 Hey everyone, it's Rachel Wolfson here with Point Telegraph. Today I'm here with Henry Arcelinian. He is the Senior Crypto Advisor at PWC. Hi, Henry. How's it going? Great. Great to see you again here in the beautiful Bahamas. Yeah. It's good to be here. Thanks for joining us. It was a pleasure. So, Henry, you've been heavily involved with regulatory issues surrounding crypto and helping draft legislation. Can you kind of talk a little bit about that? Absolutely. As a lawyer, I think, frankly, I find crypto regulations a bit quite exciting, actually. But there's obviously been a lot of developments in the crypto ecosystem over the last couple of years. I think, you know, three or four years ago, the crypto community, we were asking for more crypto regulatory clarity, more policy clarity, and I'm happy to say that we're seeing now around the world some jurisdictions now are coming forward in providing the level of clarity. The Bahamas here is a good example that really came out, provided crypto clarity, and now obviously we've seen the boom that is happening, and we've seen other jurisdictions as well. In the Americas, but in Middle East and Asia as well, so I think that's very, very exciting to see from that perspective. Right. And Henry, you helped draft some of the legislation here on the Bahamas, correct? Yeah. So, I mean, I worked in my PWC global crypto role. I work, obviously, with many regulators around the world, and I think what about two, three years ago, the Bahamas embarked on this journey really to try to provide clarity to the market, you know, and really provide them not only on regulatory perspective, but on the policy-making perspective as well. And I think the Bahamas has been a great example that if you build it, they will come, or at least some of them may come. And the ones that want to come are the ones that want to get regulated, they want to abide by KYC ML rules, they want to abide by institutionalized structures and frameworks in place, and I think this is going to be a great example of why many companies have come here to the Bahamas, and I think for many other jurisdictions around the world, I think Bahamas is a great example now of how if you build a proper regulatory setup, others may come, and you know, there's been other countries now that have been trying to do the same thing, and the best example now is Dubai, for example, where right now you're seeing incredible number of attention, interest, and movement of firms looking at setting up a presence there. Why? Because again, there's been a very clear direction from not only regulators, but also policymakers, that they want to embrace crypto and they want to provide the proper regulatory framework with not only that it's compliant, but also that provides for the particularities of crypto industry, and that I think is a great step forward, not only for the future of crypto, but also the future of money. Right. So why are we seeing regulations and clarity develop in places like the Bahamas in Dubai versus places like the United States, for instance, where it seems like this is still kind of all coming together very slowly? You know, Rachel, it was very interesting just before this, I was monitoring a panel with Chris Giancarlo, the former CFTC chairman, and asked him, how would you rate from zero to 10 the crypto regulations in the US? You know what was his answer? Zero. So it's very interesting to see that actually a lot of these actually jurisdictions have the agility, but also the will to actually embrace crypto and make it a very attractive place. And a lot of these jurisdictions are focused on the future. For example, if you go to a place like Dubai, they're really focused on the future right now, and they know that crypto is part of it. And it's also very difficult if you're, that's called a legacy jurisdiction. And, you know, there's a lot of stakeholders, a lot of traditional finance stakeholders, a lot of stakeholders, let's say, that make money by being those intermediaries. Obviously, there are a lot, many of them are embracing crypto now, but of course, it's not as, it didn't happen as quickly as many would have expected. So a lot of these jurisdictions have this opportunity now to become global hub. It's like Dubai, like the Bahamas, and attract the tier one players to come into a jurisdiction. So I think that's very, very interesting to see as well. So can you give an example of some regulations that are being implemented in Dubai, for instance, that the United States could or should potentially mimic? First of all, I'd like to say I think the United States, let's not forget, is a massive crypto ecosystem, right? Let's not forget that from listed companies, from investors, from startups. So the ecosystem is very strong. I think you mentioned Dubai. Dubai, I think one thing that Dubai did very well is they announced the creation of what they call VARA, the Virtual Assets Regulatory Authority, which is a crypto specialized regulator. And whether you like it or not, when you're specialized in certain industry, you know that vertical very well. And I think as a crypto community, as an ecosystem, I think it's you feel welcome somewhere where the regulator is specialized in what you're doing, but also that policymakers are telling you to come and actually showing the red carpet. And I think this is going to be a big comparative advantage of places like Dubai have. And also, in the case of Dubai, you mentioned that Dubai is obviously already a global hub. Infrastructure is excellent. From a time zone perspective, you wake up in Dubai, you can do your Asia business, it's only four hours behind. During the Dubai time zone, you're doing your Middle East and European business. And the late afternoon, the US wakes up and you can do your global business. So as a hub, and not only that, let's not forget, you're one flight away from anywhere in the world where in a post-COVID environment, I think it's very, very welcome as well. Right. Now in terms of innovations that we're seeing, tokenization seems to be a big trend this year. What are your thoughts? People seem to be tokenizing everything. What are your thoughts on tokenization? I think tokenization is very interesting. I'm very optimistic on the future tokenization. However, one thing that I'm looking at right now is how quickly this is going to happen. I think today, when you look at the whole tokenization space, look at security tokens, for example. I remember very well in 2019, 18, where we're very optimistic on the future of security tokens. And many believe that in the next two years, this would have been a really big, very important vertical of crypto, but it didn't happen so quickly. And I would argue in many regards it's been because the issuers, the ones issuing these tokens, in many cases didn't understand security tokens. I'm not talking about crypto companies, but let's say real estate companies or companies that could tokenize their assets. And on the other side, it's been very difficult because it's been difficult for investors to understand how security tokens operate. So I think that's been one of the things where I personally expected two, three years ago the tokenization movement to happen faster than it is today. That being said, I think other verticals of crypto have been really growing very, very fast. When you look at stable coins, for example, you're like at even the fields of the entry to institutional players, you look at even topics like CBDCs that I think have really grown way quicker than tokenization as a vertical. So institutions coming into the industry, that's really interesting. What are your thoughts on that? I remain very bullish on the continuous entry of institutional players. And I think as an ecosystem, as a crypto community, we should welcome the entry of institutional players. Yes, many would say that actually these players are coming in, many of them are centralized intermediaries, many of them are legacy traditional finance. But I think in many regards these centralized traditional players coming in provide the level of maturity and experience in dealing with institutional investors, which I think could be very, very beneficial to the crypto ecosystem. I'll give you a very simple example today. Any financial institution that you deal with has, for example, ISO certification, they have what we call SOC1, SOC2, Type 1, Type 2. These are very certifications that have been around for 30, 40 years. And what's the benefit? These actually have been in place and they show that checks and balances, 4I principles, policies, procedures, governance, these are all very boring topics. However, they're very, very important. Very good example, the Ron and Bridge hack that happened a couple of weeks ago, $600 million hacked. This was not a problem with the smart contract code, which as a community we know very well, this was a problem with the governance, the policies, how actually certain authorizations were given that were not withdrawn afterwards. And these are things that if we use some of the certifications and policies frameworks, we have developed over the last decades in the traditional financial world as a community, as an ecosystem, we can benefit a lot. So this is why I mean very optimistic on the entry of institutional players. I think they'll be very beneficial. I think as a community we should be more welcoming of on the entry of institutional players as well. Right. So I'm also curious to hear your thoughts on Fidelity introducing the Bitcoin 401k. I think that's a step in the right direction. I think as an organization Fidelity has been at the cutting edge, not on a fintech, but also crypto for some time now. And I think it's a very positive development that we're seeing in the industry. I think everybody in the crypto ecosystem knew this was going to happen. The question is, when is this happening? You know, and right now the fact that we're seeing so many institutional players enter the space, make very active commitments in the space and do it in a very affirmative and relatively quick way, I think is very positive for the crypto ecosystem. I think for us the crypto ecosystem to go from one point old to two point old, we really need the entry of institutional players not only because of the governance and the controls they bring and the institutional maturity they bring in, but in so many regards, the capital as well. Let's not forget the organizations like Fidelity and many others you mentioned, really controls not only billions but trillions of assets overall. And I think having 1% of that come into the crypto space will be very beneficial for the space. Now is this a concept that we're already seeing in a place like Dubai? I mean, in the United States, I mean, I feel like this is great. Dubai, are there other firms doing this already? Bitcoin 401k or anything innovative like that? You know, I think it's very difficult to know what a product by product perspective and the beauty of crypto as you know, many of these products are available around the world. I would say when it comes to B2C crypto products, the US I would argue is generally ahead. If you look at some of the offerings like the 401k offerings you mentioned, some of the offerings are being able to get paid in crypto for example, a lot of these B2C providers that enable crypto are actually, this is a very strong ecosystem in the US. What I'm seeing, I think every region I'm seeing certain advantages and areas they're very strong in. For example, like you mentioned Dubai, you know it's a great hub for any companies looking to operate as a hub. Dubai is perfect for that. If you're looking as a hub for Asia for example, places like Singapore and to a certain extent, Hong Kong were playing this role in the past as well. I think what's important to understand is over the last couple of months there's been a lot of post COVID, during COVID a lot of changes. You know right now if you want to address the Asian market, you cannot go to Hong Kong. Hong Kong is pretty de facto closed unless you love doing hotel quarantines and in God forbid you get tested positive and you go sent to government center for example, right? But I think this is one thing we're seeing a lot of these new hubs are being developed because they're able to take advantage of the situation in certain markets. Right. Now what can we expect next from PWC? Obviously PWC is one of the leaders in the crypto space for the big four firms. So in terms of innovation. Yeah I mean you mentioned PWC is crypto. I remember when I launched the PWC crypto team in the late 2016 and now obviously it's grown to a team that were over 400 people in 25 countries. I think the big four have still a very big role to play in the future of crypto. For example, at PWC the purpose of the company is to build trust in society and solve important problems. And God knows there's a lot of demand for that in the crypto space. And I think for us to let the ecosystem as a whole still needs for the time being trusted third parties that can come and provide this level of trust, comfort and to a certain extent institutional experience that can be very beneficial for the industry. I mentioned before areas like governance, controls, processes, procedures. These are areas where for example all the big four have tremendous experience dealing not only with Fortune 500 companies but a lot of innovative companies over the years. And I think being able to bring this expertise to the crypto space is only positive. So next time for a lot of people in crypto ecosystem you see people from the big four, from the big consulting firms. They're not there because this is the new area they want to be in. I think there's a lot of value they can add to the ecosystem. So I think we should be welcoming to these organizations. Great, well Henry thank you so much. Thanks for having me. It's been a real pleasure. Thank you for having me. Thanks for having me. Thanks for all the good work you guys are doing. Thank you, thank you.