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Webinar: 3rd Global Cryptoasset Benchmarking Study & Legal and Regulatory Considerations for Digital Assets

Thank you, everyone. I hope you can hear me OK. My apologies for our late start this morning. We had some Zoom challenges on my end, which I hope have been resolved. And I assume, Neil, everyone can hear me coming in loud and clear?

I think so.

Very good. Well, welcome everyone to our webinar presenting the findings of two recently published research reports by the Cambridge Centre for Alternative Finance. The first report is our third Global Cryptoasset Benchmarking Study, which provides a very broad and descriptive overview of the global cryptoasset industry, the developments over the past year, 18 months since we published our second benchmarking report.

This is, in fact, our third report. Our first report was in 2017, so the benefit this year is, of course, we can incorporate some comparative analysis, given that we have undertaken this particular report, this research effort, twice before. And this comparability is very timely, because clearly I think everyone participating today is very aware of the surge of interest in cryptoasset-related developments this year.

I mean, we see the price of Bitcoin through this COVID period of instability up over 150%, ether up almost 300% since the start of the year. But we did see something similar to that sort of a price run-up in cryptoassets in 2017. But I’d argue that this time it is different. And I think we’re seeing signals of institutionalisation. I think one of those signals is the acquisition of cryptoassets, particularly Bitcoin, by corporates.

Roughly, some estimates would say, close to 5% of Bitcoin is now held by companies. So why? I mean, there’s a lot of speculation as to whether these are hedging strategies. But I think we’re also seeing, to some extent, reaction from regulators that historically, the sentiment tone has been quite resistant to providing, shall we say, accommodating frameworks to facilitate institutionalisation.

And so I highlight the SEC’s recent announcement in the United States regarding cryptoasset ETFs being under serious consideration. Now I know that, for example one of our supporters of our research for a long period of time, including this research, has been Invesco. And I’m not singling Invesco out specifically, but I know that certainly in my discussions with very large asset managers, this is something of real interest.

So should that environment arrive, I think we’d see the emergence of a number of different financial instruments which are crypto-based, or embedded, that would propel the development of the industry. And so the timeliness of these reports, then, is very much in line with some of this surge and very serious interest regarding material developments in the industry.

And this raises us, I think, to the importance of the second report, which is examining the legal and regulatory considerations of digital assets. And again, when we talk about ETFs, when we talk about tokenization financial and real instruments represented in a encrypted form, let’s say. We can get into, I think one of the issues we’ll talk about today is this important issue around terminology.

What do we mean when we say virtual asset, or digital asset, or cryptoasset before we even get into stable coins or CBDCs? But I think this issue around the legal considerations is taking on significant importance, because a lot of the research involving the crypto space has been focused on the technology. And obviously, blockchain and DLT research is closely related in this regard.

But I think this report puts the private law considerations front and Centre, right under the microscope, given its importance as a foundation of commercial certainty. So as we talk about these trends towards commercialization, or institutionalisation, the issue around commercial certainty, probably along with regulatory certainty, and there’s a lot of interrelationship between the two, are really quite critical.

So we’ve been very, very fortunate in this report to benefit from our engagement with the Stock Exchange of Thailand that really provided, in effect, a real world test bet for some of our conceptual thoughts and frameworks of how to approach this area. I hope that they’re participating today, because they’re a very valuable resource for us to get out of the bubble of Cambridge, and kind of the so-called ivory tower and actually test these things a little bit in the real world.

So and again I’d like to just reinforce our thanks to Invesco supporting the research. And I hope you find it an engaging discussion today. There’s a series of panels. I think if the team could put up the agenda, I think that’s probably worth running through at this point if I understand our running so we can– yeah. So obviously, I have spoken for a few minutes here.

Shortly, I’m going to introduce Dave Dowsett to provide some introductory remarks. You can see here that Dave is a Global Head of Technology Strategy in Emerging Technology and International Innovation for Invesco. That title, since I’ve known Dave over the past few years, seems to have expanded. We’ve now got international plus innovation plus strategy. That’s quite a mouthful.

So I’m sure he’ll have a lot to say about everything we’re talking about today. Then we’re going to move into the presentation of the key findings on the global cryptoassets study I referred to earlier. Then a presentation of the findings from the legal and regulatory considerations research around digital assets with Jason Allen. And then Keith Bear is going to moderate a panel.

You can see them, I think, on the video here. A great set of panellists. Q&A with Keith Bear. I’ll provide some closing remarks. So we’re going to tie everything up by 1:30 our time, which is GMT. And welcome, everyone, because I know we’ve got a lot of people coming in from around the world. So with that, I’m going to introduce Dave Dowsett to say some remarks. Dave, if you could come in please.

Well, thanks, Bob. So good morning, afternoon, evening, everyone. And welcome to today’s webinar. We’re thrilled everyone could join us today. While the global pandemic has created a new paradigm for working, and everything going virtual a clear positive is that we can now do more global events more easily for cryptocurrency analysts which I’m really excited about.

So as Bob said, my name is Dave Dowsett. I look after really our emerging technology, data science, intention innovation to name a few. And really before we kick this session off, I just wanted to say a few words. So first, thanks to really the Cambridge Centre for Alternative Research. For those who don’t know, the CCAF is a research partner for Invesco.

And we really are proud to support and sponsor the academic and research work coming from that Centre. Today, we’re here, as Bob mentioned, to promote awareness and discuss two recently released reports, and really, again, this year does mark the third iteration of the Cryptoasset Benchmarking Report.

And this report has been instrumental really in understanding from a global perspective of how blockchain distributed ledger and cryptoasset technologies are being adopted and evolving at a global scale. Really, as Invesco dives deep into the exploration of new distribution models for fractionalized assets and crypto custody, this report serves as a valuable asset in understanding the pulse of how that landscape is changing year over year.

Additionally, the legal and regulatory considerations, really the study highlights the need for more maturity and coordinated global legislation and administration around digital assets as the technology outpaces the regulatory environment.

So while many governing bodies are beginning to examine the space more critically, really further clarity is needed as the digital asset space continues to grow. So with all of that said, we hope the audience finds value in the conversation today. And we really encourage you to download the reports, if you haven’t already. And I’m going to hand it now over to the panellists for introductions. So thank you very much.

Yes, so if I could pass over to Apolline I’d like to introduce Apolline, who will present the Cryptoasset Benchmarking Study results. Thanks, Dave, again for your support at Invesco. And Apolline is our lead in cryptoasset research in the CCAF. And Apolline, can I pass the virtual microphone to you to take it away?

Thank you. Thanks, Bob, and hi, everyone. Oh. Yeah. So, yeah welcome to the webinar. So I’m going to walk you through the key findings of this third edition of the Global Cryptoasset Benchmarking Study. I’ll start with a quick overview on the methodology we used for that benchmarking study. And then I’ll walk you through the key findings of each section of the report.

So for the methodology as usual, as for every edition of the Cryptoasset Benchmarking Study, we used two surveys, one aimed at service providers, such as exchanges, payment service providers, and custody service providers. And another survey for all the actors that operate in the mining industry. And I think this year was quite successful, because we got about 280 responses in total.

That’s 56% increase compared to our survey sample of 2018. And I guess the reason for that is that we had a much larger coverage thanks to the fact that the survey were translated in eight different languages. And as usual, we had partnerships with local industry associations and local media to help us distribute the survey to local actors.

So if we move on to the next slide, it just gives you a quick background. Yeah, a great quick overview of the geographic breakdown of the different respondents. So the pie chart on the left shows you the geographic breakdown for service providers respondents. And as we can see, that sample is primarily dominated by European actors, followed by actors from Asia and Pacific

And that trend is slightly reversed if you look at the sample for mining respondents, which is primarily dominated by Asian respondents followed by European. I think what’s not suitable for this year compared to the previous editions is that we had a much better coverage of activities and actors in Latin America and Middle East. In particular, for service providers.

So I think that was an achievement for us this year. But again, we’ll have to improve on that in the following years. So the first data point I’d like to discuss, which is on the next slide, relates to data we’ve collected about full time equivalent employees at cryptoasset companies. And the first trend, really, is that, perhaps unsurprisingly for most of our listeners is that the massive increase in employment growth that we observed between 2017 and 2018 has significantly decreased between 2018 and 2019.

So all respondents across all market segments reported a year-on-year employment growth of 21% in 2019, down from 57% increase in 2018. But what is interesting is that if you compare the industry aggregate, it actually differs from what you will see at the median firm. And that is because the industry is generally dominated by large firms that have been less impacted by what the industry has called a crypto winter, and the decrease in activity.

As the table shows you as well, the different regions in the world have been impacted differently. So Europe and North America have been the least impacted by this slowdown compared to Asia-Pacific, Latin America, and Middle East and Africa. Again, we noticed a difference between the industry aggregate and the firm level figure, the reason being that, again, you have large firms particularly dominating in Europe and in North America.

Moving on to the next slide. So that’s some of the key findings from the cryptoasset usage section. Here we only rely on what we call off-chain data. So these are data, again, that we collect through the survey directly at service providers. And that kind of provides a complimentary story to what you will find in analysis by chain analyst or elliptic or any other firm that rely on chain data.

And the first thing we look at is the type of coins being supported at service providers. And what is interesting this year is that, again, Bitcoin is unsurprisingly dominating, the reason being that it’s highly convertible into other cryptoassets, or into sovereign fiat currencies. But the major trend from this year, and in particular if you compare with 2018, is the increase in support of stablecoin like Tether and other stablecoins.

So if you look at the Tether figures, for instance, in 2018, 4% of service providers were offering Tether among other coins, compared to 32% this year. So that’s really a trend that echoes other figures we’ve seen from other data providers. That is showing that stablecoins are becoming more and more available, and also that more value is being transacted using stablecoin.

Another point that I think we were quite surprised by is that the support for privacy coins like Zcash and Monero keeps increasing, despite the fact that there is additional regulatory scrutiny over the usage of this type of privacy coin. Moving on to next slide. Here it’s the focus on transactions and activities that are taking place at exchanges.

And what you can see if you look at the first bar chart at the bottom is the type of trades that are taking place within the exchange. And so as we see is that the majority of exchanges of trades are happening between fiat and cryptoasset, or cryptoasset and fiat. And this is the case across all regions. And that justifies the fact that exchanges aren’t being primarily used by users to access and exit the cryptoasset ecosystem.

So this is why we call exchanges fiat offerings. However, if you look at the figure from Asia-Pacific what is interesting is that Asian exchanges record a much larger share of cryptoasset to cryptoasset trades, about 41% on average. And we provide several possible explanations for that. The first one being that users are probably getting on-boarded on European or North American exchange, then migrate to Asian exchanges for trading purposes.

And the reason would be first of all that a larger share of Asian exchanges have an order book compared to other exchanges. That would simply be brokers in other regions. They also tend to support a much wider range of coins. So I think on average we found that Asian exchanges support about 40 coins, compared to 13 in Europe. And they also may be a bit notoriously known for offering greater leverage to their users.

So the table at the top right gives you an overview of that. So the median leverage, highest leverage multiple is about at 15. But we know that some exchanges offer up to 111 leverage to their users. The next slide provides you an overview of the transactions and the destination of transaction when initiated at exchanges. And it actually confirms what we were discussing earlier.

So if you look at the right of the chart, this is the destination of the transaction. So open market is if you like the equivalent of order book. Internal accounts is an account at the exchange. And external wallet refers to a transaction that will later settle on-chain. And if you look in particular again at Asia-Pacific, we see that a lot of volume is actually directed at the open market, which means that very little volume actually leave the platform.

And that most transactions are– a lot of volume is generated on the APAC exchanges. That’s a trend that we also observe when looking at the difference between small and large exchanges. So large exchanges tend to have a higher average of transaction on the open market compared to small exchanges. Moving on to the next slide, which looks at the geographic distribution of the customer base of cryptoassets.

So in 2018 we estimated the number of unique cryptoasset users at around 35 million. And using the same methodology, we this year estimated that about 101 unique cryptoasset users. The reason being that there is– well, potentially possibly more cryptoasset users, but also the methodology we used relies on the share of KYC being performed. So the number of accounts being linked to an identity.

And as we’ve observed with a lot of regulatory development is that now a lot more of service providers are performing KYC checks, and linking in an account to a user. And what the charts can show here is that firms primarily serve customers in their region. That was also an observation we made in 2018. Maybe it’s slightly less true for companies operating in North America, and Middle East, and Africa.

One possible explanation would be that North American firms had a very aggressive internationalisation strategy, which has probably been very successful. The following slide looks at the breakdown of customers by customer types. If we can move on to the next slide. Thank you. So that has been a very hotly debated topic in the cryptoasset industry, and Bob pointed to it in his remarks about whether institute investors are starting acquiring cryptoassets.

And it’s true that you have had a lot of research pieces that pointed into that direction. So for instance, we recently read the Fidelity report that indicated that about 36% of institutional investors in Europe and in the US have cryptoassets in their portfolio. But what is interesting is that our data still points to the fact that cryptoasset customers are still primarily retail users.

Although, we noticed a difference for European and North American firms with on average 30% of their customer base coming from institutional investors. And these institutional investors could be cryptoasset hedge funds, but also more traditional ones like asset manager, traditional hedge funds, or family offices.

The next section looked at regulatory and compliance, which is a very important topic when discussing cryptoassets. And the first data point is about the cost of compliance. So over the years, we’ve surveyed companies about the share of resources they are allocating to compliance in terms of human capital but also financial resources.

And so what we see here is that half of European service providers report compliance headcounts and cost equal or greater to 13%. And that’s higher than in any other region where the median is around 8%.

And again, one possible explanation is that there’s been a lot of recent regulatory development in Europe that have increased the cost of compliance for European firms. One point, though, regarding North American firms. Although the median is at 8%, when looking at the distribution, we actually see a lot of variability and variation across North American firms.

The reason being that– I mean, we suspect that the reason is that some firms decide to operate across all US states, and so have to deal and comply with a patchwork of regulation. Whereas some might decide to avoid certain states where the cost of compliance is much higher. The next slide looks at the licencing regime and the type of licences or registration held by service providers.

So that’s actually data that we collected manually, and also in partnership with CryptoCompare. And so we’ve been able to identify a licence or registration for about 45% of companies we surveyed. That doesn’t mean that the remaining 55% are avoiding regulation. They might as well be offering an activity that is not yet regulated, or operating in a jurisdiction where there is no regulatory regime for cryptoasset activities.

And what was interesting is that of the companies we’ve identified– for which we identified a licence, 42% of them hold what we call a crypto-specific licence. And what we mean by crypto-specific is a licencing regime that arises from the introduction of a bespoke regulatory regime, like what you see in Gibraltar, or in Malta. But also the new type of licence that comes from legislation being retrofitted.

So, for instance, Japan. They amended their Payment Service Act to include cryptoasset exchanges, and now cryptoasset exchanges need to get a licence from the regulatory authority. And so when they don’t hold a cryptoasset-specific licence, then some service providers held payment or e-money institution, being registered as a money service business, or held a training facility or broker dealer licence.

The following slide relates to AML and KYC obligations. And what the chart here shows you is that there is a difference between companies that exclusively support cryptoassets, where about 48% of them perform a KYC check on all of the accounts, compared to 82% for firms that support both fiat and cryptoassets.

Actually, it’s a significantly high figure for cryptoasset-only firm. Because in 2018, we found that only 13% of cryptoasset-only firm performed a KYC check on all the accounts. And the reason for that significant increase is actually two-fold. First is that companies are definitely performing KYC more frequently.

But also, the fact that a lot of companies that used to exclusively support cryptoassets in 2018 now support fiats equally. The reason being that with new regulatory developments, the cost of compliance for supporting exclusively cryptoasset or supporting both fiat and cryptoasset is not the same.

So we saw about 30% of companies that we surveyed in 2018 now offering fiat currencies among the assets they offer. There is also a difference between the firms depending on the region of operations. And so what we found is that the share of accounts owners whose identity was tied to a joint account is very high in Europe among European and north American firms are approaching 100%, on average.

The next slide looks at the audit of cryptoassets reserves. Again, another important topic for cryptoasset service providers. The listeners might have heard about different discussion going around what we call proof of reserves. So these are actually taking advantage of on-chain features to be able to audit the amount of cryptoassets held in reserve by service providers.

This is not widespread at all. But what is interesting is to see that when other companies don’t rely on the type of on-chain independent audits. Some of them are performing more traditional externally led audits. And so we found that about three out of five service providers did conduct an independent audit of the cryptoasset reserve in the first 12 months. And this is mainly happening among Asia-Pacific and North American firms.

The next slide is about insurance plan. And I think that’s a really important and kind of an elephant in the room. Really a topic that is not discussed enough when talking about cryptoasset service providers. And it’s the first time we asked the question in the survey. And what we found is that nearly half of service providers are not insured against any risks.

And surprisingly also, we didn’t find any difference between firms that held their customer funds, so what we call custodian, versus those that do not hold customer funds, the non-custodians. And so as you see here on the charts, I mean, the distribution is fairly similar across region.

When firms are insured against risks, they are primarily insured against cybercrime, professional service error, or loss or theft of private keys. So I think that’s where we’re going to see a lot of development in the coming years. And the final section is a brief overview of the mining industry.

And so we have a deep dive in the reports. Actually, it’s the second section of our report. And the reason being that we felt that mining is sometimes overlooked, but there is actually a lot of activities happening there. So the graph here is just to remind everyone about the composition of this mining industry.

And all these actors, so hardware manufacturers, hashers, pool operators, or cloud mining service providers, or remote hosting service providers are the type of actors that we survey in our mining survey. I guess a very important and hotly, again, debated topic when talking about Bitcoin mining, or cryptocurrency mining, is the subject of environmental impact of mining.

And so if we move on to the next slide, yeah. So that’s a topic that we started addressing already in 2018, and also again in 2019 when we launched the Cambridge Bitcoin Electricity Consumption Index, which provides a near real-time estimate of the amount of electricity consumed by the Bitcoin network.

And this year, we also used the survey to gather more data about the share of renewables that is contributing to powering Bitcoin mining, and any other cryptocurrency mining. And so what we see here is that 76% of hashers we surveyed answered using some renewables as part of their energy mix.

And when asked about what share of the total consumption come from renewables, what we found is that on average, 39% comes from renewables. And when I say renewables, it’s primarily hydropower. And the reason being because a lot of money is taking place in regions like Szechuan, where there is a lot of surplus of hydro power electricity.

So you have, again, a real focus in the report, so I’m not going to explain too much on this here, where we have a breakdown of energy sources per region. So if you are interested, you can further look into this. The next topic is still relating to mining, is the type of hedging strategies that miners are using. So we can move on to the next slide. Thank you.

Again, that’s the topic that was not very much discussed outside of the mining industry, but which I think is important to bring to everyone’s attention. So recently, there’s been a lot of development of new type of financial products as we might have heard of Hashrate Futures, or difficulty forwards.

And there was a lot of discussion within the mining industry to understand what share of miners were actually ready to use that type of sophisticated financial products. And when asking the questions to miners about their hedging strategies, what we found is that they still rely primarily on simple hedging strategies like holding cryptoassets in reserves, or fiat national currencies.

And only a small share of them actually use more sophisticated financial products, like Hashrate derivatives, or cryptoasset derivatives, and primarily for hashers based out of North America. And I’ll end the presentation with a final slide, which– so we have a couple of sentiment questions in our survey, and we provide most of these findings in the report as well.

But for today’s presentation I just chose this one, which is about service provider’s perspective on the impact of future developments in the next 12 months. And so here everything is ranked according to Europe. But what is interesting is that you can see that across regions, service providers have ranked stablecoin as the most likely to have an impact, the most impactful events in the next 12 months followed by staking and decentralised finance.

Perhaps surprisingly the fact that CBDCs, central bank digital currencies, are ranking so low, and in particular for Europe, might be due to the fact that we asked the question before a lot of the very recent announcements were made, such as by the European Central Bank here in Europe. If we were to ask the question again, we might see a different figure. And I’ll end the presentation there. I hope I wasn’t too long, and that we have enough time for some questions and answers.

Yeah. Thank you, Apolline. Well, our running time here is super tight, and so I am itching to ask questions. But we have a superb panel that we’re going to introduce with Keith. I’m going to leave it to them. And we want to move right on to Jason. So Jason can present the results of the next report.

And just for background, Jason is a senior research fellow at HU Berlin, and he’s a research affiliate with the Cambridge Centre for Alternative Finance. So Jason, I’d like to pass you the microphone, please. Welcome. You have the floor. Please try and stick to your timing, because I really want to get to the panel with Keith because we have some great commentators that I’m sure as itchy as me to ask some questions about the reports and debates and things. Cheers.

OK, thanks. Thanks very much, Bob. And I will do my best to stick to time. Good afternoon, from my time zone. To everybody tuning in, good evening, to everybody tuning in from the time zone where I’m originally from. It’s quite an effort on a Friday night. I’m presenting this report. It’s very much a product of input from myself and my co-workers Apolline, and Michel, and Keith, especially in later parts.

As Bob introduced, this was, or this independent academic study is based on a consultation that we ran with the Stock Exchange of Thailand. And we had really valuable input, not only from the SET, but also from a number of stakeholders, including the Bank of Thailand, other regulators, and market participants.

And so thanks, also, especially to the SET legal team from whom we learned a lot. This report, the background was the legal and regulatory considerations that an entity would have to take into account when establishing a digital assets platform, or exchange platform.

This required us to look at the Thai and international regulatory framework, but also Thailand’s mixed legal system, which means it’s a civilian system based originally on Roman civil law, but with some common law and other elements. And we had a set of ad hoc regulations, for example, a 2018 emergency decree on digital asset businesses.

In general, we found that the first wave of literature on digital assets, especially since the heady days of 2017, were really focused on regulatory law and regulatory responses. And kind of assumed digital assets private law treatment. Regulatory law moves a lot more quickly than private law. Private law is general rather than specific, and it is often pretty treacle-bound in the conceptual framework of the legal system.

And we found that really local legal practition is the best place to answer some of those pointy regulatory questions. And so we concentrated our efforts on a comparative analysis providing international perspective with best practises and so forth.

But also engagement with the less immediate but no less important questions that arise when you’re looking at different models of setting up a digital asset exchange platform, and thinking about the actual mechanics of how digital assets are transferred and are exchanged. So in this report, it’s legal and regulatory considerations, but we do emphasise those private law core legal considerations.

And that’s also what I want to focus on a little bit today. This report, I think, is quite important at really opening a dialogue. Hopefully a broad dialogue on these sorts of private law questions. And I, for one, do consider some of them to be almost logically prior to the regulatory questions. And so we’ve had, in some cases, a little bit of a cart before a horse, and now we’ve got a valuable opportunity for readjustment.

I think the time is very ripe to move on to these sorts of private law considerations as Bob mentioned. The cryptoasset market is maturing. It’s institutionalising. Corporates are becoming involved. And so these questions are going to become more important than ever. So if we move to the next slide, this report consists of four parts. My presentation will be less diagrammy and more wordy. But so I’ll just move through.

We dealt with asset taxonomy. We dealt with legal and regulatory implications of digital assets. Part three of the report looks at activities in the digital asset ecosystem. Part four presents a conceptual framework, which I think might be of interest to many listeners to read afterwards. And then we’ve got a brief summary of key findings.

So if we move to the next slide, we’ll get stuck straight into asset taxonomy. This is a really tricky question. The CCAF for its part, has adopted the position pretty consistently over the last couple of years that cryptoproperly defined, are a subset of digital assets. And this report really underlines the importance of that distinction for tracing coherently the distinct legal issues that arise in the case of cryptoassets as the CCF has defined them, and digital assets more broadly as the CCA has defined them.

I think at the very broadest, digital assets, as a term, includes every conceivable kind of digital data that’s treated as having some economic value by persons. That’s obviously too broad for a study of this type. What we’re really talking about is not, for example, personal browsing history, even though that has immense economic value.

We’re not thinking about moving personal browsing history around on a digital assets exchange. We’re probably thinking of discrete transferable units of data, and most of this will, almost inevitably in this year, I think you’re going to have something DLT-related in the back of my mind if not at the front of it. This has led us to think in a broad three category scheme where cryptoassets are very narrowly defined.

And we define them as digital tokens that are issued by and transferred over an open and permissionless network with no formal operator that play an indispensable role in the economic incentive design of the underlying shared ledger or application. So really this covers the core cases, is something like a Bitcoin.

What we’re talking about with digital assets in the broader but not the broadest sense, again really in sort of heuristic, pragmatic terms, what we’re mostly talking about here is tokens of off-chain assets. We might call them digital twins.

We might call them containers. There’s no established terminology at the moment. But what we’re talking about is some sort of digital representation of something else, be that a cryptoasset narrowly defined, some conventional kind of financial asset, or be that a right in a real thing, such as a bar of gold, or a piece of real property.

There sort of is an open question that we don’t address so much in this report, where the border between these narrow digital assets and digital data most broadly is to be drawn, and that will be a question for us going forward. I think the most important take home at this stage in terms of taxonomy and definitions, is that for the most part, non-cryptoasset digital assets raise the same legal issues as their pre-DLT counterparts.

They are much more easily accommodated into existing legal categories of financial asset, which are generally rights against the counterparty, or rights in a thing, and the container or the token is less important than the rights that it actually represents. Cryptoassets raise some unique questions because they don’t represent anything else.

And they sometimes have more trouble fitting into established taxonomy, or conceptual scheme of certain legal systems. So if we move to the next slide we start to look at some legal and regulatory implications. And this is just a graphic from this section of the report that makes the point that when we move into the digital space we can’t assume that are received sort of categories of property going to just operate seamlessly and without adjustment.

For cryptoassets as we’ve defined them, the major question is whether they’re fitting objects or property rights. And in particular the right of ownership. And if so, how they behave down the whole cascade in private law as objects of lesser rights, of security rights, of pledges and so on and so forth.

For digital assets besides cryptoassets, the question is slightly different. Most of them are sort of tokens of other rights. And so the crux of the analysis here the crux of the legal sort of consideration is the bridge, or the link between the token and the off-chain assets which underlie it.

One well known early mover, Lichtenstein, uses or has adopted a statute which adopts the metaphor of a container to express this. And they would say cryptoassets are an empty container, and other what we call digital assets, or container with one or more rights in there. Now with full containers the assumption is generally that when we deal with the container, when we deal with the token we’re also ipso facto dealing with the things into which it refers, with its underlying.

So if I transfer you a gold token, I somehow also get some right to the gold. And it seems that that’s sort of the general assumption. But actually working out within the context of any given legal system how that works, and making sure that that works reliably, and that that works sort of certainty, and gives financial markets the degree of legal certainty they need is not necessarily straightforward.

One major question, for example, is how dealings with this sort of digital twin, which is often in a register that’s privately maintained without a statutory footing, actually causes changes to the legal position. And if we look at the official state held registers like land registers, dealings with entries in the register are constitutive of legal dealings with those things, such as the land.

Again we can’t assume that in the case of a privately maintained register. We might be very safe to assume, or reasonable to assume, that that’s going to be a strong evidentiary basis that there has been some legally effective transaction. But that that’s the question that needs to be asked.

The law, I think, governing these digital assets other than cryptoassets can also get very sticky, because it potentially ramified and touches on every area of substantive and procedural law. So as soon as we’re dealing, for example, with tokenized real estate, interests in the land are often subject to special regimes.

And we need to make sure that the privately maintained register, and for example the publicly maintained land register. If we think of my home jurisdiction of Australia, we’ve got a torrent system of land registration in which non-registered interests are meant to be non-existent. We need to make sure that these two things jell and that we don’t have parties operating on an assumption which turns out to be ill-founded.

For policy makers, one key finding here is that regulatory authorities should avoid to the extent possible parallel regimes for conventional and new digital assets where the objects and associated activities is similar. So if a company issued shares using DLT, they should be treated, as far as possible, like company shares, and not like some newfangled entities.

Other issues which I won’t even touch on here are like to remedies, possession transfer, encumbrance, and collateralization and private international law treatment. If we move to the next slide, however, section three of the report looks at activities and actors in the digital asset ecosystem.

Now I won’t go into so much detail here, but I would very much recommend that you take a look at this part of the report. I think it’s quite useful as a practical tool. It breaks down each stage of the digital asset lifecycle, as it were, into different activities. And it flags novel, legal, and regulatory issues for consideration under each phase, and by each actor.

It compares what actors are new, challenging incumbents, and what activities are being undertaken by incumbents. And I think this could provide a useful primary tool for market actors and regulators alike. Here, one of the key findings is that regulatory authorities should explicitly distinguish between custodial and non-custodial service providers.

And we think that the former should be subject to stringent cyber security and governance requirements, have strict refund policies in place, and be subject to regular audits. If we move to the next slide, this is just an example of one of the elements that we examined under a conceptual framework. This section is fairly ambitious.

Hopefully it generates some conversations and debate. It really attempts to zoom in and present a conceptual framework that can be used to analyse any kind of asset, and identify the kind of legal issues that might arise in its lifecycle. So it is really a product of the four of us sitting down, each from a different discipline, and spending a day thinking in very broad terms about what is an asset?

When does a thing– when is a thing appropriately called an asset, and what sort of different categories of assets do we have? What’s the difference between a financial asset and just a thing, a chattel, or a movable object? What’s the difference between a movable object and a piece of land?

And this is an attempt to integrate economic, technical, and legal points of view. We base it around four dimensions. What rights the asset gives its holder, the form of the asset’s representation in reality, how the asset is issued, that means created and distributed, and how it’s transferred.

This table here sets out our analysis of the third element, representation, by way of illustration. Because currently the legal implications of different ways of representing value are a live question for lawyers. The framework is designed to be technology agnostic and to be developed.

It certainly is not a closed scheme. We anticipate and we hope that new components categories could be added as technology and business models develop, and we might also refine this first stab at a conceptual framework, and I would very much welcome anyone to get in touch.

Really, what we want to do is to achieve a standardised way of assessing different design options of assets that lead to meaningful and reproducible comparisons. And the idea is that in the interstitial spaces at the nexes of some of these different design choices, legal and regulatory issues can be flagged with precision.

If we move to the final slide, this is just a heads up to watch this space. There’s some really wonderful work going on, particularly on the private law of digital assets. There’s the Oxford Digital Asset Project, which is led by Professor Louise Gullifer, who I’ve noticed, I’m very flattered, is tuning in.

There’s great law reform projects at the National level, including a recently announced Law Reform Commission of England and Wales on, I think, digital bills of lading in the first instance. And there’s also fantastic comparative law and legal harmonisation projects at the regional and international level the European Law Institute has a project on access to digital assets.

And UNIDROIT, again, I’m very flattered that some of the secretariat and members of that distinguished group are tuning in, has just held its first meeting in a project on digital assets in private law. So over the next couple of years, I think that we can expect– and it would be remiss not to mention the 2019 legal statement on cryptoassets and smart contracts in English law from the UK jurisdiction task force.

I think that in the next couple of years we can expect real movement in this space towards the kind of legal certainty that this market needs. Thank you very much, and back to you, Bob.

Thanks very much, Jason. That’s a great overview, and now I think I know our panel has been itching to start to debate some of these issues. I know Keith, and I can see his body language. So Keith, I think you’re going to proceed without much delay to introduce your panel. We have a great panel.

And what I’m going– and Keith, I think, will be also looking through the chat as questions are coming in from people that may be relevant to the panel. The chat feature’s often very useful, and I already see some interesting comments coming in. So without any further delay, Keith, I’m going to pass it over to you. The floor is yours.

Thank you very much, Bob. And I have to watch my body language, obviously. I’d like to introduce the panel very briefly. We have David Reed, who leads distribution strategy and innovation at Invesco. We also have Jennifer Lawrence, who’s Senior Counsel for Regulatory Affairs at Digital Products and Innovation at MasterCard.

We have Lawrence Wintermeyer who’s the co-chair and Guarantor of Global Digital Finance. And finally, Michel Rauchs, who’s a research affiliate at our Cambridge Centre for Alternative Finance. So we’re very fortunate to have a very distinguished panel in front of us. So in the interest of time, I’d like to kick off with a quick question for you, Michel. I mean, you were in the unique position as a co-author of both reports. What was the surprising findings for you from the cryptoasset report that Apolline covered?

OK. Thanks for unmuting me. Yeah, thanks Keith. So I think what’s interesting is that there’s nothing really that stood out in particular. So nothing that was really that surprising. So I think we can see it more as an empirical confirmation, really, of what we’ve been seeing and also expecting over the last year, and also the beginning of this year.

So during what’s colloquially called crypto winter. So an environment characterised by, let’s say, a lack of price action, and also less media attention. So as Apolline mentioned in her presentation, growth has slowed down, but I think it’s important to highlight that it nevertheless continued. So firms kept hiring and that is evidenced by the growing FTE numbers.

But we’ve also seen new business models and services emerge. So there has been a lot of activity really going on quietly in the background. And another thing worth mentioning is that we’ve observed greater regulatory compliance across the board. So one data point here is that, for example at European and North American service providers, nearly all customer accounts have been going, or have been KYC-ed, which has not been the case in previous years.

So I think that definitely speaks to the professionalisation of the industry. But also the stricter shall we say, regulatory supervision and requirements that many firms are increasingly subject to. Now that being said, what’s equally interesting is what’s not included in the study. So keep in mind that data was collected between, I think it was March and May 2020. So that was when it was really relatively quiet.

And then came summer, and with it’s DeFi, or decentralised finance. So the idea of really a modular financial services ecosystem with repurposable apps that build on each other. And so when we started collecting data, that was quite tiny. And it has now grown, during the summer, only Ethereum alone, to, I think, about a $14 billion industry within a span of a few months, right.

And so I think this is really testament to the dynamic nature of the ecosystem, and also just the fast pace of developments, which is really enabled through permissionless innovation. And so just the fact that there’s so much happening in such a short amount of time really makes it nearly impossible to catch up, or keep up with everything.

OK, Thanks, Michel. And it’s good to see you. [AUDIO OUT] such a [AUDIO OUT] 101 billion, I think, from the earlier survey, up to 191 billion opening by servicing cryptoasset option. I hope you–

Keith?

Yeah.

I think your connection is quite bad. We can’t really hear your question.

Can you hear me now? Hopefully this is a little better.

Yeah.

Lawrence, good. Sorry about that. The report highlights an increased estimate of the number of cryptoasset unique users to 101 million across 191 million accounts open to 2018 where the figure was 35 million. What do you think has been the biggest driving factor in this growth of users?

Well, that’s a great question, Keith, and particularly trying to single in on the biggest factor I think often as market analysts, we’re consumed with looking at data as you as academics are. And looking for factors and analysing the drivers. So having looked at all of the data, here’s my assessment.

Crypto is popular. Bitcoin is popular. And people are consuming it because it’s doing a job for them, and it has a high degree of, utility whatever it is that they’re doing with it. And I think that most people would recognise when the financial system was broken in 2008, and we took away broadly the growth engine, particularly the thing that drives wage growth and inflation.

And we’ve ended up in an economy now where government debt is low yielding to negative yielding, and there doesn’t seem to be any growth in the economy. And government debt is really the largest market in the world if you discount the derivatives market.

That now the smallest market in the world, if you accept that cryptoassets is an asset class is performing in an outstanding and uncorrelated way. And so people want to access growth. I think it’s as simple as that. It’s weathered the storm. It’s certainly weathered the COVID crash in March. And I think that it’s increasingly become, particularly for private market investors, part of a risk-adjusted portfolio strategy.

And so Robert mentioned the growth, particularly of corporates and estimates of 5% of Bitcoin holdings being held by corporate treasurers. I think between that sort of estimate, the growth of the swap market, the growth of the derivatives market, which is I think more than 60% over the past year, which is really driving risk-adjusted, and neutral strategies.

And then the growth of the perpetual market which, again my community is focused on, but it’s difficult to really size it. 10 times the size of the derivative market are estimates that are flying around. And so I think simply, look, with an average growth rate in Bitcoin of 80% over the past couple of years, whether you’re in sub-Sahara Africa, or Latin America and you don’t have the G7 or G20-focus we do, you’ve got currency devaluation.

Whether you had money, your pot is smaller, whether you have very little money, it simply offers a very attractive growth rate for you. And most people in the world don’t really care about central bankers, or regulators, or FATF, or the things that we’re always trying to solve for the G20 countries. I mean, they just want growth, and they want to be able to make money. So darn popular right now.

OK. Thanks very much for that. Turning to you, Jen. Can you make any additional comments on how you see this developing in the future?

Yeah, I know. And I would just underline everything that Lauren’s just talked about. And this industry, the whole crypto industry very commonly is compared to the evolution of the internet. And I do think that it’s a very useful comparison. And when we look at how the internet evolved from when it was first created.

I mean, it took multiple decades for even the browser to come on. Took another decade for our social networks. And all of those kind of major events really brought on new users, and made it what it is today, where virtually everyone has access to the internet, and everyone uses the internet. And I think that that’s very similar to how the crypto industry is progressing.

We’re only a decade in, and I think just over the past year a lot of trends will very much continue going into the future. I think the investments in the infrastructure, and I think the increasingly easy user interfaces through a lot of these intermediaries like your Coinbases, and Krakens, and different intermediaries are making it a lot easier for not as technically savvy people to engage with cryptocurrencies.

And I think you see that alongside the regulatory community. Even if they’re not openly embracing crypto, they’re recognising that there’s very, very advanced technology driving it, and that it’s something that needs to be harnessed and fostered just in and of itself as a technological innovation to be competitive in the global economy for national security, a host of different reasons.

And so I think between those two factors, you see a lot of people who had never looked at cryptocurrencies before really starting to give it a second look. I mean, we’re seeing it– at the outset, it was mentioned from the institutional community with companies putting their corporate treasuries in Bitcoin. You see major companies like PayPal and of course, Facebook, or Labour Association looking at this.

And depending on the trajectories of their user bases and how their crypto offerings progress, you could have hundreds of thousands, if not millions of people, suddenly having wallets who they’ll start engaging with it. So I think we have a lot more user adoption that we’ll see in the actually pretty near term, and then obviously the longer term as more of these regulatory clarity and technological advances continue.

Great, thank you. So turning to David, the report also shows that the share of service providers supporting stablecoin, this is one of these charts Apolline showed, grew from, I think, 4% to 32% over the last couple of years. How do you see the broader stable coin market developing in the future?

Yeah, thank you Keith. I think, excuse me. I think, and very much to underline a lot of the things that Jennifer and Lawrence brought up in their answers earlier. I mean, very much we’ve seen a huge surge of interest, I think, in the whole cryptoasset space, some of which has been as a result of COVID. I think that’s made people think about the world in a very different way.

But very much, I mean, I think stable coin is the bridge between fiat currency and digital assets. And in many cases, to really leverage the kind of changes and efficiencies that we can bring about through accessing digital assets, some stablecoins are very much, I think, the path to that.

And I think that the whole world, the view of stablecoins has changed in the eyes of large financial institutions, in terms of regulators, in terms of the central banks. And I think that was brought out in some of the presentation summaries we saw earlier.

There’s a lot of activity now with the central banks in terms of evolving their own stablecoins and digital currencies. And then you’ve got some of the near central bank, like some of the consortiums. Things like finality, and their utility settlement coin and so on that’s now already in kind of in pilot usage between financial institutions in terms of how they’re passing payments between each other.

So you’re starting to see this whole thing become more mainstream, and I think that will increase as we move forward. And then I think just to underline another point, which is this whole concept of the people with limited access to traditional banking and traditional finance is unbanked to the population of the world.

You can see a parallel between how that telecom evolution took part where they kind of leapfrogged the traditional telephony infrastructure and went straight to mobile. And in some instances, I think we’ll see the same with kind of stablecoin enabling that access to financial inclusion that we’ll see in some of the developing areas of the world.

Great. Thank you very much for those comments. So, Lawrence, if we could turn to regulation. I know that Paul pointed out that two out of five of the firms that were surveyed in the cryptoassets survey were licenced, or in the process of obtaining a licence, those mostly in Europe.

I just wonder what your views are on the regulatory landscape affecting cryptoassets, and in particular any comments you might have on the MiCA regulation that’s being proposed in Europe. Lawrence, yes.

Thank you, oh god, of unmuters. Yes. I mean, let’s take a global counter through some of the things that are going on. And again to just build on some of the comments that have been made by our two other panellists. In the US, OCC’s crypto guidance has come out, and so we’ve seen Kraken apply for a banking charter.

The CFTC’s going ahead with prosecutions, and most people understand that the CFTC doesn’t have a conduct oversight over anything outside of the derivatives market. But they have a fraud mandate that they’re pursuing. And the SEC, I think Robert did mention this as well, the SEC is looking seriously at crypto ETFs. But again, the swap market is the biggest issue that most regulators appear to have with things like ETFs.

In the UK, the FCA has announced a ban on crypto derivatives for the retail market effective in January. Hong Kong has proposed a new crypto licencing regime, which looks as if it will ban retail clients from the swap market. We continue to work with the industry on the implementation of FATF R16, which is the travel rule for VASPs and regulators who implement VASPs

And then again back to stablecoins. I think most of the headwinds coming out of the G20 in 2020 has been dominated by stablecoins, and this is an important. One, the global system doesn’t like the idea of a global stable coin, and that was fairly clear when Apolline and I were out there last year for blockchain week listening to them talk about Libra.

I don’t think they have a problem with jurisdictional fiat stablecoins, but let’s wait and see what comes down to regulation pipe. But stablecoins are important in that they were part of the emerging DeFi ecosystem. They’re at the heart of the DeFi ecosystem, which will pick up in a minute.

But there is quite a few global headwinds as well coming out of the global apparatus around DeFi and things like hosted wallets. So I think we’re all paying attention to that. So coming to MCA, I think MCA really does offer a comprehensive crypto and digital assets regulatory framework for Europe, which will get everyone, retail, professionals, institutionals into a single regime.

So I think that’s positive, and certainly the Americans and the Asians have paid attention to this. This is a pretty big and important move. I think the consensus certainly in the community is it is a bit backward looking, in that a bit of it is a knee jerk reaction to again global stablecoin and stablecoins.

The Idea that it’s focused on treating digital assets that are particularly representative of current asset classes like securities will be treated by MiFID at first. And there is a bit of retrofitting, but I think most of us understand that something security is a security. What makes a tokenized digital security, and then does it become a derivative? These are the questions we’re all working through.

But it also appears to favour incumbents rather than earlier stage firms. And so again, Keith, in the global digital finance community, we’ve got a massive technical advocacy team of patron advisory council members working on this. But I think broadly, we welcome it as a comprehensive regime. And so the last thing I would pick up, though, is DeFi. I know a few folks have mentioned it, and Michel mentioned the size of the estimated Ethereum market at $14 billion.

I think this is important, because I’m spending a lot of time with policymakers and regulators on this now, and I think the industry really needs to understand that a market that’s doubled in size from $7 billion to $14 billion and that doesn’t appear to be controlled by anything, and that’s entirely algorithmic without accountability, it sounds anyway to regulators. I know that’s not the case. I’m digital long. I’m a fan. I represent industry.

But it looks very similar to the ICO bubble, which is in fact why we set up global digital finance to help the industry deliver better standards and re-engage the regulators productively on how we can all work together. So I think we really need to pay attention to this because we don’t want regulators retrofitting yesteryear’s regulation from an industrial era moving into a 21st century digital era.

Equally, I don’t think it’s helpful for innovators to walk around talking about transforming the lives of millions of people, particularly when it looks as if right now many of the products have significantly large risk profiles, and probably aren’t suitable for retail clients in any capacity. So I think we need to proceed with caution on that front.

OK. Thank you very much for those comments. So maybe if we could switch over to the broader subjects of digital assets, which as Jason mentioned, are really a superset of cryptoassets. So Michel, how do you see these two worlds developing in the future? Is there going to be a case of them, a little closer alignment, or is it going to be a question of merger or integration? What’s your view on the future landscape?

I think that’s a really good question. We do not have a definite answer to that. So I think we’re going to see. But I definitely see them as complementary, really. So they will coexist. On the one hand, crypto has more, let’s say, new, funky asset class. And then on the other hand, digital versions of shall we say conventional asset classes that pursue the traditional functions.

So what I think would happen is that there will be increasingly overlaps in terms of the supporting infrastructure. So talking about custody solutions, trading venues. Also those one-stop shops where you can really issue, distribute, track, store, and transfer tokens. And so I think what will be interesting for investors and users is that you will have one single interface through which you can access all of these different asset classes.

And so that’s also this idea of digital wallet essentially becoming really aggregators of digital tokens or assets that you can interact with via a single interface, which doesn’t really exist today. And so I think if you look at Paypal’s recent news about offering crypto products, I think that is part of that larger play as sort of testing ground to incorporate other assets.

So I definitely think there will be an integration, but there will also be some sort of separation, which is based on the underlying networks. Which way now– well, shall we say, if everybody issues a token on Ethereum, they’re obviously all compatible with it.

Now, that is not going to happen, I think, for a lot of the more traditional, conventional asset classes. So you will have isolated networks where you will have to facilitate sort of controlled interaction between them. So we should expect a greater focus on interoperability, and so really expect to see this further develop.

OK. I think you raised some very interesting points, and good opportunities for startups to be looking at, maybe, in terms of your comments there. Turning to your, Jen. Here in Europe, we have the Swiss Digital Exchange, SDX, due to start hopefully live operations next year in terms of digital assets. And then we also have claims from various parties that there could be no limit to how conventional assets could be tokenized.

I just wonder how you saw these two tracks, if you like, of innovation as things develop along the lines Michel was talking about. But also the regulatory envelope that Lawrence was talking about. How do you see that developing from a US perspective, and from a global perspective?

Yeah, well that’s the million question, right? How are these two things going to coincide going into the future. And I do think that it’s really helpful to look at how the regulations have progressed even just to today. And kind of what I see is at least somewhat of a turn towards the positive. So there’s no question that regulations have lagged behind.

I mean, regulators themselves have widely acknowledged this, particularly in light of the deficiencies that Libra has shown, where there are gaps, deficiencies, retrofitting, et cetera. But a big reason for this is that regulators to date have been very reactive. So whatever technology in the crypto space has come into being, regulators are not ahead of it.

There’s usually some time, and then they take some sort of reactive stance based on whatever their policy priorities are. So in the US, it’s very much focused on preventing financial crimes, and consumer and investor protection. In other jurisdictions, it’s actually different. It’s very focused on harnessing and promoting that technology as we see in some jurisdictions like Malta and Gibraltar.

And that obviously leaves other jurisdictions take a very hard line, because they see it as a threat. So you have your China, your Russia who very much just outright ban certain aspects. And so that’s really one of the reasons why we’ve gotten to a place where we have such a patchwork of retrofitted fragmented regulations, and it’s really difficult to do anything particularly by an industry that really wants to do this in a regulated way.

I think any company would say, or innovator would say, oh, I don’t want to be regulated, because that’s just more work.

But in this space, being regulated means that it’s legitimate. And you have that clarity that you’re not going to be thrown in gaol, right, very seriously. And so I think going forward, regulators are much more attuned to this issue. And I think that they are trying to be more forward looking. I think their work in CBDCs actually will help this.

So I do think that there will be more regulatory clarity around a lot of this stuff, which will pave the way for some of the things that you were talking about, Keith. But I don’t necessarily think, at least in the short term, that it’s going to be easier. I think things will continue to be fragmented.

Again, even if you have certain conceptual agreement on how something should be regulated across different countries, you’re going to have different policy motivators as to how exactly to treat it. And I think that we’re still going to be stuck with this sort of at least in the short term, what I like to call this square peg, round hole thing that I think actually Lawrence was actually giving great examples for, where we have these new and innovative things that we’re trying to do, and regulators reacting to it.

And rather– because just needing to do something in that moment, we don’t have a new set of laws to deal with this new technology. So we’re going to try to retrofit it, and stick it in this round hole. And it just doesn’t necessarily fit or work, and I think that we still have some years of pain of that to go through. But I do think that the trajectory is in the right direction. It’s just I think we have some more bumps along the road to get there.

All right. Thanks very much. So last question we’ve got time for, David, if I could just turn to you. We’ve touched on tokenization of digital assets, obviously. I just wonder what your view was of tokenization of alternative assets, because obviously Invesco was a large global investment manager, if you have major funds focused on real estate. There’s also discussions on tokenizing of things like private debt. I just wondered how you saw that market developing.

Yeah. I mean, I think absolutely. I mean, alternative assets are increasingly on client agendas across the spectrum of clients, in terms of where we see as an industry trend there’s a move to passive investing. So people are constantly looking for OK well in addition to that, where can I get my outperformance? Where can we generate alpha?

And looking at those kind of alternative markets is something that has been going on for a while, and will continue. So when we look at how those markets work currently, they’re often concerned with assets that are not necessarily as liquid as others. So there’s some liquidity issues that sit-in there. And the whole concept of tokenization would theoretically seek to address a number of these things.

A lot of these private markets are not as seamless and as efficient as some of the more traditional asset classes that we see. There’s a lot– potentially more manual intervention and less transparency, in terms of how they are administered. And the whole kind of the advantages that some of the DLT technology brings to the table in terms of transparency, the immutable nature of the thing, and audit trails, and all those good things all play to give the appearance that those markets will that makes that a whole better experience.

I think to go back to some of the points that have already been raised, that the way– there’s a lot of talk about the democratisation of alternative assets, and how we can suddenly miraculously offer real estate to everybody in the world. And I think we’ve seen through some of the things that have been a result of the large market adjustments we saw as a result of the pandemic.

And some of the liquidity issues that came from some of the existing alternative asset products. That isn’t something that can be miraculously solved even with tokenization in its final form. And we’re also seeing a different approach being taken to that from different regulators. So there’s a certain amount of regulatory arbitrage going on in that space.

However, I do think that’s a market that will continue to evolve. I think it will probably drive a lot of the innovation and product development in the tokenization space as we see, and I think as everybody expects, tokenization becomes more and more prominent in terms of product development and product availability.

Great. Thank you very much for that, David. I know we’re just about on the half hour. So we’ve just about run out of time. So I’d like to thank you all for the very insightful comments that you’ve made. It’s great, and it’s great to have such friends of CCAF as Invesco, GDF, and Mastercard. So we’re really grateful for your cooperation and your partnership. So I’d like to hand back to Bob just to close the seminar.

Well, I’d like to add my thanks to Keith, to Lawrence, and to Jennifer, and to David, and to you, Keith, for hosting the panel. And also Michel, who it’s great to see you after a long time. I think, really, I’d just wrap with one observation. When you talk to regulators historically, they love to say that they’re technology agnostic in their approach to regulation.

And I have to say, I’m left wondering if we’re now solidly in an era of post-technology agnosticism when it comes to regulatory interpretation and development, because I just don’t buy this technology is not agnostic approach thing. I think we’re past it. And I think that’s one of the key, I think, insights that I’ve taken away from listening today and I suspect regulators are going to start shifting over to that reality.

But anyway, I’d like to thank everyone for listening in again. Thanks to the panel. We’re closing right on time, and so please, everyone, have a great day, and have a great weekend. Thank you.

Thank you very much.

Thank you, everyone.

Thank you very much.

Thanks.

Thanks, everyone.