Digital assets and their underlying blockchain technology tend to focus mostly on their promise, predictions about future applications. But we're now at a crossroads. Some of those promises have been fulfilled and parts of the digital asset ecosystem look like they are sustainable and will become permanent parts of the financial system architecture, while others still remain aspirational promises. In this session, we're going to examine the current state of play. We'll cover many aspects of digital assets including crypto, stablecoins, payments, tokenization, and regulation throughout the world. So, let's get started. Let me start with Adib Ahmed from Lulu Financial Holdings. So Adib, your group operates across multiple regions and touches millions of customers through its payments and remittances ecosystem. From your vantage point, how have cross-border payments evolved over the past few years and what shifts are you seeing today as new digital asset payment infrastructures begin to take shape?
Thank you for having me here at the session today. So one thing that we've always known in the last couple of decades is that the future of finance is digital. While this has been an accepted thought over the last two decades, we have seen a very slow but predictable shift from cash to digital. But what we are seeing at today's cross-junction is a complete rebuild. And this is because we have many new forms of money that have come into the market. So we have stablecoins, cryptos, tokenized money, digital assets, blockchains. So there's a different kind of payment methodologies that have come into the market. The last couple of years, the geopolitical tension around the world has fragmented the financial payment ecosystem in each of the countries. Today you will see majority of central banks wanting to establish their own regional payment ecosystem in all countries. So you have the larger players like UPI in India, in Brazil you have PIX, here in UAE you have Aani, in Singapore you have PayNow. And then we have the aspect of the need of the cross-border payment to be seamless, and that requires interoperability between each of these fragmented payment ecosystems. So with all these new elements of activities that have come in sight, we are still gearing up our entire aspect of understanding how the payment could be much more seamless. I feel that the use of stablecoin is largely increasing in its usage. Even though if you look at the 2024 numbers, you'll see that the payment used on stablecoins is still less than a percentage of what is used on traditional money. So we see that stablecoins are still in its very nascent form and there is a long way for the usage of stablecoins to be on the mainstream. In terms of Bitcoin, yeah, it's still up in the air. We don't have central banks regulations on that aspect. But the good thing, at least from our side of the world that is here in UAE, the regulator has become co-author of writing regulations and that's very good news for all of us here because they involve us in finding out and understanding this new journey which is also very new to them. And this allows players like us to assist in getting the right regulations placed because it does not become a bottleneck and it brings in more efficiency to the user stage of tomorrow.
Thank you, Adib. Yeah, you mentioned both stablecoins and the role of regulators and industry players working with them. We'll do some deep dives on those. Thank you for setting us up on that. So, Yoni, I want to come to you next. You're the co-founder and CEO of eToro, which is a leading global trading and investment platform. And you allow folks to trade traditional securities like stocks, ETFs, options. We also allow them to trade on the same app alongside digital assets, which are continuing to grow in popularity not only among retail but also institutional investors. So, it seems like they've been kind of the new thing, the popular thing to be trading, but how long have you offered investment in digital assets and how important is crypto trading on your platform relative to the other assets that you trade and what trends are you seeing over time?
Sure. So, we started actually buying Bitcoin back in 2011 where it was $5. We should have bought more. And we launched Bitcoin in 2013. We were the first regulated financial institution to offer Bitcoin trading in Europe, then expanded our business from Europe to the UK, Australia, Singapore, Abu Dhabi, here in the US. And we started our business in capital markets, stock trading. I think what we've seen over the last 12 years, this is a generational asset class. It's not only about the technology, it's about a new form of capital markets. It's a global capital markets. We have today over 500 million people that actually trade and invest in digital assets across the globe. So this is far beyond already the inflection point of usage. More people actually invest today in digital assets than the stock markets directly. And when we look at the younger generations joining eToro, and many of the people who join eToro join in their early 20s with as low as $50 or $100 to start basically their investment journey and then grow with us and grow their investment with us over time. And we actually see that today crypto in many cases is actually their first asset class. So this is a generational asset class where younger generations actually start first to invest in crypto assets such as Bitcoin and Ethereum and we suddenly find our role. We used to say always that eToro caters to younger generations, me at Gen Y. Now we're catering to even younger generations. And I find myself actually trying to explain to Gen Zers why they need to diversify from digital assets and crypto assets into the stock markets to diversify their investments and take less risk. And actually sometimes it's hard because their expectations are very different. But again, if you think of the size and scale, we're thinking already in trillions. It's already a $4 trillion market cap economy. If you think of size and scale, again, it's like comparing newspapers to blogs. So we recently went public, very proud to go public on NASDAQ this year. But when you think of the number of publicly traded companies in the US, it's only 4,000. Actually down I think from about 8,000 to 4,000 over the past decade. If you think of the number of crypto assets out there, it's over 100 million types of crypto assets out there. So basically people are just launching new tokens every day, launching new types of assets, new types of tokens. So that new ecosystem opens an opportunity. If you think of the number of small-medium businesses, just if I remember correctly, just Europe and the US, 65 million small-medium businesses that up until today didn't really have access to capital markets because capital markets are reserved for significantly larger companies. I remember starting eToro, my father told me you need to get to $50 million to get public. By the time we got public 18 years after, we're at almost a billion dollar revenues. So the thresholds continuously go up of traditional public markets but there's a huge need of capital formation for many other businesses across the globe. So it's not about only the ability to invest into digital assets. It's also about what do you invest in and when you invest on the other side there's capital formation. So it's a new type of capital formation which is global which is already there and now we're seeing what's really interesting with regulatory updates coming both from Europe with recent MiCA and now with probably the friendliest administration anybody could hope for in the US with Chair Paul Atkins continuously talking about capital markets moving on chain. And that's where we are now at that next stage of growth for digital assets. It is the inevitable hundred trillion dollar move of traditional assets and new type of assets onto the blockchain. So we're talking about probably the next 10 to 20 years a huge shift of assets both existing ones like stocks, very popular right now tokenizing the stock markets themselves, in what I say is capital markets copying crypto markets because our customers are used to trading 24/7. So when we started eToro everything used to be only market hours, now suddenly stocks trade on eToro 24/5 live, now shifting to 24/7. Why? Because customers who trade crypto 24/7 expect also stocks to trade 24/7 and fixed income to trade 24/7. So what we're seeing is capital markets copying crypto markets in behavior which means 24/7 transferability and you're seeing traditional assets, everything from obviously the dollar stablecoin, now by the way $350 billion of stablecoin which means it's one of the top 10 holders of treasury in the world is actually young digital asset investors are actually the I think the fifth or sixth largest holders of treasuries in the US. So you see that move of traditional asset classes and then real estate, bond markets, private markets all moving onchain. So very exciting times to see that process from $23 trillion into hundred trillion dollars over the next 10 to 20 years.
Oh, that's great. I mean tokenization, stablecoins. We'll get to that in just a couple minutes. I can't help but notice when you listed the countries that you were in sort of in order, you got to the UAE and everybody else before you got to the US. So, we'll get back to that. You said the current administration is the most pro-crypto, but we'll contrast that with your experience in the past. So, I want to now move to Yuval, who's the co-founder and CEO of Digital Asset, which is a leader in the use of blockchain technology to improve capital flows. As I mentioned, the title is from promise to permanence. And if you go all the way back to the sort of the original big bang, the Satoshi white paper, right? It was the promise, one of the promises of blockchain technology is it would create a new financial architecture. Tell us about the Canton Network and how it's fulfilling the promise of blockchain.
Sure. And maybe I want to just build on what Yoni said. I really like he said generational asset class and kind of at the end I'll summarize. I think we're seeing a generational user experience, right? This point of real world is copying crypto. I think what we're seeing is what's happening right now is that markets are adopting a new user experience and that user experience is not going back. Meaning everything onchain. It's not just 24/7, it's settlement times. It's the ability to take my assets and pledge them as collateral against many types of products. Like if you think about today, if I go to a traditional broker dealer, I cannot take my Apple stock and really lend it as a retail customer. Yet in crypto, I can lend my crypto into many types of products. So if Yoni for example wants to offer his clients to go into private credit which is a really good asset class but he says to his clients well it will take you 20 days to settle this or you cannot trade it or you cannot pledge it as collateral they're going to say what is this stupid asset class no interest no thank you. So I think that this user experience is really what is proliferating and what crypto have shown because at the end of the day I am still a believer that assets should have utility and cash flows. At the end of the day cash flows will win long term but not if they don't have a user experience they will not proliferate. So I think that this point of Wall Street is copying crypto is probably the most important comment here because otherwise it will not succeed. So in 2012 I used to work for a company called DRW trading which started trading Bitcoin in 2012 and we started thinking about well what does it mean to trade crypto assets and back then it was not very capital efficient to trade Bitcoin but given where it is right now it was a very good trade. But when you think about it from a capital market structure perspective it was not very efficient and we started thinking about well what does it mean to run capital markets natively on chain. We started thinking about what are the characteristics that will be required to bring a lot of institutional players to participate natively on chain. Yes, in crypto, but also again back then we were starting to think well there's 400 trillion worth of assets. If we can bring that kind of assets on chain that would be even more exciting. And for us it was a few components but I would probably say that back then we said that privacy is the most important component. Back then when it came to crypto we were not very popular saying that privacy is a good thing because in traditional crypto rails if you can say that there is no privacy. And our view was if you want Citadel Securities, if you want DRW, if you want Goldman, if you want those type of players to provide deep liquidity on markets they just wouldn't do it if everybody can see all of their activity. It's just for us that was table stakes. And the reality is that building a blockchain with privacy capabilities that are still going to be regulatory compliant because not all privacy is created equally is not a trivial task. So in 2016 we started building Canton which is a layer one that allows for configurable privacy. And the reason why I say configurable privacy is that we don't believe that everything is either public or private. Right, like Yoni's website has a lot of elements to it that are public, he shows stock prices, he shows crypto prices. But if you want to open an account, his customers' accounts are not public for the whole world to see. So this idea that you could actually...
We actually are by the way, right? Because we're a social network. So people share their portfolio.
They share, but you don't have to, right? Like you could actually again so it's configurable, right? So this idea that the world is not binary. You have to allow for this configurable privacy. And the reality is we launched a year and a half ago. We launched the layer 1 after testing it for many years with large scale institutions. And for example, one of the most exciting we talked about stablecoins is now you could actually move stablecoins on Canton with privacy, but the stablecoin issuer still wants people to see the activity. So the notional of a stablecoin movement is public for the world to see. So you could actually see how much volume is happening in your stablecoin. Who's the sender and the receiver is private. They can actually keep it. But to Yoni's point, I mean, what we're seeing today is pretty much every asset class is getting excited. You're talking about cross-border and you said, is it permanent? Today on Canton, we're processing close to 10% of the US repo market. That's $400 billion of repo every day. And this is not retail. These are some of the largest broker dealers in the world, banks, that are doing it. Private credit is definitely going to move onchain. I cannot share but some of the largest GPs are starting to put their private credit facilities on blockchain to enable much more efficient settlement and securitization. Mortgages, bonds, equities and all the way to sports wagering. And I think that the reality is what we're going to see is I'm not going to say but companies like eToro are going to become the banks of the future. At the end of the day what are you looking for from a bank is someone to custody your assets and to provide you credit services. And really the reality is if you really remove the friction of managing assets and being able to pledge assets as collateral, borrow against these assets, right? That can all happen on your phone. And I think that that's really the direction of travel that we're seeing and that's what we're trying to enable through Canton.
And after that promotion, I have to say you can buy the token of Canton Network on the eToro app.
Thank you. We'll save the commercials for the end. No. So you and Adib were saying that Wall Street is learning from the crypto markets. But in a sense what you're doing is with this privacy and allowing people to configure that is a lot of what had already been happening on alternative trading systems. You don't want to necessarily show people what your portfolio is or what your trading is for front-running purposes. And there's different versions that are out there and you're just providing that option now in the crypto market.
Yeah. I mean again for us it's a decision. Yoni for example how many years ago did you start?
Yeah. His whole pitch was a social network like you actually want to advertise your trades and that was the whole business model. And again that's a very clever business model but if you are an activist hedge fund that is not your strategy, right? Your strategy is to create many legal entities that by the time the company knows that you took over it's too late. And again I'm not here advocating for a business model but at the end of the day again the world is not homogeneous. We heard comments about SWIFT. This idea that everybody can sit on just one network and then whatever some third party can have control over your sovereignty again is another challenge that we've seen in the last few years due to geopolitics. So the idea of Canton and hence by the name, the name Canton is from the Swiss system where every canton has its own sovereignty and control but they can all interoperate under one country called Switzerland. Right? That was kind of the design characteristics and what we're seeing is that that is creating real excitement because now if you're in UAE and you want to create your payment system that's great. We have our payment system. We can do payments real time 24/7 with privacy. We can interoperate with everyone on the Canton network. But if tomorrow whatever we have disagreement with someone else in the Canton network, cool. We won't interact with them anymore. But we still have full sovereignty and control over our own canton. It's a very smart feature of digital assets is smart contracts or configurable money, right? So every type of asset can basically be configured to say who interacts with that asset. What's the level of privacy of that asset? What's the speed of settlement or configuration on how does it settle? So a big part of digital assets, it's not only 24/7 trading and transferability. It's the fact that embedded in a digital asset is the fact that it's a smart asset. It's a smart contract. It's configurable programmable money, right? And that's a very very big change to how financial services and institutions interact today where I interact with Goldman, it's 500 pages of an ISDA agreement, then I need to interact with another firm, it's another 500 pages of an agreement and the funds between us can't really move. It's very hard to move assets between financial institutions. So this is a paradigm shift, complete paradigm shift on the infrastructure of financial services to move into digital assets and very interestingly the fact of privacy, non-privacy. So when we started eToro it was about show your trading activity and your portfolios so other people can copy you. That has become today in Gen Z, the younger generations that has become not only the standard but when you look at things like prediction markets and all of the new types of exchanges which are the decentralized exchanges the default is not only showing your performance but actually showing the actual funds and the actual P&L. And people are actually sharing their real P&L online nonstop. So when you're looking now at something that today has a lot of buzz around it like prediction markets, you go to Polymarket and you can actually see exactly how much this user has made, from $100 to $100,000 in what he's been predicting or betting on. So everything is suddenly on the public domain. So when you think retail, everybody wants to be sort of on the public domain and share things that people didn't expect people will want to share their actual financial transactions with their actual funds and the entire history of it right on the blockchain where institutions need that configurable money for things to be private and a bit more secret.
Yeah. So this idea of it's configurable money, you got smart contracts and stuff and so that's a perfect segue into what I want to ask Joanne about in terms of the legality, like what legally, what are these things? So Joanne's a partner in the UAE office here in Abu Dhabi at the Quinn Emanuel Global Law Firm and you get to deal with very exciting issues like how is this defined, like what is this in law, right? And it actually is very important, it matters in terms of legal rights, creditors rights, tax issues and all that stuff, right? We throw around terms like digital assets, configurable money, cryptocurrencies, right? What are these things? Are they in terms of where's the law in terms of these things? Are they currencies? Are they something else? And why does it matter?
That's kind of you, Mike, to call that an exciting question. I will try to make it an exciting answer. Yeah, it does matter. Hello, everybody. Fascinating to hear the conversation from my panelists. I'm learning all the time. So thank you for that. In the law, as ever perhaps playing a little bit of catchup towards the commercial developments that are happening in the wider business world and some might say the law has been very slow to catch up with these new and exciting products. And often it only catches up when there are real problems that come before the courts that need the courts to decide important issues. Look, in the digital asset space, probably the key question that a lot of regulators and governments and courts have had to grapple with is is a digital asset property and does it give rise to property-like rights under the various legal systems. There were various cases coming out from jurisdictions across the world on this for a number of years. One of the first bodies to really have a good think about it was the Law Commission in the UK where it did a big consultation and it grappled with the problem that it's not a thing in possession, it's not a thing in action. So how can a digital asset be a property because it didn't fit into one of the two defined elements for property in the law? And the Law Commission said well yes, we think a digital asset is property, but it's a new thing. It's a new type of property. It's a third type of property all of its own. But that was just a report. And the report said look we think that common law and the development of the law in this space by the judges can deal with the changes needed legally for these new products but they recommended change. Now I'm happy to say that the first fully argued case at Court of Appeal level on this question as far as I am aware was a case here in the UAE that came before the DIFC courts. There was a case called Huobi where a horrible set of facts came before the court where there was a transfer of a digital currency of Bitcoin between a seller and a buyer with an intermediary who was meant to help with the transfer and the intermediary would only release the Bitcoin to the buyer once the money had been received. And the seller and the intermediary were innocent parties but unfortunately the buyer found a way to access the funds in the wallet, sorry the tokens, the Bitcoin in the wallet before it had given the money which I won't get into how they did that but it's a fascinating read. So the question came before the DIFC court at the Court of Appeal level well are there property rights in this and actually they looked at whether the wallet was property and whether the digital assets themselves were property and relying heavily on that Law Commission from England and Wales, the United Kingdom, it agreed and said look clearly digital assets are capable of being a property, they are a third kind of property and it made its decisions on that basis. That case is actually set for a retrial. But on that particular point, it's as far as I'm aware, it's probably the leading decision in the world on that question at the moment. So soon after I should say, since then there's been a digital assets law in the DIFC which codifies what they found in that case that there is a third kind of property that covers digital assets. And so I'm happy to say that in the UAE right here in the UAE we're making law that will I expect to be followed all around the world. It comes against the background of the UAE leading from the front on these issues. The ADGM was one of the earliest if not the earliest adopters of a full legal regulatory framework to cover digital assets as long ago as 2018 through the DFSA, the FSRA. In Dubai we have the world's first independent digital asset regulator which you guys will know more about than me. But that in of its own, the fact that it was a world first along with modern legal frameworks has said to the world that this is a jurisdiction that is open to digital assets. We're here. We want it. We want it here. We will regulate it. We will make it a place where investors can be comfortable and where this business can grow. So forgive me I've spoken a lot about the UAE. But I defend that because it's a leader in its field in this space.
I totally agree and we'll get to that.
Like we've had, you know, the folks on your fellow panelists have set up here in the UAE particularly for that. But I want to get to, so now it's right, we, it's property, it's well defined in law in the United States. The Internal Revenue Service has said for tax purposes in the US it's considered property. So that's pretty, you know, there's cases going on, pretty much settled. So from then you have legal certainty, then all the property rights and stuff then follow from that. And then you get innovation, you know, like that Yoni was talking about, tokenization of a lot of different things. Now, the phrase tokenization can mean a lot of different things to a lot of people. So, I want to get from all of our speakers, what exactly when you're talking about tokenization, what are you thinking about? What has promise? What has actually permanence in terms of going on, you know, and there's a lot of folks that said we're going to tokenize everything in the future. Really? Are we going to tokenize everything? What's hype? What's reality? What's promise? Where have we actually gotten some permanence on this? So Adib, let me start with you.
Yeah, so I think we're still at a very nascent stage of tokenization of everything. You know, there's a lot of conversation on saying that, you know, you get real estate tokenized, you could get real asset tokenized, you can get money tokenized, you get capital flow tokenized. Yes, but all this are happening at its very nascent stage. And everything the panel has spoken before, and I think we're missing out, you know, the tokenization aspect, the transformational aspect, the innovation aspect. Well, there's a new layer that has now just come on top of that. It's the transformative power of AI. You know, and the moment you put the transformative power of AI on all these kind of things, it now gives consumer even more power of analytics, data, ability to make more precise decision when to move funds, when not to move funds. The ability to predict the rates ahead of time. You know, the usage of funds, you know, where to park funds, you know, what's the best yield coming through. So, you know, the transformative power of AI is also moving at a very fast pace and that's going to be the real game changer as we move forward.
