CRYPTOCURRENCY – RIPPLE / XRP – What is the future of BLOCKCHAIN and Digital Asset REGULATION



thank you all for joining us tonight we are going to kick this off and get started so if you want to join us over here in the main area I think you'll be able to better interact with the panel tonight we are joined by four people who are really on the front lines of of our topic tonight which is digital asset and blockchain legal frameworks and regulation we're really pleased to host them here and I think the idea is to get people from different backgrounds so I'm gonna let the panelists introduce themselves in one minute but we will have you know hopefully find some areas where people agree hopefully some areas where they disagree and really try to make this an interesting panel we will be doing questions at the end so I ask you to hold your questions until then today they're gonna share an insider view really into the advancements as well as frustrations and challenges of this space I know many of you are also on the front line so you'll be able to relate to that and then we're gonna look at what's next for the year ahead always a popular topic tonight's panel is open session so if you want to share any of the views of the panelists tonight you were welcome to do so across Twitter or you know whatever channel you prefer so without further ado we will go ahead and get started I'm Claire cart and I'm the moderator for the evening I have the honor of being a head of community a triple so welcome to all of you and I'll ask our panelists to introduce themselves larrya body throw it I am a corporate attorney I've been working with startups for around 10 years and around three years ago I joined Perkins Kui is considered to be like they lead law firm in the space and for the last two and a half years I've been working and representing crypto projects and I do mostly corporate and securities work and some regulatory work hi I'm Sara hodie my legal career actually started as a litigator for we mostly represented financial services companies because I in law school at a time when when you're graduating and looking for a job Financial Services litigation is kind of a fancy way to say things like bankruptcy and collection and so it gave me really first-hand insight into how messed up even the financial system in the u.s. kind of was and so when I stumbled upon Bitcoin I you know caught the bug that a lot of people catch about around thinking like this is really cool this could solve a lot of problems that exist in our current system and I had always also planned to go to law school so that I could eventually work in-house and so from there I sort of found myself in house at coinbase for a couple years starting in 2014 and over time that became more and more of a compliance heavy rollers kind of doing a lot of the same stuff on my new transmission money services work and I sort of decided okay this is all really cool and really interesting and this company is really awesome but I want to do more and so that's what led me to Perkins cuy about two years ago where as Larry I said we have a really robust blockchain FinTech practice and so I get to do a lot of product counseling and and basically regulatory advice for everything from crypto exchanges to qualified custodian work – token sales and some of the the less exciting non blockchain work and the FinTech world of you know payments it's not something I wait a second thank you Eric my name is Eric Phan miltenberg I'm senior vice president of global operations here at Ripple I've been here for just about two years and in my role in global operations I get a chance to do a lot of fun things but specifically I help to guide how ripple expands into new geographies we're sort of an international company by definition but there's certain markets where we have decided to make an investment to go deeper to put more people in market to get a better sense of the market the use cases closer to our customers and partners so we can be more responsive and so we're we've done that selectively across across the globe in certain Hubbs prior to being a triple I've been in Silicon Valley in the tech space for over 20 years always on the business side doing everything from business development corporate development strategy business operations looking for opportunities to help companies scale find the next thing and grow and so you know the opportunity to come here to ripple and be a part of helping to build what we think is X wave of Technology I'm pretty exciting great thanks Aaron for coming I'm Kevin we're back I am a professor at the Wharton School at the University of Pennsylvania in legal studies and I have the great fortune of being able to study emerging technologies that have significant business implications as well as significant legal and regulatory implication and I became convinced a number of years ago that this blockchain cryptocurrency space was the most exciting most interesting area of technology today and dove in headfirst and that led to developing a book that just came out called the blockchain and the new architecture of trust and really trying to articulate for broader business communities what's going on what the real value proposition is in this area as well as doing a lot of work both teaching working with regulators working with people in industry on trying to work through the legal and policy issues at the beginning of my career I was at the Federal Communications Commission 20 years ago now during the early days of the commercial Internet and I'm happy to tell you the government didn't kill off the Internet in case you were wondering but that was really the challenge that we faced in the government doing internet policy at that point and many people have made this analogy but what's happening now in the blockchain world has many many parallels to what happened during the early days of the Internet it's hard to know exactly where things are going to turn out but I'm excited to be involved again at this early stage of this technology working through those issues and really appreciative of ripple for hosting this today and looking forward to the discussion great thank you all so much and we don't get introductions from everyone in the audience but I would like to get a sense of your background so if you would participate and just raise your hand if you are currently working in this space okay a lot of people raise your hand if you're kind of interested in getting into it you may be a student or thinking of changing industries or an entrepreneur hey people all right awesome well welcome I think we'll have a pretty high level of knowledge in the room then given that many people are already working in the field so that should generate some great conversation amongst panelists as well as some great Q&A at the end to jump right in I think the best place to start is to lay a foundation of really what the global business environment looks like and what the current state of affairs is we have a very global perspective as well as interdisciplinary perspectives so I think let's get started right there Kevin the first question is for you you spent the last two years researching and writing your new book which we had some copies of in the back blockchain and the new architecture of trust what did you find in terms of foundational elements that are present or not present for really the business environment to evolve what have you seen yeah well so the funny thing about writing a book about a fast-moving technology area is that it takes you a substantial period of time to write the book and then I turned in the final manuscript of this book the first week of January so nothing at all has changed whatsoever in blockchain and crypto since the first week of January right but but actually that's a good thing because that forces you to try to abstract from the events of the day and the prices of different tokens and so forth and asked what's substantial and so you know to your question we're still early in some areas on just the basic technical maturity you need to distinguish between different kinds of blockchain and cryptocurrency networks so if we're talking about the the public permissionless blockchain networks like Bitcoin and the Thea they're still our basic open questions about scalability about interoperability about the consensus mechanisms and so forth that really need to be addressed there are lots of smart people around the world working on them but we're certainly not at a point where you can say we're certain that these networks just technically will get to the point that they need to to really reach their potential in other areas there's a gap in understanding that's a lot of why I wrote the book I was talking to many business executives people in public policy and others who just said look I don't get this like I thought it's not that I'm skeptical I just I just do not understand either why anyone would want to use a cryptocurrency what the value is of a blockchain versus a traditional database or just how's it possible to trust something as being valuable when there's quote/unquote nothing standing behind it so that's part of why I wrote the book to make articulate that but I think in general there's still a need for broader awareness I mean anyone who's in this space you're in a bubble right if you are convinced that this is an important area you're in a relatively small community within a larger business environment so we need that broader awareness we need to find more killer applications I think we you know there clearly some application areas where the value proposition has been established but especially in terms of widespread popular adoption we don't yet have anything we can point to to say that this is certain to be something that's going to get in widespread traction and then the last thing is governance and governance means different things in different contexts in the decentralized cryptocurrency permissionless blockchain world there's some really hard questions how do you coordinate among a decentralized network where no one's in control no one has power to say this is the way we're going to go lots of interesting experiments and work going on to address that but a really huge challenge because you need governance otherwise when things go wrong when things change it's impossible for the system to adapt but even in the permission world the enterprise world you still have this governance challenge because the potential this technology is when you get competitors on the same platform because they're willing to use that decentralized ledger technology precisely because it's one shared source of truth as opposed to everyone keeping their own information and having to duplicate the system because they don't trust each other and actually that's still a hard governance problem it's still a hard problem to figure out how you convince a company to give up control you can prove to them technically that the system works that the cryptography works but there's still a process and so I think that's what we're seeing now in a lot of companies is saying well I sort of get it at a high level but I really need to be convinced in this application that the promise is there that this truly works in a decentralized way that doesn't empower any particular actor so I think we still need a lot more work in that area really for maturation of the industry Eric next question is for you you are really on the front lines taking Ripple into new market so you have visibility into kind of the global environment um how would you characterize kind of the landscape right now and would you say that any geographies are ahead or behind curious to hear your thoughts on that or absolutely maybe I'll start I assume people are somewhat familiar with ripple but you know we come to the market with a product we serve financial institutions and we have a very very sharp focus our focus is on helping to remove the friction from cross-border payments so by definition we're an international company there's no there's no domestic version of ripple so your point there we are out there operating in geographies around the world what also makes us a little bit different than a lot of other folks in the space is that we have a strong opinion that we want to work with governments with regulators with policymakers we're not trying to be that libertarian anarchistic you know we're gonna you know sideswipe and get around the man so we've been engaged for years with regulators I think we have relationships with over 40 regulatory bodies around the world and we certainly see differences as you look to those different bodies of regulators and how far they've advanced the state of the art in terms of how they are laying out the frameworks for regulatory clarity you know we've spoken to people from everywhere in the u.s. to the Philippines to India to UAE etc etc and I guess I'd highlight the the ASEAN countries Southeast Asia as a set of jurisdictions where there is I think a notable positive development in terms of clarity you look to Thailand for example it started the year and the Bank of Thailand came out with relatively stringent conservative you know blockchain is bad very restrictive regulations but they quickly and dug in and towards the middle of the year you saw you know a licensing framework for exchanges you saw classifications for crypto assets that really provided clarity for companies who wanted to operate in that geography as to what was allowed and what wasn't and you see advancements there Philippines you know early on that they provided licensing clarity around this space the Monetary Authority of Singapore again very progressive and how they're they're trying to set a standard and really educate all the constituents as to what works and what doesn't and I don't think it's a coincidence it's happening in this part of the world you know there was a hundred and thirty billion dollars roughly of remittances flowing into eastern Asia last year and that's happening at a time where the legacy technology involved with moving moneys or the correspondent banking world is is withdrawing there's fewer and fewer banks maintaining their correspondent relationships so the friction is increased in terms of cross-border money movement and I think you see these these regulators you see these jurisdictions looking to the blockchain and this technology as being a way to reduce the friction move to the next wave and realizing that to to sort of pave the road they need to provide that that clarity from a regular joy standpoint sooner rather than later so I think that's a it's a real positive development I think it's a model that other parts of the world really should take note of as they great thank you um Sarah and blurrier I know you work really closely together at Burton squeak I never on different sides of the house but I'm gonna direct the next question to both of you um I think you're probably collaborating on these types of things very frequently so feel free to jump in with your your own unique perspective but there's been a lot of developments lately in our space the SEC took action against arefox and Oregon consensus announced that they're laying off 13% of their workforce these are headlines that I don't think anyone in the room can avoid they're popping up like every second on my feed so my question is you're really on the front lines advising businesses on how to navigate this environment so do you see any of the clients that you advise changing strategy or how are they reacting to to these development let me go first oh I am kind of like at the beginning of the process because I helped a lot with funding and I will say that worst thing is people that is coming with new projects they are kind of like going more towards the traditional financing route you can get financing through equity we are seeing more institutional investors get in a space and that comes at a price you know they basically if you have an institutional investor willing to invest they are going to want to do a deep torille deletions process not only in the traditional startup world but also they want to know about picture specific they're gonna do Europe total supply how the founders are best in their tokens if you have lockup so it's not as the craze in 2017 what he was kind of like give me your money I give you nothing we're done you know it's kind of like they want to see they want to see the team they want to see prolog then we have a lot of clients that have already finalized their pre sell and they were ready to go public and the position of our firm at least is we're not doing any public sales until we hear from the SEC and we get clear guidelines so those people are in a tough position because are like in wait-and-see mode a lot of them are thinking of engaging with with regulators you know the SEC has been very vocal about come and talk to us there's a fine line because you want to be open and property but at the same time you don't want the spotlight on you and then they to tell you that everything you're doing is wrong and so we're helping clients strategize with that we have other group of clients which are like we want to stay away from the u.s. help us do everything so we don't have to yeah and that we could rely on by gas but it gets very tricky so and then you have other people that is just like trying to see of solutions that may eventually use blockchain but he's not really necessary right now so they're going the more traditional route so that that's I think is what I'm seeing at least at the beginning of the process there what are you seeing yeah so from my perspective I I think the different biggest difference for me is actually more just in what my workload is because I'm usually less involved in financing and fundings and normally you're coming and asking for a regulatory product advice once you probably already have money and so for me the biggest difference is a year and a half ago I was getting asked quite frequently to help right regulatory memos on proposed token sales or proposed token projects and that was I don't know maybe 70 to 80 percent of my workload for a couple of months of 2017 I would say for me it's just gone back to what it had previously been which is that I work a lot with exchanges I work with you know custodian projects and I also do a good amount of work with projects that are building on what I would call decentralized exchanges building real layers or projects on top of real layers and I guess kind of to your point about layoffs I think we were panelists all chatting this earlier how we're not really seeing a lot of people leave this space so even where people leave jobs we see them go I think so far at least we've largely seen them go and to just other roles in the industry and so you know some of the clients I work with our former coinbase colleagues who then left to go start their own projects in the again in like the decentralized exchange space or there are crypto hedge funds or I don't even know a lot of them don't even like to be called hedge funds because they're more funds in a kind of new sense of the word so so the difference for me is Marja s– that the stuff i get to spend my time on and i wouldn't say that the regulatory change has really spurred any difference I think if anything those who took our advice or advice a year or so ago to start engaging with regulators sooner rather than later are probably glad they did that because what we said at the time which i think is still true is you don't want the first time you engage with a regulator to be when they have some kind of inquiry or enforcement action and you know at first they're you know entrepreneurs especially in the technology space tend to be like oh my gosh that's really scary like why would we ever want to talk to regulators if you don't have to but they're they've they've been very receptive they meaning regulators have been very receptive to engaging with the industry they want to learn they realize they can't ignore it and so I think the the folks who are open to engaging with regulators and figuring out it best path forward or probably it might be painful in the short term but in the long term are gonna be the best position to grow and succeed as a company and I'm not trying to say our services but if you decide to go engage with a regulators plan ahead have a strategy your attorney so we whoever but just don't go call like hey this is my project I want it because he's a fine line you know you don't want to be let escape code so you ready when you go there and talk to anybody to it it's interesting to see how I think there was a wave of innovation that was taking place you know here where we all are today in Silicon Valley that was sort of like kind of what's the saying where you ask for forgiveness not permission and you just enter new markets and you know kind of deal with the regulatory fallout on the back end we may all know the company I'm referencing they filed for IPO recently and there are many others kind of in the same vein but it's interesting because because this space touches financial services so much it is so highly regulated and I think you know regulators have a very important role to play it's good to hear everything yeah so it's good to hear that that you're advising people to engage early and it's also good to hear that I think the climate is shifting more around active engagement as opposed to you asked for forgiveness not permission model which don't ascribe to Eric and Kevin I saw you nodding do you want to jump in on any of their points or going I would agree I think just what we see what's this whole openness and willingness of the regulators to engage I mean it's really an education process everybody's trying to figure out what this is and honestly also what it isn't and the the confusion and some of the the legacy stuff that wasn't so savory that came with the start of the blockchain activity is still weighing on people's minds so just making sure that that really you're bringing them along in this journey and then they're eager to do that it's an important well I think that lower level like anyone saying there's a lot of people that don't get it and there's not only like Oh risk-averse so they don't want to like regulators are still trying to understand it sometimes we are still trying to understand you know in certain cases all the time so you have to you know so the other thing is I talked a lot of entrepreneurs in this space who say well we just want the regulator's to tell us where the lines are give us a bright line guidance you do this it's okay you do this you know we'll make you give back the money you do this you go to jail and that's generally not how regulation works in emerging areas at least in this country because we tend to have a very kind of case-by-case approach and we're dealing with new kinds of situations and the regulator's frankly are in a really challenging position because I don't think they want to shut off innovation but we're talking about people's money here and there are a lot of bad actors out there and there are a lot of questions about protection of ordinary investors so you know it's it's a challenge and I think anyone who goes in thinking well you know I just want an answer and it's going to come out needs to have some some fortitude and some willingness to deal with the uncertainty I do think there is another shoe left to drop with the the bad actors which is not the people who did a token sale and didn't register as a security even if that's ultimately what's determined it's the fraud the scams the the front-running on the exchanges the questionable stable tokens all sorts of activity where there's you know there's going to be evidence that people are doing things that's abusing the system and manipulating the system and I think the regulators are going to have to address that here and in other jurisdictions and the markets going to overreact I think it already has but that's the reality that when you see actual enforcement actions ultimately it helps the companies that are trying to do the right thing I think the regulators understand when they see companies saying look we were trying to follow the law as we understood it we want to work with you then in the long run they're going to be okay but I still think you know in the coming year – we're going to have to deal with that situation because the reality is you look globally and a lot of this is more outside the United States but it's an interconnected system there's still a lot of that that needs to be worked out so a lot of the panelists have referenced some of the barriers that this industry faces and really moving forward and I'd like to dig in on that a little bit and I think this is there may be some of our difference of opinions may come out so should be interesting um first question is again for Sara and valaria I think sometimes if you read Jo or just the last letter blockchain news or go to events enough there is this palatable anxiety that perhaps the United States will get left behind perhaps we're slow to come up with these legal and regulatory frameworks and as a result we're going to get left behind and this won't be a hub of innovation like it was for the internet and all of the prosperity that I'm really pretty for us how would you respond to that and what is your perspective on the USS position you want me to go first all right I'm first this time um so I don't think it's that big of a concern I'm at least not anytime soon and the reason is that a lot of benefits come from clarity and although it feels painful now you know a regulatory year is like light years and emerging technologies it's it's still reasonably fast and the amount of certainty that then comes with it is a huge competitive advantage not just from the standpoint of where you stand with regulators but also how you raise capital which is the other reason why I don't think we're anywhere near the verge of the u.s. falling off the map because I don't think the capital is gonna move that quickly my one caveat to that is I think there is a lot going on in Asia that I'm not aware of that you know I think probably I just I haven't followed it that much and I certainly hear like rumblings that there's a lot happening there but but the reality is I think we're going to get greater regulatory clarity in the next year or two and even if that feels like a really long time I think it's going to take a lot longer than a year or two for all of the capital investment in the u.s. to start funding projects from like coders in Russia they're still going to probably want a Delaware C Corp you know some simbu tu' on the ground in the US and I don't know like sure a steamie review we have these cassadee's in the past and I think there's no immediate concern yet you know the US has been at the front line of technology for a long time and I think it has a huge ability to adapt and I do think we're gonna see clarity soon now you would have asked me this in 2017 I would have been more concerned because I think one of the nice things that the ICO Pro was like they open the financing or it was just us and Silicon Valley whereas with the icos people was able to go to other markets International get funding Twitter prices you know portfolios being the way they are is not helping so I think we're good that there is a lot of competition for many jurisdictions trying to get in because there's a lot of money in the space and again Asia is being there have they have big players and they're moving fast yeah not an immediate race but I wouldn't rest in my laurels definitely Eric you are really a Silicon Valley veteran and you were around during the wild wild west days of the early in the 90s not to date you sorry about that but we're all looking forward to I guess hearing your wisdom and perspective on on that and specifically you know I think what we all saw from that is united states benefited so much in terms of a national security perspective a lot of economic prosperity was created and I think looking back on that many people attribute that to really leading from alleged legal regulation framework standpoint so how would you compare now to then and Kevin you might want to jump in on this too because I know you were also very much at the heart of it that was a nice way of saying that I'm old and that's fine yeah I know I think I think the point you bring up is a great one the the regulatory climate around the internet 20 plus years ago it started off thermally from what shaky there was you know Congress in the US was very skeptical you know a lot of evil things happen on the internet banned the internet and then you saw progression you know in the in the Clinton administration they laid out a very clear framework for for e-commerce again they started moving away from regulating the technology to regulate regulating specific activities you know what do you do with the technology and and there are things that you can do with technology that are bad and those those that are very very helpful and I think you saw that that that framework that that was laid out around e-commerce turned out to be a global standard and as a result at least for a while you may not argue that today but US companies were predominantly leaders and and at the forefront of the the e-commerce movement fast forward 20 years you do see similar trends the parallels that Kevin pointed out I fully believe in you know you know initially the the start of what was being done with blockchain and Bitcoin the Silk Road and a lot of bad things and you have people who are trying to learn and the easiest response we're talking about this list earlier is is you know I'm know or I don't know because they're still trying to figure it out and I I do feel maybe a little less optimistic in terms of the u.s. being in a safe position I don't think anything's gonna fall off the cliff in the next year or next couple of quarters but given my earlier remarks there are jurisdictions Asia definitely is one there are things happening you know in Switzerland UK UAE where they're they're really trying to take the lead and set a standard and you know once you do set a standard you create a very friendly environment for innovation and economic prosperity then you have a lot of investment being made within China and within Russia around trying to be a predominant force in terms of the next generation of how FinTech evolves I you know and even if you look at two of the most popular tokens out there Bitcoin and aetherium you know the vast majority of the mining power is within China right now you know 80 plus percent and that in effect is control now if you look at the US it you know it's notable at least to me that around June of this your director Hinman of the sec came out and said kind of in a black-and-white way both Bitcoin and aetherium they're not Security's silent on every other token out there not saying that they're bad but also not saying that that they're not securities so that puts those projects those companies sort of in it in a limbo position you know that lack of clarity ironically the US companies that are not green-lighted are put in a bit of a disadvantaged situation whereas these two tokens they're human Bitcoin which for my earlier point there's a lot of center of gravity and control within China have been given a green light that's that's not necessarily a formula in my opinion to set you know US companies up for success going forward so I think you know there is opportunity to move a little more quickly than we've seen to provide that clarity to coordinate you know with regulators around the world honestly to have kind of a uniform or at least coordinated perspective that will ensure that that the US can have a a real solid strong position in what you know at least many of us in this room believe are it's going to be a an important technology going forward as opposed to being relegated to a you know a second chair having you are an insider on all this I mean you you were at the FTC yeah I actually helped write that White House report in nineteen I hope us I'll be a fly on the wall of what that was like and how it compares now because again you are working with regulators so I'm very curious are you weighing on this question of us remaining competitive and do you feel we're moving fast enough I don't think it's a question of moving fast enough so the difference is in 1998 when the US put out a framework for global electronic commerce the whole rest of the world had to respond because all the activity really was here this is where the development was where the capital formation was the whole Silicon Valley startup ecosystem was and the rest of the world wanted to develop an Internet economy it didn't have it yet so it couldn't say well we're gonna regulate more than the u.s. so we could basically drive the agenda today the u.s. is still in a very significant position but you look at the development activity you look at the adoption you look at a lot of the economic activity in the blockchain space and it's much more global there's much more happening in other areas the u.s. is still in a very preeminent position and I would agree with with most of the panelists has said it's not a matter that the US has to be the the fastest or all the capital is going to somehow flow somewhere else and all the entrepreneurs everyone's gonna pick up in League Silicon Valley and move to Gibraltar or Malta that's just not going to happen but it is an environment where we need to take into account what's happening in other places in a different way the other thing that's different is that the financial boom happened quicker this time you could go back if you start the the tape at the Bitcoin white paper ten years ago then it looks like ten years but but really you know it's only the last five years or so and it may be even less than that that this has been more than a fairly small community and a small level of economic activity and so the development has been relatively quick to get to the point where we had this massive IC o—- boom the internet revolution it was at least five years from the time of the the real take up and adoption of some of the first commercial Internet services that the yahoos and Amazon's and eBay's of the world launched and actually had real adoption fairly early on before we had the 9899 com bubble so in this world we've got a lot of activity a lot of incredibly promising projects things that I think are not just you know purely speculative but still early on in terms of you want to say you know how much is their mainstream adoption what are what are applications that millions of people today are actually using other than investing in tokens fairly limited lots and lots of enterprises doing tasks starting to go into production ramping up services is starting to use services like ripple services but still relative to the overall markets still relatively small so we have this sort of in one hand compression of time scales it feels like we're much further along than we actually are and I think there's still an opportunity that you know that's why I talk about trust in the book trust in the integrity of the ledger itself is not enough to trust the system and what we really need is an environment where there's broad scale trust in these entire ecosystems in these entire application platforms I mean that takes time and that requires a degree of confidence that the bad actors will be addressed and that there is clarity and so I think we're still at a point where I'm not particularly worried that the u.s. is going to somehow not be the kind of place it is in the global capital system and the global innovation ecosystem but there's no question there is a tremendous amount of activity in other places many different parts of the world that are much more competitive with the US than we saw in the early days of the internet you know we've had some really robust questions and answers from everybody so I want to ask what will be the last question but I want to get perspective from all of you on this um so leaving time for audience questions because I think a lot of you've been taking notes and we'll have some good ones I want to know what your predictions are for 2019 I don't think this would be panel and digital assets and blockchain if we didn't ask for predictions not price predictions is but I want to know what you think will come about in the next year and if it will be painful or not well I think it's been painful enough a vision or me advising clients on what to do when there are no rules hasn't been easy and I think in that sense it should just get easier I mean we're having regulation by enforcement and by public statements and I think we're getting closer to to getting clearer guidelines mm-hmm what what I would like to see this is more like I don't know if he's gonna happen but I think it's time like I was saying before to deliver I feel at the end of the day we all love blockchain and love you know the philosophy behind that these are products and businesses and people wants to buy real solutions and they are not buying blockchain they are buying something that is gonna make their life easier and and that's what I tied to like the international community because I feel like in the u.s. it was huge the craze with the speculation but things work here like I use PayPal and I'm like I love blockchain but people is awesome you know like so easy whereas in other parts of the world the friction is unbelievable and you can really have an impact in people's life by using this technology so what I'm hoping is I think regulatory you know that regulators are gonna get up to speed with the technology and a lot of like patterns I'm gonna play out so they'll have more things just an app town so I think that's been a bit better and I hope we see deliverables you know time to see today build hey it's time to see the problems agree Thank You Sara yeah so I think the the lawyerly answer to the question of will it will be painful as it depends I think that some of the clarity I agree that we're gonna see greater clarity I think that's some of the reason we're gonna see it is because we're going to see more litigation and I am so glad that that is not part of my job anymore but I think the we're already actually starting to see if you haven't followed they've kind of flown under the radar but a couple of sort of lower matters but in kind of high-profile cases have had judges issue orders in recent weeks that I think it's gonna really put regulators like the SEC and CFTC and others and we care a lot about on their toes because if judges are coming out with orders denying motions or or what have you that that maybe contradict public statements that Commissioner has made or or at least call it into question um the clarity is gonna have to come one way or the other it's gonna get teased out so if you're on the wrong side of that litigation it is not it's gonna be a painful year but I think overall the industry is gonna be stronger in 2019 and I agree also with what flurry I said about it's time to see products it's time to see people actually using the various things that we're all excited to see I think one of my one of the things I care most about is is the notion of self sovereign identity because I also agree that PayPal and venmo and Square cash are all facebook messenger for that matter who's really easy to make payments to people we kind of abstract in the background all of the painful parts there but um there are other things that really do call for distributed systems and and also in emerging markets payments call for that as well but but I think someone said this recently or maybe I read it on Twitter kind of thinking about the early days of the internet that that waiting for the next crypto bubble is gonna be like everyone who in 2001 was waiting for the next calm bubble and it never really came but ten years later you were like wow the Internet's everywhere so in terms of predictions I don't actually predict we're gonna see that much different a year from now maybe I'm a pessimist but I do think that maybe maybe three or five years from now we're all gonna look back and there's gonna be kind of blockchain powering everything and behind lots of products we use that's right you'll be using that's right yeah Eric Evan sure well so for some people it's gonna be really painful because as I said there is this other regulatory shoe to drop in lots of areas there is an international group called the financial Assam task force that deals with money laundering regulations which is coordinating across jurisdictions and is very serious among many countries in trying to address the the potential for using crypto currencies for money laundering that does not mean everyone in this space is at risk there there's many companies that have any money laundering processes in place but there's lots of parts of the space that don't and you know the sort of second wave follow-on from the fallout from the the ICO is going to happen but people are gonna be building things and I think if you're in a position where you're not dependent on that I think we're going to see more of the maturation of this world and some of the areas that are going to move fastest are not going to be the areas that are necessarily the most radically transformative there's tremendous uptake by wall street in security tokens and crypto asset financial products that are not really based on transforming anything it's just saying okay here's a new asset class and here's a digital asset class that I can use to create new kinds of financial products I know how to do that I'm an investment bank I do that at large scale and I want to take advantage of the programmability of these new digital assets I don't care about any of the stuff underneath it I think that's going to see very significant ramped up over the next year I think on the enterprise side with many of the distributed ledger technology projects I think we're gonna see a lot of these things start to go into production and start to see some real take-up among some of the consortiums that are well thought out this year not all of them but I think we're gonna start to see that and then I think on the the more innovative kind of distributed application contacts we're gonna see a lot of building a lot of focus on having to deliver real solutions that real people are going to want to use as opposed to getting too caught up in the frenzy so again it depends what position you're in if you're now set up to to deal with that kind of environment whether or not it's going to be painful to you I mean the last thing that I'll say is I'm not so worried as I said about the u.s. falling behind from a regulatory standpoint but I am somewhat worried when I talk to governments and other countries not not the regulators but the the national governments because I've talked to a number of them who are saying we need a blockchain strategy we think this is a transformative technology it will be essential for government services will be essential for economic development it's an area where we want to fund research and we think government can really play a role in coordinating the uptake of this technology and they are developing national strategies and providing support for industry in this area and I don't see as much of that happening here and I think long-term that's a challenge because again I think the u.s. is in a in a very valuable position but the developers can really be anywhere so I don't think that's going to change overnight in the next year but I think we're gonna start to see the impact in the next year of some of those jurisdictions lots of activity in Europe and individual countries and across the European Union and lots of activity in some of the Asian jurisdictions where I think the government affirmative investment both financial and operational in trying to facilitate the the payoffs from this technology I think we're going to start to see fruit in ways that we're not going to see here all three quick ones one all echo Valeria's in terms of will see real projects come to light and a shameless shameless plug is I think we're already showing that I mean we've been focused on a real use case we have over a hundred you know financial institutions as customers we're in deployment we're moving real money with us this watching technology so I think we're certainly going to make bigger progress there but I think you're right we'll see more of that to building a little bit on Kevin's point I think banks will sort of see a tipping point we actually have commissioned some research some third-party research this year that and they're saying that we're on the cusp sub banks sort of embracing this technology in a bigger way and I think one particular manifestation of that will be around banks custody digital assets it's an obvious need is a new asset class they're in the business of custody assets' and this is one they should should do as well it's a pain point that exists especially with this technology so I think you're going to see more and more of that and then third maybe extrapolating on what I mentioned before we're seeing in Asia I think some of the regulatory evolution will be moving from regulating the technology to seeing a much broader embrace of regulating the specific activities so being more thoughtful about the use cases and what you know what consumers and others need real protection from versus this sort of blunt instrument you know it blockchain is good or digital assets are good or bad it's it's more subtle than that I think the regulators are getting to a point where they'll be able to provide that clarity in a more thoughtful informed way well thank you all so much before we thank our panelists I want to thank all of you for coming this was our first edition of what we hope is more in the expert series so I hope to see you all back here in the new year and I hope you'll join us at other events that we threw out we are working to really spotlight these credible voices in the industry because I think that while this is a very exciting time it's important to talk to real practitioners who are seeing this from multiple different angles and and listen to those credible voices so thank so much we have a few books of Kevin that are back by kind of our AV set up back there in the room so and we don't have enough for the whole audience unfortunately but we do have a few so I encourage you to go back there and get one if you're interested kevin has offered to sign some of them and there are pens back there if you'd like to do that we also have some ripple t-shirts – thank all of you for coming and we have some food and beverages and networking till about eight o'clock so I welcome you to join us for that we're gonna have a few audience questions and then we will thank our panelists and conclude so are there any questions in the audience I'm going to hand you the microphone so that we can record the audio and I will come and circulate it now I Professor Ling from SF State I teach financial technology in my alternative investment class this is a new brand new field for me and also my students are very curious about this I have a two question the first question is – Eric you just said 80% the money machines for Bitcoin and a CRM is in China I in China so easy to see a radically possible for Chinese government to shut these two things down once once and for all theoretically I mean what tell them what to do like I think that's I think that's unlikely would be short-sighted and okay and I don't think it's in the long-term best interest of certainly a bit of the ecosystem and I don't think so for China but the possibility I think exists and it's it is sort of you know tied to the the proof-of-work consensus method in the act that the cheap energy and the ability of economies of scale really to allow that sort of disproportional power can go in an ironic way to a to an extreme that may not be within the spirit of where you know the technology arted there's actually about the sort of focus of the regulatory clarity on sort of also our discussions have been mostly about this sort of investor and network creator axis but we also sort of have a consumer producer access for participants in the economies after they launched the consumers of the services that have tokens involved in them and whether or not there's any sort of we have seen a separate timeline for clarity around participation as opposed to launching especially in light of discussion that of its activity not technology that we would expect to be regulating directed at the buyers mostly so my take on that is actually we have a reasonable amount of clarity on that already and I guess this goes to the the point of a more broadly how the internet is regulated and how existing FinTech is regulated which is that specific services often have consumer protection rules attached to them and so whether that's data privacy or you know it just disclosure requirements receipt requirements requirements around custody other people's assets if you're you know PayPal is a great example actually of PayPal is regulated the same way that coinbase is regulated so if you're if you're trusting a FinTech company to hold your dollars you're also trusting them to hold your Bitcoin it's a very similar consumer protection facing regime and so the rules that apply to those businesses and the people using them so the point of the question though is when the service being rendered is diffused over a decentralized network if we're talking about you know imposing that on the thing you architected and deployed in the first place but then the sub services are provided in a sort of diffused way by sort of you know even synonymous or even named participants like how does the responsibility that would go to if it were say uber or Airbnb as providing a platform versus say now the computation and execution of what you architected is now not you at all but actually some a few set of parties I think that's gonna end up being highly situation dependent and industry independent and I mean that actually honestly and not as a joke because the the reality is in some instances I think you'll see regulators probably like if it's if it's a serious enough issue they'll probably try to look to the people who deployed the code in the first place and to an extent we've seen that already with with decentralized exchange platforms but I also think that that's not an argument that holds up super well across the board when you have things like free speech and and if code is speech then just publishing it probably isn't a crime so I really do think it's gonna it's kind of the analytical answer today that you might give for a particular scenario is probably going to play out to be something different as regulators evolve over time I also think there's not a clear accident and answer to your question because the truth is we are still at the early stages is remain and that's why the real raters are kind of like not knowing what you do nobody knows because we still don't know how these things are gonna play out you know we we know the theory you need to see the variables and see how they're gonna play ality yeah and regulators respond to problem so we're talking about something like consumer protection the Federal Trade Commission which is the general consumer protection regulator has a blockchain team they've brought enforcement actions already they're not going to step in and say what architectural we should happen with decentralized platforms they're going to say alright here's a situation where someone has suffered a loss there's been some fraud or some violation what can be done about it and then they're gonna look at the particular situation and and a lot of these platforms it turns out today are less decentralized when you pull back the covers and it seems in theory but but they're gonna focus in on where the problems happen and what to do about it and it's gonna be the same kind of thing the entrepreneurs the technologists are gonna have to come in and talk and explain what they're doing and explain the positive value of the decentralization and address what the problems are and and that's just something that's going to take some time we have time for one maybe two short questions or one longer one I my name is Paul I'm based in Hong Kong so this is directed at Eric increasingly in Asia and it's also true in Europe you're seeing government's move toward restricting cross-border data flows data localization requirements big big potential markets of yours India China Europe has this since May of this year the general data protection regulation so you cannot transfer a personal data to a country that it doesn't have its stamp of approval and in Asia there's only one country that currently has that it's New Zealand so how is that affecting ripple and how are you dealing with it I mean and it's a fair point you know ripple from a technology standpoint isn't really getting in the middle of the data flow if you will we're not holding user data we don't store it we don't even really look at we're really providing a technology layer so if you think about the things that are already happen with cross-border payment Loes be it you know kyc or anti money laundering all those checks that happen still happen and they're being done by the financial institutions that were doing them before so from our perspective we certainly are staying abreast of it and we want to be responsive so that we can help our customers the financial institutions be responsive and responsible in what they are doing to stay compliant but you it's not that ripple is is changing the flow of data or anyway holding that data we're simply a facilitator if you're both technology provider and oftentimes we'll go in and we'll talk to regulators and really it's education we're telling them what we do and then after a few questions that wait a second you're not holding the data you know so you're just providing software we're like good that that's what we do like why are you talking to us because the they don't regulate the technology providers they're regulating something different so I'm not sure that fully addressed your question but it doesn't really change a whole lot of what we're up to but we want to be helpful as we engage with our our customers well thank you all so much we're out of time for questions but the good news is I think the panel they're all and sticking around for a little bit to Network and socialize so if you want to get in the weeds with them on something I'm sure they'll they'll enjoy having a conversation with you about that but I hope you'll all join me now and just give me a round of applause and thanking our panel sir [Applause]

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