 All right. Hello everybody and thank you for joining us on a Thursday at 3pm for what I promise you will be a riveting discussion about global regulation and crypto currencies if the quality of the commentary in the speaker group was anything to go by. I'm going to start with a very brief round of introductions just to sort of set the stage on the folks that you will hear from today what their various interests of interest and in some cases disagreement might be. And at the end we will have some time for questions at that point I will be that person who says please actually ask a question and not merely make a comment on the state of the world. And I'll also ask you to stand up just so that our colleagues who are providing the live stream for this will be able to include you in those shots. I'm just going to start with the gentleman closest to me. Klaus cannot you are here in two capacities at least for this particular panel. You are the chair of the FSB which has very important roles to play in the context of opining on financial stability and persuading people that this is an important thing for our overall financial ecosystem. And you are of course president of the central bank of the Netherlands. Thank you for joining us today. And immediately following we have Commissioner Marie McGinnis who is challenging portfolio just I think in terms of scope financial services financial stability and the capital markets. Thank you for joining us. Brad you have perhaps the shortest title Garling House. You are the CEO of Ripple Labs. But you have I think one of the more complex interactions with some of the regulators that we will to be discussing about today. So we will certainly be hearing from that. And last but not least we have his excellency Omar Salton who is representing the UAE. And again very interesting portfolio that encompasses remote work artificial intelligence and digital assets all of which are hot topics here in Davos. So thank you everyone for joining us. Now if you have been to any of the other sessions recently you may have heard any of the following words. Sam Bankman freed Bitcoin tokenization digital assets stable coins fraud scams hype excessive exuberance and regulation. And we will tackle if I manage this time correctly most if not all of those things. And I want to start by acknowledging that at the time of this panel we are in an environment in which if folks have heard about crypto and crypto assets and if they have an opinion on it it tends to be one of two reasonably polarized things. Best idea of all time worst thing ever. And the spectrum of opinions here on the stage is neither of those right. What we are going to talk about is the messy and much more interesting middle which is given the existence of a set of underlying technologies known as the blockchain and the existence of an entire ecosystem from centralized exchanges to banks that work with those exchanges to companies dedicated to providing services in that universe. What is the appropriate rule of regulation here. And your excellency I like to start with you because the UAE has over the past several years emerged as a jurisdiction with what is described as a lighter touch approach to digital asset regulation. Can you just give a sense of what that is and why. Thank you Stacy it's an absolute pleasure being both of you today. I was promised one ripple to be on this panel. So in all honesty I think the first and foremost thing that I want to describe is the UAE's journey with crypto started in 2015. We hosted the first round table where we just wanted to actually understand what this is and understand if it's worth regulating or not. At that point of time let's say the adoption was quite low and people were still not sure what the utility was. So we thought let's follow it but let's not regulate it at this point of time. Today our regulations are actually not lighter than most other jurisdictions. We have very extensive regulations but maybe it's not promoted as you'd like on most platforms. Let's talk about for example Vara. We've heard that FTX is a license so Vara is so virtual. So we have a sorry we have an authority in the UAE called the Virtual Assets Regulation Authority and through that people have heard that FTX and Binance and some of these other platforms were licensed. But the fact of the matter is we don't have a single license exchange in the UAE. What we have is a four step process. The first is called a provisional MVP license for these exchanges to come and open up their activities for us to understand exactly what they are. They're telling fraudulent activity internally. Does this actually check out as a business. Is there anything that the government needs to really dig in to. And then they go through something called operational MVP license which goes and looks at their operations goes and sees for example do they enforce KYC and AML measures. Know your customer and anti money. Yes. Know your customer and anti money laundry as well. And then finally they're actually given something called a full market product FMP which allows them to bring in customers. So not a single exchange in the UAE was able to onboard any customers even until last week. Now I would like the for the European perspective here just for a second. That is by the kind of the framework of Micah which is wending its way through the process seems still even if it's not necessarily light or touch in a lot of ways much more focused on like exchanges in one particular part of the market. Commissioner McGinnis can you just talk a little bit about what the markets and crypto assets regulation is trying to propose and how it may be similar to or different from the approach of other countries and states. Well we started working this before my arrival into my role. So there was a concern that this existed. So in one sense we had three options. Let it happen without. So turn a blind eye banish or regulate. So at this stage the marketing crypto assets has gone through all the legislative process. It's not just implemented yet but it is coming. And the idea is that a license is granted to these operators which is across them. The member states they can operate across the member states. But really in my view regulation is about knowing what's happening out there. Understanding that there can be checks and balances so that we don't just say we're regulating we then actively do that. And I think the recent experience of those dramatic events in the whole crypto area has reassured us that we're doing the right thing and that I would like to implement soon and we will. I think beyond that it was interesting your observation my technology. So I want to be very clear that there is a difference between technology and how it is used. So we're also conscious that we don't want to stifle innovation. So we have already some pilot projects around DLT. Disturbing said ledger technology. I'm just going to say you're passing all of the tests. So well done. So my apologies for that. I used to be like this. It gets to you after a while. So we have actually you know we're doing the right thing around trying not to stifle innovation but not having as we say a wild West. And again I want to put back to the real world which are the people out there not in this room who invested like the youngsters on apps. We all have young people in our households. This is happening before we even knew it. Lots of people have suffered. For what has happened now. So while the consequences may not be immediate for financial stability for individual stability both financial and mental health this can be very dangerous. So the idea of something always going up we know does not exist. But if nobody ever tells you that and you're quite young and you dabble a little and then you dabble more and then you borrow to dabble in all of this. That is a hugely damaging societal issue. So I think that in one sense where we are today because of recent events which we would all rather didn't happen people will be more aware of the downside. And that's one of the upsides of recent events. And I think then beyond that but it's probably too early to throw it in at this stage is none of us really know where digitalization tokenization will bring us. And we need to be mindful to do it a step by step basis and watch very carefully on each of those steps. Chair. In October 2018 you delivered a speech that was titled The Evolution of Power of the Blockchain which is a very early period to be giving such a speech on. But one of the things that you identified in there was that a concern about the potential intersections between traditionally regulated financial institutions and crypto assets. And you even made the point that regulators don't like the phrase crypto currencies because crypto crypto is not money. Can you talk about what the potential risks are. You know we've heard about the need for consumer protection. We've heard about the importance of New Year customer and anti and anti money laundering. We have had in the United States for example Silvergate Bank experience a multi billion dollar run on the bank in part because of its exposure to FTX it laid off 40 percent of its staff. It was able to tap a federally provided lending reserve that is only available to banks but not to crypto companies. You know. So even if we have CEOs like Jamie Diamond out there saying I think his latest is Bitcoin is hyped up fraud there are other banking CEOs who are clearly interested in playing in this area. Yeah. Well thank you very much also for having me. If I had been offered a ripple by the way then I would probably have had to decline the invitation XRP not Ripple's the company XRP is the token. Yes. Anyway. But on let me begin also by saying that the FSB also has a sort of single punch line for digital innovation and that is trying to harness the benefits of innovation while mitigating the risks. I must say though that over the last year or so we have been so busy with this letter part of this punch line. The risk mitigation part that clearly there has been less attention on the tables that I joined on on harnessing the benefits part. But I guess that's also the role that you expect from a global community of regulators to play. Now like Commissioner McGinnis I would also say that many of the risks that we've seen in the last few months are not all that different from risks that we also saw elsewhere in the financial system in earlier episodes. And they have a long long long history of the financial boom bust cycles etc. The difference this time is that they appear in a digital manifestation. But essentially this is about liquidity mismatches which make some of these platforms vulnerable to runs. It is about creating expectations of ever increasing prices which are of course to go to be true. We know it. There are the dangers of leverage. People taking speculative bets. Well you can't stop them from doing it but speculative bets do turn into a financial stability risk if they're leveraged bets. So that's what you want to avoid as much as as possible. And then of course there have been all these kinds of interconnections within the crypto space that have raised serious issues about governance about conflicts the rediscovery of counterparty risk the rediscovery of counterparty risk etc. So our effort has been on the scale of banning isolating containing traditional incentives based regulation to of course come up with a regime where all three elements need to be part of it when it comes to illicit activities where unfortunately too often crypto assets do play an important role in the financing of money laundering of drug trafficking of illegal arms trading etc. That is clearly areas where you find them where I think bans are appropriate isolating slash containing that is where you try to keep at least that those parts of the traditional financial sector where leverage plays a huge role away from cryptos as far as possible to contain what I spoke about in 2018 the possible sort of contagion effects from the crypto world to the more traditional traditionally regulated parts of the financial system. And then yes you have the normal incentive based regulations which are again not all that different. They are same activity same risk same regulation investor protection transparency separation of funds all these kinds of things. And the business is global in nature. Many of these crypto assets are offered from places that I would call sunny places for shady people. You give an example. Well I think we all know the kind of locations that we that we're talking about. So we need to have a global framework to regulate this. It doesn't make sense to just have national approaches. I think this is truly global global in nature. And so we have been working concretely and then I'll stop on updating our regulations on global stablecoin arrangements and coming forward with a new set of recommendations for what we call unbacked crypto assets or other crypto assets. They are now in the open for consultation. So we are looking forward very much for sort of the first pitch of the panel. And then we hope to finalize these two sets of recommendations by the summer of this year. Now Brad you have already made the distinction between XRP the token and Ripple the company. You are the only you're a regulated entity or you're speaking on behalf of a regulated entity when folks talk about these different sorts of provisions. You are the person or your various teams doing the paperwork providing evidence of baseline trustworthiness. What is it like to be a non bank financial service provider operating at the intersection of these very traditionally regulated financial institutions and less traditionally regulated less traditional financial institutions. It's exciting. I feel a obligation to advocate for there are these new technologies that we can use for the betterment of economic value to our citizens to our businesses even to central banks. And I think to the extent we can focus on that. Hey these are new technologies that can be used in that way. Like the earliest days of the Internet can these technologies be used in illicit ways. Yes. And certainly we saw the early days of the Internet and people called for bands of the Internet. And to be clear the current days of the Internet as well. Oh yeah I guess. Yeah. Well though there is a much louder higher decibel level call that and maybe the 90s when people are more intimidated by how these technologies being used. And I think we're seeing that play out in the world of blockchain as well. I thought it was interesting you described the UAE regulatory as light touch said it's described as light. Oh described like that. Right. I actually give huge credit to the UAE. Do you have a license. No we do not. Although we might. I don't know the exact answer to that. But we do not currently. The point I would make though is you do not. Thank you. The point I would make though is the UAE has done the work to codify what the regulations are. I think the challenge you know and we discussed this before we got up here. I think the vast majority players in the crypto space want to be good actors. But I think we have to be clear about what that means. And I think one of the challenges is and I very much agreed with some of the commissioners said we talk about regulating crypto. I think we should. That's an abstract thing to say to me from my point of view. We need to regulate the activity. But what is it that we're doing. So Ripple is in the business around crossword payments. Our customers are banks. Our customers are regulated institutions. You can't have a non KYC know your customer transaction etc. There are lots of regulations around payments like know your customer like AML anti money laundry like OFAC compliance in the United States etc. Anti terrorism finance. So I think when we say crypto is not regulated I hear that I think I don't know what that means. Like Ripple is a very regulated company and lots of different jurisdictions not yet in UAE perhaps. Although I don't think we I don't know the exact status. The point as much as anything I think it's a misnomer to describe crypto as an unregulated business in the U.S. You have in the SEC someone at the chair saying it's the Wild West. Look there are clearly examples where that's true. But there are a lot of people doing solving real problems for real customers and taking the air and the froth out of the hype and speculative bubble that really was true in crypto. I think it's really healthy. I think one of the challenges here is there are actually very few people describing crypto as an unregulated business. What they're saying is that it is insufficiently regulated and that there are certain types of activities you know separate out the obvious and egregious fraud scams and grift. But there are certain types of activities that are either being presented to customers as potentially safer than they are or you know the promise of guaranteed returns when there are no such thing or in the U.S. for instance many investors and certain of these crypto companies several of which have now gone bankrupt were under the impression that their deposits were insured by the FDIC which is that up to two hundred and fifty thousand dollars of whatever the deposits were would be protected. And that was an impression that was in a lot of ways encouraged by the marketing and the advertising of certain types of these entities. But we have laws about that right. And now frankly I think instead of going after Kim Kardashian for promoting a case was dismissed but I didn't actually know that. I think we have the things you're describing and even we talk to begin backstage if there's fraud we have laws about that in major but I think what I would love to get the perspective of the commissioner on is that it is not always just explicitly fraud sometimes it's just misrepresentation or in fact you know something I hear very often which crypto folks like to say was like well do your own research. Like it's a very easy thing to tell a venture capitalist with a team of people who are supposed to be good at this to do your own research and it's a very different thing for a 17 year old who's being advertised at on you know Superbowl advertising for instance to make informed decisions. I think we need to step back a little because if you look at the origins of crypto whatever we call it acid or liability some I think many would have set out on the basis that they did not want to be part of the establishment and therefore did not want to be part of the traditionally regulated sector. That feeling has not gone away you know. I think some do understand the need for regulation. So I think we're still in that battlefield of those who believe that crypto and everything around it is the future. And that dare I say central banking and monetary policy and all those things are the present but not the future. And we have to have that public conversation and we haven't had that. So we have to in my view there are two groups really there are those who still hold to this future that they can create but haven't quite described what it will look like. And those who understand that you need to be part of the system of the regulatory system. Now you're right in saying that the activity of some of these should be impacted by other pieces of legislation with crypto because nobody can see it it's kind of an invisible thing. It's just gone it has if you like gotten away with more before regulation has actually been put in place because not all of crypto is bad but certainly not all of it is good. And you know I think we also need to say as we sometimes with the digital euro proposal we need to be able to communicate what is the value of crypto today. Where will it lead us tomorrow. And had we not put some regulation in place how much worse could this be. Because there's a bigger it's there's more of a societal issue around this as well. If I and I do listen a lot I talk a lot too but I try and listen. There are two different camps around the financial system. There are those of us who are older not wise about older and no system. And there are those younger tech savvy different outlooks on finance different outlooks towards assets. And we need to make sure that there isn't a mismatch completely here. In one sense we are as well as the traditional regulators. I would like to think we regulate in a way to help those who see a vision for the future. But they haven't in my view articulated that vision beyond some believing as the taxi driver told me his son had millions in Bitcoin. There's when I worry. So in one sense we have to have the public discussion. The recent events have allowed this discussion to at least start. But it's maybe not always taking place in the forums that need to hear it. So I still think there are those who believe that crypto is the future and that it doesn't need regulation. And we have to fight against that not because we want to trap them or restrict. But it is because when there is a problem and I say when who will be asked to tidy up if it's a big problem the traditional system will. Your excellency in you have shared stats in the past that's something like more than 20 percent of the population of the UAE holds and at least one NFT and that 35 percent of the people there own crypto folks in the UAE or at least with KYC addresses in the UAE were identified as being among like the top creditors to Sandbank and Frieds FTX International. And how do how are you squaring this reality of you have a population that is pretty exposed especially on a global scale to this asset class with the need for investor protection education regulation all of the things that we're discussing here. So it's the first that I hear of some of those statistics but the reality of the matter is I read an article about four percent of those who were affected by the FTX scandal were based in the UAE. And I actually started to dig into this to try to understand where this number came from. The first thing that was clear to me is there are other jurisdictions that had higher percentages was whether it was South Korea or the UK or you know other the Bahamas was a highest I think. But the other thing is how do you actually understand what this means. Does this mean that there was KYC done on that person or the address was just something that people thought was in the UAE. Second is that they have a dollar or a thousand dollars because actually assessing the value of the impact is as important as understanding where people are being impacted and was that account active or inactive maybe the accounts were just domicile accounts had not removed. The fact of the matter is our job as regulators is always to try to be proactive and to protect people as much as we can. Whenever people adopt a technology we have a young population. So naturally we need to ensure that we move faster than others because a young population is going to be embraces of technology. The third thing is we actually looked at this technology. I wanted to understand other than crypto where can't be used. Is it something that we need to invest in from a talent perspective or not. What we aim to be is the highest talent per capita country on earth and bringing Web three talent bringing talent that's working on blockchain is fine Web three. So Web three I think is the future of the Internet. It's the convergence of the metaverse is the convergence of blockchain technology. And I think some of the features of Web three is quite exciting. So I think if you actually think about blockchain and the traceability behind it and the fact that all transactions are actually transactions that are legit and cannot be removed or raised is a positive thing for the world. It's easier for you to trace someone who has transacted through Bitcoin for example then called hard cash. Right. If they bought drugs or if they did something that is in terrorism financing or money laundry as well. The challenge is there are some cryptos that are shady and we know this and we need to regulate against this. But we are going through an evolution process. Our job as a government is first to work with everyone necessary to ensure that people are protected across geographies because this is a currency that lives on the Internet. It does not live in the UAE does not live in the UK does not live in the Bahamas. The second is we need to ensure that we are agile without policies because there are going to be bad actors trying to always play around with the legislations and the rules that we put in place. And third is we need to protect the talent because there are some really talented people in the space that we want to embrace. I think them calling the UAE home is definitely a positive thing. Now when you talk about people 30 percent or 20 percent hold NFTs I actually don't understand how we can calculate this number. If it's just the wallet addresses one person can have five wallets or ten wallets. So it can be one person holding most NFTs and people think that 20 percent of the population. I want to I want to pull on that point and you know I want to ask you this question which is on the one hand you have this tension between the idea that if you use Bitcoin five years ago we can figure out if you bought drugs with it. And on the other hand we don't know who owns NFTs. How as a regulator are you thinking about this simultaneously of this profusion of information and kind of like an absence of context and knowledge in understanding what is a legitimate activity and what's illicit as you described it earlier. Well that's quite a difficult distinction to make. I mean of course these activities don't have illicit or it's not like label bad stuff label labeled on it. So I think there are separate authorities that that sort of have to oversee and make sure that anti many money laundering is being prosecuted etc. There are different privacy authorities that have to take sort of a close watch on on on whether or whether the data standards are actually upheld etc. But you cannot expect all of that from traditional financial financial regulators but I would say therefore there is also a responsibility of the industry. I mean if there is an industry with good and bad guys you cannot just be in a good guy sort of look at the regulators and say oh it's your job to sort of wield out the bad guys and yeah well that there are also bad guys is not my case. No I think you also have a collective I think responsibility within the industry and to make sure and that you don't legitimize the activities of the bad guys if you even if you are convinced which you probably are that you are a good guy within within this industry. So you cannot expect public authorities to solve all these problems. Brad let's talk about crypto Twitter for a second because we have to. I actually want to talk about the UAE because let's say that you are a person who ran a hedge fund and then blew it up expensively and extravagantly. Why is your first point of call like Dubai. Right. Why are why are folks who are emerging as people in crypto who are very influential who are very critical of other actors in the space trying to align themselves with certain regulatory jurisdictions. And you know Brad I'm going to ask you this person and ask for his excellencies opinion is is there in fact a self policing mechanism for the crypto industry when so many of these folks seem to have more than nine lives certainly and the ability to try to fundraise again while in active litigation with various governments. I guess my comment reaction is only what I've read. You know I saw this week that the three arrows capital guys are raising a distressed crypto debt fund. That made me scratch my head a little bit. Look again I think about this is an analogous to OK when a hedge fund blows up birdie made off. We should look at OK what what went wrong there. Why didn't we see that coming. I think what happened with FTX. We is a very very similar and very analogous to what happened with made off. Well I'm going for you to deny all allegations. I know sorry. Yes. Allegedly. I don't I know nothing proprietary of consequence here. I think it's important that we are regulated for sure. The point that I was making is I think the activity is what typically has been regulated regulating technologies is a little bit more complicated. Understanding how a technology is being used to touch a business to touch a consumer to touch fill in blank. We should absolutely have laws around that and we should protect consumers. I'm actually intrigued by your thought around kind of the self policing mechanisms and you know as you said it I was saying but you know how could we do a better job of that. You know and frankly one of the things that came to my mind is I think you know the several people in the hedge fund industry had reported made off time and time again to the SEC and for whatever reason they didn't investigate. I do think you know we do work with law enforcement at Ripple and we do file suspicious activity reports and again we're only working with regulated endpoints. So we're somewhat unique. I will say I agree with you that the origins of crypto were absolutely anti government anti bank. You know the origins of these technologies and how these technologies can be used can be very very different. And as time goes by I think we spend less time talking about Mt. Gox and Silk Road and more time talking about. Here are real enterprise scaled use cases where it's not an experiment. You're talking about billions and billions of dollars going through Ripple's technology platform. Can I ask you a second. Sorry because I think you mentioned about Dubai and I just want to say something here. So if you look at Sam Backman Freed and Americans are living in the Bahamas most of the money that was invested to promote FTX was you know to name a stadium in Miami or in the U.S. spent in the U.S. mostly. And I think he just visited the UAE once. All right. What happens is today you have a brand name Dubai sells. I think any article that says Dubai actually gets read and it's being a city that loves the future and flirts with the future. You know time and time out with every technology whether it's 3D printing whether it's AI and so on so forth makes people assume that you know it's where the future is. Now if we look at every single disaster in the crypto space the one from Luna in South Korea he has not come to Dubai actually read an article saying that he was in Dubai and I went out and looked for him and the guy wasn't there. Three hours capital was in Singapore. So the fact of the matter is we have to differentiate that bad actors don't have a nationality and they don't have a destination. They do have lots of passports. Maybe they do. But the fact of the fact is what bad actors want to do is they want to ensure that they affiliate themselves with let's say jurisdictions that people feel protected in. So you hear Singapore you hear London. You hear Dubai because people give that brand a certain amount of credibility. But I don't think they have a nationality and I don't think they have a destination. You will see them everywhere. You see them in the Bahamas you see them in New York. You see them in London. And what we need to do as governments is to work together with the industry as well to ensure that if someone does something wrong he can't move from one place to the other. And that's something that we take very seriously. We also need to make sure that this mistake does not get repeated because what's the use of us whether some back when free turns out to be innocent or guilty. If someone else comes in and does the exact same thing in another jurisdiction we all feel this government. This is a lesson that we need to take today and make sure it does not get repeated tomorrow. And this segues to your point that you and other colleagues here on various stages of me that global coordinated regulation is the key. Yeah. And I wanted to add I mean about this libertarian sort of origin at this anti establishment. We should not forget that a lot of financial transactions are based on trust. Right. I mean instability is coming from the fact that we see each other as repeated game players. I can screw you today but maybe I need you tomorrow. Right. So maybe I won't screw you today because I need you tomorrow. One of the problems I have with the crypto business is that many participants see this as a one shot game. It's entirely single highest achievement is that if I screwed you to the Max. Right. And that in my view is a sort of mentality issue which is very difficult to regulate. It's a mentality issue but it will imply that it will be very difficult to ever sort of create a basis of trust and financial contracts we know can never be complete. So there is always a trust element needed at the end to make it work from a longer term perspective. Nothing analogy all might have been expecting. We will have some time for questions. So if you do have a question please put a hand up and I am going to enforce the question not a comment rule and please do stand once we give the mics to you. One of the things I always ask as a journalist is at the end of an interview is is there anything I didn't ask you. And so I have a question for you. Bring it on. Do you hold crypto. No. I have a question for the audience. Who would admit they hold crypto. Great. So the folks on to about 50 percent. Yeah. There are more as a financial drones very strict rules about not owning assets that you cover. Thanks. I'm Michael Groninger one company called Genelysis. I just wanted to comment a little bit of what I saw up here because there is definitely a lot of statements that I know factually are wrong. The amount of example criminal activity on the blockchain today and in the crypto space is counted in basis points. Zero point. Yeah. It's a very very small amount in dollar amount is a big number. But in actual amounts it's very very small and I think that's an important thing to stress. What is your question. So it was a correction here. I would say my question around things is like what have you what have you done in terms of like educating and learning about crypto from an oversight point of view. Another thing that was mentioned by commissioner McGinnis was was around crypto was invisible. If you work a lot with different analytics companies like ours you will learn that there's a lot of things you can see in crypto and it is only to the point where you can actually see specific transaction and sign to specific activities. So what have you done in terms of like educating yourself in terms of that. Thank you for the question. What is your what do you read. Well what first of all other than Bloomberg obviously. No no no no I mean first of all everything we do within the FSB I repeat that we consult right. So we sort of initiate consultative comments in order actually to educate ourselves at the Netherlands Bank I can add we tried also to build a crypto coin ourselves for sort of internal transactions within the bank. And the reason was only because indeed we wanted to learn by actively also engaging in the industry. So what the technology was about sort of and and I think we also learned a lot from from actually doing that. And one of the things is that the benefits of this technology are beyond any doubt. I mean nobody is questioning it's the use of the technology that is raising all all these issues. The numbers you gave on the criminal activity. I mean I cannot give you any other numbers but I can tell you that if you talk to public prosecution officers they give you a quite a different impression than from the numbers that you just mentioned. Question. This person in the third room. Thank you so much. Don. Yeah Don Tabscott I chair the Blockchain Research Institute. And my question is for Brad but anyone else. Why do we misunderstand what crypto is. And a lot of these conversations we assume it's some kind of security. It's a new asset class. But we're digitizing tokenizing all assets. So if you understand that you'll understand that there are a dozen different types of which what you're talking about is one we're tokenizing carbon credits. Should we regulate that. We're tokenizing art. Should we regulate that. There are protocol tokens that enable people in a decentralized community to communicate with each other and to make decisions. So if I understand the question it's should we. Well if I may rephrase the question there is often a conflation of crypto equals everything that can be defined as stable coins versus non backed assets or protocol tokens or the tokenization of other forms of financial assets. What in from a regulatory perspective are the next steps here given that when we talk about an asset class in industry or an ecosystem it's actually multiple or can be perceived as multiple different asset classes. Well I don't point to the question I'll just say I think one of the hardest parts for that people up here doing their jobs and all the people in the respective regulatory bodies is actually understanding new technologies at a degree of detail that to Don's point it's very difficult to paint all of crypto with one broad brush. You have represented here you know where the leading stable coins in circle you know chain Alice's Michael's company you know these are very successful very robust companies doing very interesting things in a very regulated way. And I think the challenge for us maybe that group of people is there's so much you know FUD there's so much missing there uncertainty and doubts. Thank you. You got them all. I think it makes it very difficult and I actually think we the industry have done ourselves a disservice by being exceptionally tribal and kind of the infighting within crypto has actually made it even harder to to the chair's point to understand the different pieces and parts. Look that's why I'm here. That's why I come to Davos. That's why I'm meeting with regulators because I want to partner and say here's how Ripple approaches this here's how we see the industry. And I will say I've found an amazingly receptive audience here in Davos. If I may just to the two questions because the first one is do not worry. It is not all in my head but I have plenty of experts and they do know this area very well. We don't sit in a room. We listen to industry and we reach out and the European Parliament is involved and the member states are involved. So a lot of work goes on in this. So just to reassure you don't worry it's not me. To your point to the more I think the problem with this conversation is we have assumed there's good actors and bad actors. Good people make mistakes too. I mean the bad ones are criminal. They're bad if they were in the traditional banking or financial system. So they're just bad and they're everywhere and they will always be with us tragically. But we need to find ways of getting at them. The regulation also has to deal with the good who can make mistakes or things go wrong or because they're so excited about this evolution they don't think that they need to have constraints put upon them. And I think we do need to make that difference or separation because as I understand it some of what's happened in this area should be controlled by existing legislation traditional legislation. So you know things accounting rules etc are accounting rules and you shouldn't kind of fudge around them. So it isn't about good and bad. But it is about how you also regulate those with very good intentions who make mistakes. And the reason we do that is so that their mistakes aren't massive mistakes before we discover them and we have financial instability because then you will come to the European Commission or central bankers or whatever and say you failed in your work. For now people don't really want to involve because it's all very exciting or it was up until a few months ago. And now there's a realization we will have to either pin blame on somebody if we don't regulate effectively or indeed say well done you saw this coming and you put in place a bedrock of regulation which needs to be global. So when I'm in the US I talk to colleagues saying look it's not enough for Europe to do what we're doing or others. Everyone needs to be in this same space because there are no borders and no barriers to crypto. One more question here. Maybe to if you keep it short. No pressure. Hello Irshad from the global shippers community. So I mean me myself being in Web 3 Space right. I do notice that when you talk about trust you know I think if you look at the issue of FTX is always a centralized exchange. You know my my my question is like what are the regulators thoughts and opinions in regards to decentralized finance where you know quotes are immutable permission is stuff like that. Where do you think that fits in in the regulatory space. Thank you. I would like the perspective of his excellency on DeFi. Well honestly speaking I think that the space is evolving the DeFi space is evolving. There is there are a lot of questions you know I do hear from some that it's a bubble because the thing about lending and borrowing is that it's a very intricate matter and some issues that we're seeing in the DeFi space is at times you're lending a dollar the same way you're lending a million dollars. The checks and balances the steps required are actually nearly the same. But if you go to a conventional bank and you want a million dollars the guarantees that you need to put in place are much higher than if you want to take a dollar right. What we're going to see is and I think that probably unfortunately we are going to see some bubbles in the DeFi space in the coming future that will require a lot of government intervention. If you look at the broad crypto space I think DeFi probably is the least regulated today and it has a lot of applications that need to have government oversight. So we don't want to jump into into it right now what we're doing is we're putting the broad frameworks of regulating crypto and then we're going to take each vertical on its own. So NFTs are different to DeFi are different to let's say security tokens are different to stable coins. The only issue that we have if you look at the UAE government's capabilities we can move very fast. But if we work with every other government that is interested in this and we work as a team so one government says OK we're going to approach DeFi to ensure that we have a baseline of regulation that's agreed upon by everyone and we're going to bring this to the table and we can all scrutinize it the same way that we're seeing the commissioner or as XNC not doing as well in Europe we need to be doing this for every single vertical because unfortunately we can't wait for the next catastrophe and we're already too late. I would like to ask if there are any people who are not dudes in the audience who have a question I would love to hear from you. OK well then I'll ask the final question. We're going into 2023 in a I wouldn't say historically high interest rates environment but certainly a higher interest rates environment than before and that has been the thing that has been attributed by lots of extremely knowledgeable macroeconomic commentators about having contributed to removing a lot of the speculative froth from the market and bringing a sense of discipline back. The flip side to that is if we do start to normalize rates again or rates start to go go down do you expect that the level of enthusiasm shall we say that we saw from 2020 to 2022 could potentially return or are there other factors at play that may be depressing some of the excitement here. Just is that a crypto question or a Tesla stock question. It is a crypto question. I have no opinions on Elon Musk. I'm only asking that question. I think we have appropriately talked about there was obviously a significant decline in the value of the crypto asset market overall. If you just about two trillion dollars of value went out. If you just look at Tesla Facebook and Amazon two trillion dollars went out last year. No one's saying we shouldn't invest in Tesla Amazon. Actually some analysts are definitely saying that's what Facebook and Amazon. And that's fair. But I don't think we're trying to regulate in saying that we shouldn't let people invest in Tesla. I agree that the consumer protection has to be paramount and it has to start. Some of the times I hear things I'm like well wait a minute two trillion dollars came out of the crypto market but a whole lot more than that came out of the thing is the overall crypto market had a maximum capitalization of three trillion dollars. So it represents a much larger percentage of the whole. That's why I use Tesla stock because Tesla stock was down the same amount as the crypto market. Well thank you everybody. We hope you enjoyed this.