking at our um institutional client segment the sentiment that we we get very often right there's still some some of these institutions are hesitating right um to really dive into into crypto um so i think that's still a theme that may change during the next 15 months or so right looking at today today's uh price action there may just be a sense in which uh like a certain institutional drive fomo starts uh kicking in right then that's something i i think is totally possible but yes i mean other than like really entering crypto um for like financial institutions there's been a lot a lot of interesting things that happened a lot of progress in the last in the last two years right i mean looking at the the what i think are really important milestones are is the fact that publicly is publicly listed companies like um microstrategy is a probably the biggest example right allocating a certain percentage of their treasury of their cash assets um to to bitcoin and and and i think that's that's like started a trend that is going to continue probably again throughout the next 15 months say where more and more companies are going to do that like i think there's a lot of companies that have cash lying around a lot of tech companies have cash stacks and uh it makes a lot of sense to diversify that into a uh into an asset that is an inflation hedge against inflation right and during times of a lot of um government spending uh corporate relief spending right um it it makes a lot of sense to to to do that and i know that um dan who was one of the previous um uh panels here is it has talked about with michael saylor actually was a kraken uh webinar on this topic so i think that's that's a big trend and it's just it just started it so we'll see more of that and it's going to be pretty exciting and then yes eventually we'll also have the banks um also do that but i think it's going to take a little a little longer i feel like some of these these fintechs or uh new you know de novo banks maybe are going to be first at the the tech ford uh um companies and then the more traditional banks are going to follow in in a few years so probably those banks are going to be in a what buyer build situation they'll either have to try to build this internally if they're not already or they're going to be buying one of those fintechs maybe a solaris who knows that they're going to be able to leverage that crypto native infrastructure within what they've already built uh oliver you actually had raised your hand you looked like you were ready to make a point there i just wanted to um pick up on what johannes was saying about uh the you know tech companies with a bunch of cash on hand and making better use of that um and you know put it in the likes of bitcoin um apple has 200 billion dollars of cash at hand uh if they put it all into crypto today at 15k that have 13.3 million bitcoin which is two-thirds of the entire bitcoin issuance outstanding to date um so yeah that doesn't even account for the slippage that would occur on the buy that apple would go through right i mean good luck doing a t warp on 200 billion but just that's just to speak to the scale of the opportunity here uh you know if apple then just even puts a like a two percent allocation of that cash um as a diversifier you know that's a market moving event oh absolutely and i actually hypothesized that there are some publicly traded companies and maybe private held companies that following uh microstrategies as well as a square um one of jack dorsey's company's fame uh i suspect that it's actually going on in the background right now um i mean no public company is gonna come out and say we're gonna buy 100 million in bitcoin it's going to be we bought 100 million in bitcoin right um so i would be surprised if it's not actually occurring in the background um as we're currently observing it um i mean it's kind of interesting though that bitcoin is now uniquely positioned as that treasury reserve uh currency do we potentially see other crypto assets becoming a part of that we just had the announcement yesterday about eth 2.0 that contract has been deployed staking's going to now become a part of the ethereum system or do we think that bitcoin itself kind of really has that monopoly um on being that digital gold that digital store of value i think maybe dropping in there what you mentioned you know patrick is very interesting uh you know going back to like corporate investing the treasury into bitcoin right as well as a cash alternative so now if you think about from their perspective for example uh investing into some stable coin uh then you can get return on some uh or you know even in if and then you are doing staking and you're having some yield so support in europe you have a you know negative interest rate right so uh if you will have you know even a two percent three percent return uh on an asset which is pegged to another currency i mean obviously most of the stable coin are in dollar so it could be a bit challenging but you could think of die as well uh so definitely as a treasury alternative uh bitcoin is great but i think they are also over asset class and could be considered in that regard i certainly think so as well too and i think a lot of people are severely underestimating how much a two to three percent yield means for a bank nowadays right uh one of the things that a lot of people say right now um or like they couldn't believe they couldn't fathom that people aren't in bitcoin because bitcoin can do 100 return in a year right and of course a bank would want to have 100 return but actually it couldn't be further from the truth if you have the ability as a bank to deploy about 100 million in capital and gain two to three percent yields that's earth shattering as far as they're concerned so i think there's a misalignment of understanding or misalignment of incentives between the banking infrastructure and what we have in crypto if you could deploy a meaningful amount onto uh blockfi for instance uh as a bank and get your six to eight percent yield you're probably going to get promoted to managing director at that bank in a very very short time right right um with bitcoin as a um i i wanted to bring up uh you know your um bitcoins treasury versus um any other competitors and it reminded me of something very cool i heard on an interview with the guys behind solana the sam bankron freed i know sandbag green's doing the serum bit over solana yes um but they're really they're doing a very interesting job on the money use case here um and where bitcoins block confirmation times are like once every 10 minutes these guys want to confirm in the millisecond zone so that's uh um you know gonna be awesome uh y u know transformational for for payments if if it takes off i i i think it's a very interesting project no absolutely it's going to be johannes please no just also still that question about is there any other competitor like for this kind of digital gold you know role that bitcoin is filling occupying right now um i i think it's going to be hard for other even ethereum like it's going to be hard for other assets to to to get there bitcoin just has an enormous advantage in in my opinion right i mean it's just it's just it's it the first mover advantage or whatever you want to call it it's been around for for you know um 11 years um and it's just it's the security of the bitcoin blockchain is unparalleled it's just there's just no way another asset is going to be competing with bitcoin in that in that regard at least i mean there will obviously are many many or there will be many many use cases even in the future for for cryptocurrencies or crypto assets right and um vending is one of them or um saving um or maybe even gaming eventually right um and and many more that we can't even like you know think about or we can think about speculate about but that don't exist yet so and and bitcoin but has has carp that have been able to carve out that that niche of being the the you know this digital gold-like asset and i don't think anyone's going to going to be able to to challenge that any other assets going to be able to challenge that anytime soon no i think i would agree with you on that front um especially at the other crypto assets with what i view as very differing value drivers let's say i mean ethereum does not have the same value driver as bitcoin uh any of the other leading protocols don't as well either uh just based on their ability with smart contracts dapps etc um one thing of interest though here that i would note um i mean alexis you brought up a very very interesting uh point there around uh dye a bit ago and that kind of being its own stable coin native to the d5 space um do we start to see uh as this rollout of d5 that started over the summer continues uh d5 becoming a little bit more uh integrated within kind of a banking perspective um i mean johannes maybe i'll actually kind of turn that over to you d flag kind of began it's been around for some time but i mean let's really call the catalyst what it was it was unismock so uniswap goes off the ability to swap these tokens through this aggregated market maker that's really what made d5 what it is now today and now we're starting to see insurance platforms come out we're seeing all these other crazy constructs it's not just stable coins amms it's actually really not getting the financial products can we fathom a world where there are d5 banking players um certainly we can fathom the world but it's not here yet right we're very far we're still far away from it um i in to a certain extent i you can compare the the defy kind of uh activity over the summer uh that happened to to the ico craze like three years ago right i mean it was very interesting there's lots of driving not a lot of innovation right something gen you know very kind of new to the space that we hadn't seen before that we don't fully hadn't fully understood um and uh kind of developing very rapidly unfolding very rapidly and um so so that seemed to happen again in 2020 and um but but it's i i think banks or even even um right um tech banks and and challenging banks are not really in the space to kind of tap into these these super novel products yet or really um capitalize on them that's it's just too early like same same with icos like icos in 2017 i mean there was were interesting projects there right certainly uh also some scams but but very very interesting um projects that happened um but like there was a there was a there was no willingness from the side from the on the part of of institutions or financial service providers to have anything to do with that at the time right for a good reason i mean this is it was just it's it was just unfolding in front of their eyes and and no one really knew what is it going to you know um you know is it a huge bubble it's going to burst you know how is it going to end uh what's going to happen next so i think just given their their nature and their their dna i think banks are not equipped to to um to um be exposed to that and deal with that yeah certainly can't move that fast either over to oliver right this is where our opportunity is johannes and alexis this is where our opportunity is if the banks are not going to do this we're going to do this because the obvious play here is that there's a ton of there's a lot of value being generated in the d5 markets uh there's you know almost 12 and a half billion dollars in issuance now up from you know a fraction of that earlier this year and the cut you know the curve has been volatile but there's there's a lot out there and there's meaningful yield there so the the play here is simple it's take money that's not working for itself whether that's in the form of dollars or in the form of bitcoin um and provide synthetic exposure to this d5 market and then you can provide a bank-like yield on that deposit and that's for us smaller innovative fintech types to uh you know to bring to market years before banks will so let's do it yeah i would definitely agree with that um i mean on oh certain is good um so yeah i will definitely we will i mean just as a reminder on our side we are tech company but we also have a banking license uh so in that regard you know we look into that i think we have a bit of a you know um you know very forward-looking mindset because you know uh most of the the people working at solaris bank among the on the tech side and also even on the regulatory functions and we have people are also like you know uh very excited about this type of topic and we were actually just discussing that today with the team uh you know like uh how banks can participate uh into the or what's the role of a bank into that d5 ecosystem and um you know obviously defies decentralized finance so you know it's a kind of like a bit of an interesting uh question uh to have but i think what would be interesting you know is to offer the gateway and uh to the g5 space and i don't think a bank in itself like you know uh really has a key role into you know managing a protocol or you know building a new service purely in defy but definitely offering that gateway and as oliver mentioned benefiting of some of the opportunity then you can bring to your banking customer via the g5 world is is interesting uh yeah uh johannes let's say you're gonna say something there you know i i agree i mean right now what like for example take paypal right the kind of crypto exposure that paypal is going to offer is is pretty much like a walled garden and that has been commented on like you know a lot in the in the last two three weeks right since the announcement but um so you can't do much with that bitcoin with that that's sitting in your um in your paypal account right but maybe there's going to be some time and there's going to be a day when paypal decides it will give you some kind of exposure to some of these you know riskier markets right so and it doesn't you know it doesn't need to be that you are going to be um you know depositing funds into like an ethereum contract or something but that they if you give you exposure to um some kind of um essentially um yeah asset-like token that um lets you participate in some of the gains right and the losses um so i think that's going to be the evolution of these kind of services they will will be rolled out in stages to be the average um retail client right but very slowly and there's a there's a long runway here right it's not going to happen tomorrow like we're now at the point where paypal again paypal is offering just like essentially something that looks like bitcoin in your in your paypal account right just for essentially um facilitating some form of um exposure to the price the price action uh speculation if you want to call it that um and um not not much else beyond that maybe saving right saving and investing um and and so that's gonna slowly there will be more more use cases for the average uh retail client um to get to gain exposure to these developments yeah absolutely and i think that it can't be understated how monumental of an impact i believe paypal is currently having on bitcoin and crypto and what that is long term i've always kind of said uh crypto adoption happens in two layers number one it happens when the tokenization of assets uh starts really in uh becoming an intrinsic player within the capital markets and that's been happening for some time and will continue to happen but from a user perspective an application perspective when they'll be able to go on through their normal applications uh retail users go on through their normal uh us user experiences ux um and be able to engage with crypto assets without actually really knowing that the crypto is what's effectively working on the back end that's when you're going to really start to see adoption and part of that is seeing groups like paypal and what will be some other financial institutions offering these assets for trading for custody for whatever it may be on their own platforms uh so we're getting near the end of our time and before i start turning it over to uh a q a session we've started to see some questions roll in uh i just wanted to do a really quick round table of the three that we have here uh and unfortunately you all have to answer the question uh what is the one piece that we are still kind of currently missing in crypto that could help expedite the adoption of those financial institutions from entering into the space and not from a treasury management or a investment standpoint but truly being interested in deploying services that are more native to banking in crypto uh alexis we'll start with you so i think you know if you look at like for the traditional financial institution to move into the space you definitely need the regulatory framework to be able to do so otherwise you know it will always be the blocker for this institution to move forward you always have you know a frontrunner and we try to be that way in the in the in the banking space you know uh to try to adopt uh crypto but i think you know looking at for example mika which is coming uh in the in the european uh market i think that will help you know if you really want to see a traditional player moving into the field very very uh good answer definitely something i would align with johannes you're jumping at the bit to get in here so what do you have i had micah on my list but so alex has already mentioned that yeah but but i totally agree i mean you have to say something different i should have qualified with that you have to say something different than alexis rephrase it as uh regulatory certainty certain that's really required i mean that that is that is a given i i totally agree there but something in addition to that maybe is also i don't know how how that is going to happen because that's a kind of really hard problem but bitcoin has a gets a terrible press like go to like mainstream quote-unquote mainstream media and look at how the reporting how you know the headlines about bitcoin and the news about bitcoin it's so often still associated with scam uh you know uh fraud um money laundering laundering the speculation in a very kind of pejorative sense so i think just the the brand of bitcoin has suffered so much maybe during 2017 2018 maybe even before that right just there needs to be more more positive positivity around the notion of crypto assets right and and that's a hard one because it's like a collective action problem it's not one player who can change that but it takes it takes time and i think something like the paypal announcement certainly helps with that right bigger companies with with a good solid reputation um committing to to to the crypto space so so um yeah but unfortunately it's a process and um not like one action item that we can easily knock out so last but not least oliver uh you have to say something different than the other two what is currently missing in our infrastructure that will help expedite uh institutional adoption of crypto services one of our clients uh coin floor did a cool video uh a few weeks ago pre-lockdown um pre-logged down too um walking around hyde park asking people in the street what comes to mind when you think of crypto and the answers were extremely varied uh you know from um well-informed answers to uh you know it's it's you know all across the scale you know people saying it's a scam and that's their strong a lot of people were associating it with fraud and crime and so i think um you know it it's you know we're in this bubble we live in this crypto world and we're completely immersed and we understand problems from so many different angles but the fact is that awareness and and education is still so small in the world so i think my answer to your question infrastructurally is education and panels like this uh and and podcasts uh and uh you know this is all part of the movement for for getting that awareness broad more broadly out there and i think um along with that awareness becomes an un demonization of the whole asset class i think that's what we need no i would certainly agree with you there and what we try to do is really kind of put on our teachers hats and try to drive that educational aspect not just for users not just for retail but certainly the institutions um so i'll give you uh my answer for this um so we actually recently met with a top five bank some of the directors the executives at this bank and basically what they confirmed for us is that they publicly have to be very negative on crypto just because of the powers that be because of their public perspective et cetera et cetera but the second one of the other top five banks goes in they have everything in the back end that they're ready to go they're investing they have their services they're ready to go um so i actually think it's going to take someone to make that leap uh one of the xyz top five banks in the world the second that happens every other large bank is chomping at the bit and they're ready to go as well nobody wants to be first and get their noses bloody i suppose so i'm gonna turn it over to some questions here we've had a couple of good ones come in um one of the first questions we had here is what will be the role for the established exchanges when cbs cbdc's go live in some countries uh coming from one of the most established exchanges johannes i'm going to turn that one over to you that's a good one uh certainly first we need to watch what's happening right we're not there yet i mean like i think for the for the european project i mean christine lagarde just recently two weeks ago put out this notice about like a public consultancy and like they want comments and whatever from industry you know groups organizations so like we're still in the kind of not even the proof of concept phase for for some some of these are a little more advanced right so like it's really too early to to to tell because we don't really know what what are these things going to look like right um you know it's very unclear for example in the in the european for the european project like what exactly is this going to be this is going to be for retail clients right retail franchise is going to be uh some some other kind of um you know you mentioned m1 m2 m3 right all of that has not been determined or decided so yeah we're going to watch from the sidelines for now um and then eventually you know as as always we've always said if there's interesting uh assets right that that are um you know where we have the necessary amount of liquidity and and just a consumer interest and client interest then we will consider listing these assets right in a compliant manner well so i actually view it that it will allow for more liquidity on the exchanges would i be correct in saying so uh yeah i mean yes i think so right so if if we assume i mean if this is really like this might pretty much be a big bang for for for the crypto space right because there's like millions of new use s right new consumers entering entering the market all of a sudden right with a big bang so and and yes certainly that's going to drive a lot of liquidity into the space it's it's not exactly clear it's very unclear how that's exactly going to get allocated that liquidity um and because we have a poor understanding of what that kind of user trajectory is going to be but yes certainly that will also end up with the with the some of that will end up with the exchanges right um so that's our our expectation absolutely uh so we had one question come in here uh hi all how would you recommend a non-crypto native learn uh about the kryptos case and become a bit more crypto fluent um alexis you didn't come from the crypto space and now are very crypto native uh how did you begin learning about crypto all those years ago uh was it at room 77 like me yeah definitely yes you know like you have the blockchain week in berlin which is quite fun um but uh i think you know just the interests you know you have like you can test product uh you know read a lot about it uh and then using different products in you know the usage of it uh you know for me what was like really also a great read you know uh was uh mastering bitcoin uh that book is really like amazing that's a wonderful book yeah and uh you know i always recommend it to everybody who just want to learn more about it to to take on on that one to start uh yeah and i think like you know uh overall like i think there's different products and can in the market you know give you a different type of exposure um and you can like you know grow progressively into what you want to use you know from like self-custodian wallet to like you know custodial wallet exchanges defy and so on and you know going step by step and that's uh definitely uh the way to go yes absolutely um so oliver over to you um do you think that to realistically achieve full crypto adoption that there has to be a hybrid of centralized and decentralized uh characteristics i.e for instance forgetting and about um anonymity um so do we see that uh decentralization is kind of more of a spectrum and there has to be sacrifices before we can start to see full crypto adoption oh boy um well let the philosophy major chime in after this perhaps yeah that'll be great um look i think uh like i expressed earlier i think we're a long way from from from the optimal solution that satisfies everybody's criteria um and and it is where you put the trust along the spectrum you know um so i think um well first of all let's look at the full adoption bit of the question right i think full adoption is um not not really a necessary kind of uh signal of of uh you know the true usefulness of it because today you know you know people's people use money in very different ways everywhere in the world so um it just needs to be critical mass adoption um and yeah i i think you know on the line between centralized and decentralized uh you know uh formats of that money it's um i think that has to be calibrated to to where you are um uh you know if you if you're on the full centralized end of the spectrum um you know here's some examples china's cbdc uh initiatives versus sweden's cbc the the e-chrono that came out in 2017 you know extremely different um uh animals so i think um we will see a hybrid emerge um it's not clear what form that will be um but it's certainly not going to be at either end of the spectrum philosophy majors step in please john it's up to you what was the question about cbdc's or um or generally more more general adoption so uh i mean what level of decentralization versus centralization do we kind of have to forego let's say uh to start to see this adoption because that's the only way that theoretically we might be able to have the institutions become uh available within crypto yeah and again my answer maybe that's you know i've used that one before but there's going to be both of all of it right all of the above because organically we just need to grow like the crypto industry is tiny still comparatively right we just need to grow that thing right and that yes there will be there will be decentralized uh trading venues of course right there should be yes there will be centralized trading venues there will be spot and futures markets and what have the options markets what have you and we need you know many of them and and good ones right secure ones and um so i think again can these things can exist uh alongside and and kind of flourish and develop alongside each other right because we again the space is so tiny and we just need to have a cambrian explosion of of activity right yeah um so not very very good so uh we are now at the very end of our hour i thank everybody for kind of joining us um thank you to the viewers and the listeners for jumping in thank you uh johannes oliver and alexis uh before we conclude though i'm going to ask one final question uh the world's future uh reserve currency do we think it will be as we currently see it or do we think it will be uh cryptographic do we think it will be a cbdc or decentralized it's going to be bitcoin it'll be bitcoin uh alexis what what are your thoughts there what is the what is the timer reason on that question uh let's well i mean it's a good question to ask every reserve currency changes every 100 years or so right the dollar's time might be at the end uh let's say 10 years from now 10 years from now that's a good question uh i think you know the world group currency will probably not be yet a bitcoin in 10 years i think it will take a little bit longer than that uh but uh yeah hopefully there will be you know maybe a couple of like cbdc initiatives that will be out there uh we'll see some competition globally for adoption of currency uh so but i will still say 10 years it will still probably be a traditional non-cryptographic global reserve with the dollar johannes how about in 20 years it will be bitcoin i think that we can all agree to that one uh i might be a bit more of a skeptic on that front i'm not convinced that we'll see bitcoin as the global reserve currency but i do think it will be the global store of value especially as we move toward a more digital world well thank you everybody once again for joining once more that is johannes from kraken oliver from bcb group and alexis from solaris bank here in germany with us we are now signing off thank you for joining our bar on the block we'll have this recording up in about a week or so thank you everybody thank you patrick bye