Disrupt or Enable: Materializing the Internet of Value

*Disclaimer: The accuracy of this transcript is not guaranteed. This is not investment advice, and any opinions expressed here are the sole opinions of the individuals, not of the institutions they represent.

 

[00:00:11] Adrien: Welcome to the 41st episode of Metaco Talks. This is a very special edition today, with Brad Garlinghouse joining us. Brad is the CEO of Ripple, a leading enterprise blockchain solutions company, and also now the owner of Metaco since May this year. Brad, welcome to Metaco Talks.

[00:00:41] Brad: Thank you. Glad to know I’m the 41st.

[00:00:43] Adrien: I think it’s a good number. Let me start with the question that every single interviewer asks you to start with. We’ve had very good, um updates on the status with the American regulators lately. XRP is in and of itself not a security. Can you give us more context? What does it mean? What does it imply for Ripple as a whole?

[00:01:06] Brad: The macro dynamic in the United States has been frustrating for companies in the U. S., companies wanting to operate in the U. S. Ripple was at the front end of that with the United States Security Exchange Commission filing a lawsuit almost three years ago now, asserting that Ripple’s sales of X R P had been the sale of unregistered securities. Our lawsuit win, which I think also around the same time was an important win in the US courts for a lawsuit around a company called Grayscale, it really has shown that the chairman of the SEC, Gary Gensler, had a failed policy of how do we regulate through enforcement. That hasn’t been effective. It hasn’t worked. The courts have now moved against the SEC. We’re, I hope, entering a new age where we can actually have clear policy that is constructive in the United States.

As you said, Adrien, what the judge in our case said, XRP in and of itself is not a security. Now almost in an unhealthy way, the only two digital assets in the United States that there’s clarity they’re not a security is XRP and Bitcoin. The SEC has continued to I think muddy the waters, around lots of other things. Creating that confusion actually has helped the SEC try to retain power. One of the things I tweeted out a while ago is the idea that confusion masquerades as power. If it’s clear, the SEC doesn’t have authority because these aren’t securities; they’re the Securities Exchange Commission.

I’m super pleased about it. I think it is creating some momentum in the legislature of the United States to create that clarity. But as you know Adrien really well, and certainly a lot of your customers and prospects know, outside the United States there’s been much more clarity, and that has allowed Ripple to grow. 88% of our hiring in Q3 was outside the United States, in places like London, Switzerland, Singapore and Dubai. That’s largely because there has been that clarity.

I’m really pleased about the case. I’m really pleased that we won on everything that matters. But I still think the U. S. is not yet in a constructive place in terms of what the future of crypto looks like in the United States.

[00:03:41] Adrien: That’s super interesting. One thing is that this discussion with the regulators also emphasizes a lot the XRP and XRPL component of Ripple. I’ll be honest with you, Brad, until very recently, I always thought Ripple was actually everything about XRPL and XRP. I thought it was a cryptocurrency. I didn’t realize that there was all of this business which was almost a software and financial service, regulated financial service business. Can you tell us a little bit more about what Ripple is doing beyond the Distributed Ledger and cryptocurrency?

[00:04:14] Brad: I think it’s a really important distinction that there are always, well, I’ve been in the company now eight and a half years, almost nine years and I think there’s always been this conflation and confusion between what is Ripple and what is XRP. I think you understand well, and I think many people are starting to understand better that XRP is an open source digital asset that anyone can participate in that ecosystem. The code is not controlled by Ripple, the validator network is not controlled by Ripple.

We’re clearly an interested party in that. We own a lot of XRP, and we think XRP is extremely efficient for many use cases. Not all use cases. We definitely are not maximalists in that we think that there’s a place for Bitcoin, there’s a place for a lot of other tokens and different use cases. But Ripple at its core is an enterprise infrastructure company focused on blockchain.

We started with a use case around payments. We have now expanded beyond that. We introduced a product prior to the Metaco acquisition, called Liquidity Hub, focused on managing and sourcing liquidity across the digital asset ecosystem. With the Metaco acquisition earlier this year, we’re expanding to custody. We see ourselves expanding to other use cases focused on that infrastructure side at the enterprise level, really going after financial institutions, enterprises. We’re really pleased about where we sit there. We certainly think we, we have ways to go.

Going back to your core question, there were a lot of people who I think just didn’t understand that Ripple is not XRP and XRP is not Ripple. That’s partly because exchanges would list XRP as Ripple, and people would say, “Oh, I bought some Ripple.” Like, no. It’s been something that we have combated for a long time and we’ll continue to do so; just providing education about what Ripple is doing. As you said, Ripple is clearly, if not the leading enterprise infrastructure company around blockchain, we’re one of them. We’re really pleased about that momentum and we’re glad to have Metaco as part of that family.

[00:06:25] Adrien: Speaking about Metaco, you acquired as a company Metaco and you’re the sole owner today. It’s obviously a very different business, at least in appearance. We, and I say we because I used to be the founder and CEO – I’m still the CEO – Metaco was focused on purely the infrastructure selling custody mainly to the banking institutions. Ripple is doing more than this. How do you see the two combining together and creating synergies, creating value?

[00:06:54] Brad: I think there is customer overlap in that Ripple has a broad salesforce as well as existing customer base of financial institutions. Metaco, as you know better than me, has tended to play at the tier one level; Ripple has tended to play below the tier one level, but I think there’s clearly overlap there that has created some positive synergy.

I also think as you look at where the product suite, the opportunity for financial institutions broadly is going, it doesn’t stop with custody, it doesn’t stop with payments. It’s really how do different financial institutions take advantage of a suite of products that would include custody, that could include payments, that could include other capabilities at the infrastructure enterprise level. Now, you know better than anyone, and certainly the Metaco team, which really just achieved an immense amount of success with a pretty small lean team and competed very effectively against larger, better funded companies. But the macro environment around custody digital assets is expected to be close to 10 trillion dollars by the year 2030.

Inevitably, people are going to need a place to store those assets safe, secure. They need to be able to transfer them as well, having good on and off ramps, even a tokenization engine. Some of the work Ripple is doing around central bank digital currencies or CBDCs.

We think there’s a lot of pieces that come together, and we already had. I remember when you and I first spoke, I remember being on a call with one of the largest top 10 banks in the world, a bank Ripple was already working with, and they were asking us about, could we help them with their custody? This is prior to Metaco acquisition. We weren’t in a position to do that. I think about that synergy, the ability to say to that existing Ripple customer, “Hey, here’s a best in class, going head to head time and time again and winning on the custody level,” to be able to bring that product to them is a great opportunity for the two companies together. I’m really happy about it.

I’m curious, if I could turn the tables for a moment, what has been your experience about the synergies? You’ve only been here a few months as inside Ripple, but I’m curious what you have seen so far.

[00:09:25] Adrien: I’m going to be very honest here. I think we’ve been very good at one thing at Metaco, which was focus. We’ve specialized in doing infrastructure in building security related software, and we’ve done it very well. We’ve also specialized in our go to markets into the larger segment of the banking sector. But it was also our weakness in a sense, because we became so specialized that it became hard for us to emerge beyond infrastructure, if you wish. We were probably the best at infrastructure, but then getting into the use cases starting to think I’m going to be processing payments, I’m going to be tokenizing real assets, I’m going to create value that the banks can truly leverage in and of themselves, was becoming harder and harder because our team and our go to market was specialized on infrastructure.

I think what we’re seeing in the collaboration with Ripple is that we are starting to be able to combine this deep expertise in infrastructure and security that Metaco has acquired, also the network and the success we have on the market, with now value added services, which potentially you can leverage also the different licenses that you have as a regulated financial institution and start selling more vertical offerings that go beyond the pure infrastructure level.

That’s probably what excites me the most, is that Metaco in itself still exists as it used to be. It’s still largely independent, still has its same exact offering with its same ambitions, but it’s now able to provide more value to the clients.

[00:10:57] Brad: Well, one thing you said that really resonates with me that I think has been important, actually a go to market synergy, I think both Metaco and Ripple came from the point of view that regulatory frameworks matter, that compliance matters. I think in the crypto space for better, for worse, and in many cases for worse, a lot of players in the crypto space have come from an anti government, oftentimes frankly anti bank point of view.

From the earliest days, Ripple took this point of view that if we want these technologies to have the biggest impact, for the largest set of populations to benefit from these technologies, we needed to work with the system. We need to work with governments and with banks. When Ripple has looked at acquisitions over the years, really Metaco for all intents and purpose is the first acquisition we’ve ever made. For a company in Silicon Valley, 10 years into our history to make our first acquisition, I think we’ve been patient. I think part of that is because we wanted to find the right fit, and that meant culturally from a product strategy point of view. Then part of that culture is, as I was just saying, the regulatory posture of respecting that regulations matter globally and leaning into the right licensing, I think, is an area where Metaco and Ripple really saw eye to eye early on, and I think that has served both companies well.

By bringing the two companies together, Ripple’s invested a lot in licensing around the world. We just got our major institutional payments license in Singapore just a month or so ago, so we’ll continue to lean into that. But I think that part of that cultural fit between Ripple and Metaco was super important to get a deal done.

[00:12:44] Adrien: I completely agree. I would say that the interesting thing of capital is that even if you don’t truly enjoy everything that comes with regulators and all of the rules and potentially the frictions in developing, if you just look at where the opportunity is, it creates a strong incentive for you to build a business which is going to be aligned with the current frameworks. Whether it’s good or bad is a question of opinion and can be a question of politics. But the reality is when Metaco was founded, we were not so much about, is it good or bad that regulators exist? We took the current state of affairs, which was regulators are here, they are massive banks on the market which are managing trillions of dollars worth of assets, at some point cryptocurrencies and tokenized assets are going to be so big that they will not be in the hands of the retail consumers in their mobile phones, but they will have to be recentralized in more professional companies that are subject to regulations. Again, whether they like it or not, because there is a top down push by governments and regulators.

Therefore, the opportunity became obvious that there was a need to build such institutional infrastructure.

It brings me to the future. Brad, I think Ripple has a culture of being very transparent both internally as a company, but also to the markets in how it communicates about its ambitions. I think Metaco may be a little bit less because we tend to be very conservative with clients that don’t like us to be too transparent. But can you tell us a bit more about the future plans of the company, where you see the company in Q4 and next year, both in terms of product, if you have something to say, or in terms of general trajectory?

[00:14:19] Brad: First I want to comment briefly, your comment about transparency is an important one. I think particularly in a new category like crypto, you’re still building trust. People don’t know how to think about. Frankly, to speak freely, there’ve been some bad actors, right? I think we’re all to varying degrees paying attention to the headlines of an interesting trial going on in New York right now with Sam Bankman-Fried. When you do have new technologies and people are trying to figure out how do we take advantage of those to benefit their customers or improving efficiency in their technology, yu have to build trust.

One of the key things in my lifetime that has built trust, and I mean this on a personal and professional basis, is transparency. Ripple early on decided, we did these things called XRP markets reports once a quarter, and we would publish. This is dating all the way back to 2016 or 2017, at a time when a lot of people were very secretive about what was going on in crypto and how much crypto they owned and what they were doing with it. We decided to buck that trend and be very transparent. Now, ironically, I think that’s one of the things that hurt us in the SEC, if people say, “Why did the SEC go after Ripple?”

It’s partly because we gave them all the information to do so, which felt not so great ironically, in certain ways. But I still stand by, if you want to build trust in new technologies, you want to build trust in new products, you want to build trust in new companies like Ripple and Metaco, then you have to be transparent. You have to go above and beyond. Certainly we have tried to do that.

[00:16:06] Adrien: Maybe before you go to the company strategy, speaking about trust, do you think there is a future where the concept of trust can be mostly eliminated because you can essentially trust the infrastructure itself? When we speak about blockchain, we in fact speak of trustless technology, because you don’t need to trust the legal system, you don’t need to trust a counterparty. You can observe everything and it’s secured by mathematics and algorithmics. Can you see a future where your statement is actually proven wrong and you no longer need to trust something and somebody?

[00:16:38] Brad: I am not enough of a fortune teller and future seeker. I think some of those things to me, and I’m one person, some of those things to me feel philosophical or academic, and not pragmatic. I can get my head around like, that’s interesting, that would be interesting. But a lot of times, when I read papers and I read companies are building around that, I think, wait a minute, that’s not the world we live in today. In the world we live in today, you do have counterparties, you do have regulations, you do have compliance.

Could that world exist or could a subset of our economy in a parallel structure work that way? Maybe. I think I view myself more as a pragmatist, that some of those things feel more academic and philosophical than they do feel like that really can roll out at scale and benefit millions or frankly billions of customers.

One of the promises of crypto and blockchain was to bring some of the underbanked or unbanked into the ecosystem. I still very much believe that we haven’t really achieved that. I think in some ways that’s because we jump to, “Well, we’d like the world to look like this.” You do get in the crypto space some religiosity; people are guided by a philosophical view to such an extreme that you’re just like, wait a minute, that’s not pragmatic. We’re not going to actually be able to really move the ball forward. Again, maybe I’m pontificating and ranting a little bit here, but I’m a huge believer in the opportunity represented by crypto. I think sometimes the industry gets its own way by not being transparent, and by unfortunately having people like Sam Bankman-Fried or even the Celsius act meltdown last year. Celsius to some degree was intended to be one of those trustless yield bearing. For me, I looked at it, I didn’t participate because I live by the adage if something seems too good to be true, it probably is. That one certainly felt that way.

Anyway, I think I’m off track in your core question around Ripple’s strategy, so I’ll pause there. Anything else around that you want me to comment on?

[00:19:16] Adrien: No, I think we can go back to the strategy if there is something that you would like to share about the future of Ripple. Where are we going?

[00:19:23] Brad: I commented a little bit earlier on. At the core, Ripple really has been a software and blockchain business. We are using blockchain digital assets to solve pain points. We started around moving money around the world. We have this grand vision and ambition that we can enable an internet of value, that value can move the way information moves today.

I’ve used examples that it’s just crazy that you can stream video from the space station, but for me to send – I’m sitting in California today – for me to send money into Swiss francs would be rather slow and rather expensive, yet it’s all just ones and zeros, it’s all bits. Why can’t we not do that more efficiently?

We started with cross border payments, because we felt like that was the highest friction point. But we’ve always had this grander ambition, and a couple times I’ve commented that when I think about Amazon, the company today, it started with just books, it was a bookseller. I viewed Amazon is to books, as Ripple is to cross border payment. What I mean by that is, we do have ambitions beyond just cross border payments to do payments more broadly, but also to really be that infrastructure, and thus the acquisition of Metaco, thus the initiative around liquidity hub. We have some other initiatives we’re working on. But when we think about that infrastructure layer and we think about do we build that internally, Ripple is about a thousand people strong now, do we build it? Do we buy it as we’ve done it with the case of Metaco? Or do we partner and integrate?

We want to be able to partner with banks and financial institutions and bring a one-stop-shop to solve some of the things they are dealing with as they think about how they can use these technologies and answer some of the questions that customers are bringing to them today.

[00:21:21] Adrien: I’ll share something which I rarely say openly, but many of the banks that we meet and some of the banks that we work with, they know they want to go into digital assets, but they don’t know why. They don’t know what they want to achieve. They may know how they want to do it, but they don’t know what’s the end goal.

You are already somewhat closer to the end goal providing regulated services. Brings me to the question, do you feel that the current positioning of Ripple is to some extent competitive with some of the banks that as a group we are going after and collaborating with? Or do you see this as being more complementary or potentially completely different?

[00:22:03] Brad: Well, I see it as pretty different. Banks today, we’re not trying to take their customer. We’re trying to enable banks, frankly, to better serve those customers.

Adrien, I agree with something you said there that a lot of people are interested in crypto, but they’re not 100% sure they know why, and they’re getting customers of theirs who are interested in being able to use crypto for various things.

I think one of the things we as an industry, and I mean the crypto and blockchain industry, we’re still in the very early stages of going beyond what is just speculative use cases. To really see the promise of crypto and blockchain at scale, it’s not just about speculative use cases, whether that’s on the enterprise side or the retail side. but in order to develop some of these non speculative use cases, you also need that regulatory clarity. Again, you’re seeing places like the EU and the UK and Singapore and Australia and UAE, they have moved forward with various licensing regimes and rule books, and that has allowed people to start to think about, how should I think about the tokenization of commercial real estate? By the way, that’s not something, I’m just using that as an example. I don’t want people to overread that the CEO of Ripple said.

I think that’s a real use case. That’s not speculation. There’s a lot of friction in some of these industries, and when you can make that simpler, either the transaction or the ownership or custody, that I think is good for the global economy.

I think you’re seeing major financial firms start to lean in, here in the United States even with the Bitcoin ETF, Credit Agricole in France. There’s a number of big financial institutions starting to lean in and think about, not speculation, but we can use these technologies to solve these problems in these ways.

I don’t know I exactly answered your question there, but when I think about where the world’s going, talking about SPF as not being good for crypto, I don’t even think that the NFT, the non-fungible token craze around the speculation on some of the NFTs was not actually good for the industry. I think it got a fervour of excitement, but actually what problem is that solving? Where is that really improving efficiency or what have you? For a lot of that, I didn’t see it.

[00:24:41] Adrien: Are you of those that believe that everything will be tokenized eventually? Do you see this 1,000 trillion wealth of assets and potentially beyond what we today call assets, let’s say the key to your car, the key to your door?

[00:24:52] Brad: In general, I am very much a believer that tokenization is not a passing speculative opportunity. I think tokenization is very real. It’s hard for me to predict where that goes.

There’s a saying in Silicon Valley of people often overestimate the change that’ll happen in five years, but grossly underestimate the change that’ll happen in 10 years. I think people have overestimated what’s going to happen tokenization in the short term, but I think they’ve underestimated grossly how tokenization may evolve in the next 10 to 20 years.

There’s a lot of examples, you listed off some there. I start with the efficiency. Is it solving a problem? Some of the things you mentioned, I think that those are real opportunities to solve a problem. Therefore, I think someone will find ways to tokenize and bring that to market. But the challenge isn’t, can you tokenize it? The challenge is how do you make it useful? How do you take it to market?

I have been, I don’t know that publicly vocal, but I’ve always been a little bit sceptical of the tokenization of identity. Now, on one hand, the benefit is real, right? We all in the financial services world deal with, can you tokenize identity in a way that could make KYC much easier and make some of these capabilities simpler? That’s an example to me where I could see tokenization making sense, but go to market around it is really tricky. Because you think about, who owns your identity today, Adrien? Your passport’s issued by a country, your birth certificate’s issued by a county or a state or something, and your driver’s license or what have you. Those are the acceptable legal forms of identity, and they’re all owned by a government in some way. To do that, I think you have to have government cooperation, which in the United States anyway, our government’s hard to get anything done. Some of those tokenization use cases you’re describing are going to be tricky.

[00:27:08] Adrien: Yeah, and it’s an extreme degree of consensus and ecosystem, right? You think about tokenization today, on the short term there is no obvious value on how to either decrease the costs or improves efficiency because it’s probably more expensive to operate a token than to operate in the traditional space with traditional frameworks. It only truly materialized as a value when you end up having a number of the key players in this industry, the tier one custodian banks, the intermediaries, the transfer agents, et cetera, that all move to this new scheme and start essentially potentially either making this mistake, some of them could disappear in principle, and you have a single way of representing value. I think we’re still far from it, and this is probably what’s slowing down this innovation.

Now taking this to back to Ripple, there’s a lot of speculation that payments is something that can go beyond the traditional rails. There are other ways you could operate; you could operate potentially with tokens, with stable coins. Are you particularly interested in stable coins? Is it something that you see as being valuable in the future?

[00:28:25] Brad: The short answer is yes. I think stable coins have a role to play because they are efficient. They are adding an efficiency to how money is moving today. Back to my point around transparency, they are trusted in a way that people perceive crypto as less trustworthy in some ways because of volatility.

I’m not sure we have gotten to the promised land as it relates to stable coins. There are stable coins in the market today that have depegged. Some have recovered, a couple have gone away in effect. We have to remember this whole industry is still pretty nascent and it’s going to continue to evolve. But I do believe that stable coins have a role to play, I’m bullish on that.

One manifestation of that is Ripple has invested and is working with about 10 different governments around the world to do central bank digital currencies. A central bank digital currency is a stable coin. It’s just issued by the government. But I also think there’ll be stable coins outside of that. But as we’ve already talked about, it’s important, I think, to have clear regulatory guidelines as to how those will work and to make sure they are safe for consumers, make sure they are safe for counterparties, et cetera.

I’m curious, by the way, Adrien, I’d love to hear your answer to that question. What’s your take on the future of stable coins?

[00:29:59] Adrien: I was curious about your response because Ripple has been very visible also on the CBDC space. It’s clear that the technology of XRPL is something that can be used also in a more privatized, if I can call it this way, version of the ledger. It can be turned into a private payment platform or private platform. XRP also in general is considered to be one of the best tokenization platforms. It’s very clean, very hard. It’s meant for tokenization. It’s meant also for on chain trading, actually with features which came way before some of the more generic platforms such as Ethereum. It brought this concept of AMM, automated market making, etc.

I have this pragmatic view that something which is technically feasible will eventually happen. It may take a long time, but it will eventually happen. Because it is possible for governments and central banks to eventually digitalize everything, even though it’s not something they are comfortable with on the short term simply because they’ve never done it, it’s a very different role for them, I’m convinced that the attractiveness of being in control and having even more controlled power and ability to enforce regulations is something that will make central banks move to market with some form, whether it’s retail or wholesale, of CBDC.

Now, what does it mean for private stable coins? Well, first of all, until central banks are going at scale with CBDC, I think we’re not there yet. Some central banks are now moving and they are clear that they are going to this market, but it’s going to take time until they are truly productive, and in particular for the main largest banks to be on the markets. Also because they are afraid of the implications of this, what does it mean for the banking system? What does it mean for the monetary supply, the control of inflation, et cetera? It’s not clear.

I think until such central banks are moving at scale with CBDC, there is clearly a need to have proxy to the central make money, which today is a private form of a stable coin. They already did multiple initiatives in the market; some of them have been more successful than others, have been able to better keep their peg. There are many shapes of them also, some of them are more algorithmic. They try to maintain the peg through a overcollateralization mechanism, which could be on chain. They have tended to be sometimes less stable than the fully backed stable coins. I don’t know how the market is going to evolve, but one thing is clear. I think there is a need today for the on-chain activity to grow for a stable coin to exist.

[00:32:31] Brad: I think that’s well said. I agree.

[00:32:35] Adrien: Brad, coming to a different topic, Ripple is also known to be very active on the market in terms of events communication with its clients, with its partners. You have pretty soon an event called Swell which is going to be taking place in Dubai. Do you want to say a few words about this?

[00:32:55] Brad: Yeah, I appreciate that you were raising that. Ripple started doing a conference called Swell years ago in Toronto alongside Sibos at the time, and eventually we spun it separate from that. But it really is intended to be a one part, a customer event for our various customers to talk about the various things they’re doing with Ripple’s technologies and Ripple’s solutions, but also to talk about where the industry is and even beyond where just Ripple is.

We have a number of speakers from outside of Ripple and our customers. We’ve had some amazing keynotes. Back in Toronto, I remember Ben Bernanke, the former head of the federal reserve of the United States, spoke and talked about where he saw crypto and crypto going in the future. It’s always been very impactful. We’ve had speakers from around the world. It’s a two-day event, we’re holding it in Dubai in I think November 8th and 9th, or 7th and 8th. I can’t remember which.

[00:33:55] Adrien: Why Dubai?

[00:33:57] Brad: Thank you for asking that. We have done two or maybe just one in the United States. We’ve done Singapore, we’ve done Toronto, we’ve done London. It really is frankly, if the US is going to take a hostile view towards these technologies, let’s go to where customers and where governments are leaning in. Certainly one of the strongest markets we have as Ripple has as a company, and I think certainly Metaco has done well as well, is in the Middle East. The interest in these technologies and the real-world use cases, not just the speculation, have been quite high.

We chose Dubai probably a year ago and I’m looking forward to being there. Hopefully we’ll see some of the people in the audience today there as well. If you are interested, I know there’s a website where you can register, I don’t know exactly the URL top of mind.

[00:34:55] Adrien: Well, I look forward to being there. I will be, Brad, I don’t know if you’re aware, but I will be taking one of the panels also, so we should probably be meeting there.

To the end of this discussion, is there anything that you would like to make as a final comment or question?

[00:35:10] Brad: I’m going to take the liberty, I did cheat and peeked at the Q& A that had been posted. There’s a question that was posted that I really like because I think it’s super fascinating. Terrence asked, do you see any value in the tokenization of intellectual property? I think this is one of the examples of a real-world use case where tokenization really makes sense.

I’ve talked to CEOs of big pharma companies who talk about their patent portfolio and the value of the patent portfolio and how much complexity there is in the licensing of the patent portfolio even cross pharma, and that they’ll have hundreds of people and they still make tons of mistakes. You think about if you could tokenize a patent in the pharma space and then build smart contracts within that so the licensing actually is auditable and you could actually track these things, it would improve efficiency. It would increase the value of those patents in various ways, and it would make them more accessible.

I think it’s a really good question, Terrence. A patent is intellectual property. I think there’s a lot of things like that have never been tokenized because it wasn’t obvious how you could do it. Now, cribbing from something Adrien said earlier, the technology exists; I think eventually that will happen. We can argue about is that 1 year, five years, 10 years, but I think it just makes sense.

[00:36:33] Adrien: Absolutely. I see that there is a question relating to Switzerland, so I will take it. I feel it must be aimed at Metaco to some extent. The question is, where do you see traction geographically apart from Switzerland?

I’ll start with the bad news saying that Switzerland is not the best place where there is traction today. It was one of the first countries to put in place clarity in the regulatory framework, and therefore some of the early players, the early banks, started in Switzerland, maybe five, six years ago. But it’s also a very conservative country. Conservative in the sense that it’s risk averse. It doesn’t like change, it likes safety. Therefore past the first banks that had moved into this cryptocurrency and Bitcoin and Ethereum trading, not much happened, frankly speaking.

We were forced as a young start up five years ago to start looking outside of Switzerland. The first jurisdictions that became attractive were particular Singapore, Southeast Asia more widely and Germany. It remains some of the most attractive and prolific geographies for digital assets infrastructure in banking for a long time. Now, the market has evolved a bit. France is catching up, Italy is catching up. Some countries in Africa, in particular South Africa, are starting to accelerate. The Middle East, as we discussed with the UAE, and in Southeast Asia it’s also growing now more aggressively than it used to.

I would say, unfortunately the North American market, which had started to move in the last two or three years, has got to a point where it has become very difficult in particular for banks, federally regulated banks, to do anything of significance. They are all working on initiatives, they’re all building capability, but they are not at a phase where they are able to operate at scale. It feels a little bit frustrating because it’s mostly related to the regulatory push against digital assets, to a point where even basically using a public ledger, even for tokens, even for nothing related to cryptocurrencies, public ledgers are not authorized within banking. Even things like using blockchain for books and records, like let’s say, I’m going to use a private ledger to track my tokens, can I use it? No, I still need to have a database managed by a transfer agent to tell me who owns what. It truly reduces the value of blockchain to less than the database to some extent in the current setup.

I may be exaggerating a bit. I think some banks have found interesting applications in particular for use cases like bank to bank payments, et cetera. But it’s not something which I would call a very welcoming territory currently.

[00:39:18] Brad: All right. Should we take any other questions here? I know we’re almost out of time, Adrien, so I’ll let you be the guide.

[00:39:24] Adrien: Let me see if we have maybe a last one we can take. I think this is more of a high-level question, I’ll give it to you, Brad. What are your thoughts on the Bitcoin ZTF approval and its future role in the monetary system?

[00:39:44] Brad: It is an interesting one. We’ve seen a bunch of traditional financial firms file for spot Bitcoin ETFs. Finally the United States SEC after years of dragging their feet, seems to be allowing those to move forward.

Part of the question here is this idea that, are they part of the future monetary system? To me, a Bitcoin ETF is simply allowing people who may not know how to custody, buy, manage their crypto themselves, to participate in Bitcoin as an asset. It’s a little like a gold ETF. You may not want to hold gold in your home, but being able to buy a gold ETF allows you the investment exposure to that asset.

I’m very much pro giving people access to these things in a way that works for them. I don’t know why that would be bad and why the SEC was blocking that. Whether or not that has a role in the future monetary system, as much as I’m bullish about Bitcoin and I own Bitcoin, Bitcoin has some significant limitations as it relates to a payments mechanism in terms of fees and speed. I’m not sure I see that as transforming the monetary system.

[00:41:11] Adrien: Brad, it’s been a great discussion. Thanks a lot and speak to you soon.

[00:41:15] Brad: All right. Thanks, Adrien. Good to see you.