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1CAPTIONING. >> LADIES AND GENTLEMEN, OUR PROGRAM WILL BEGIN MOMENTARILY.
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3 . >> WELCOME THE TO FIN TECH FORWARD 2018 CONFERENCE, INNOVATION, REGULATION AND EDUCATION, PLEASE WELCOME OUR DIRECTOR OF LAB CFTC AND CHIEF INNOVATION OFFICER DANIEL GORFINE [LOW AUDIO ] STANDBY FOR CAPTIONS ] [LOW AUDIO ] [STAND BY FOR CAPTIONS ] [LOW AUDIO ] . . >> SOME OF THE COMPLICATION IS A RESULT OF REFORMS THAT ARE PUT IN PLACE AS A RESULT OF THE FINANCIAL PLACES, ADDITIONAL CAPITAL REQUIREMENTS, LEVERAGE RATIOS, SUPPLEMENTARY LEVERAGE RATIOS, MARGIN ENVIRONMENTS, MARGIN SWAPS, SOME OF THOSE THE COMPLEXITY THOUGH IS CAUSED BY SECOND [INDISCERNIBLE] AND THAT IS INCREASING FRAGMENTATION. [INDISCERNIBLE]. I CAME OF AGE MY PROFESSIONAL CAREER OVER A 30 YEAR PERIOD [INDISCERNIBLE] YET IN MANY WAYS 1 HAS TO ASK WHETHER THE TREND OF GLOBALIZATION AT 30 YEAR TREND HAS BEEN SHOW OR REVERSIBLE WHAT WE SEE HAPPENING IN EUROPE, SEE HAPPENING AROUND THE GLOBE AND IN A NUMBER OF REFORMS [STAND BY FOR CAPTIONS ] [NO AUDIO ] >> WHY ARE WE HERE TODAY? I THINK WE ARE HERE TODAY TO TRY TO FIND SOME OF THAT CONSENSUS, IF GOVERNMENT IS GOING TO FORMULATE PUBLIC POLICY [INDISCERNIBLE] IT CAN'T BE ON THE BACK OF A SCANDAL OR A CRISIS OR DONE IN A RUSH, IT'S GOT TO BE BASED UPON PEOPLE ENGAGED, HOUSE AND PRACTITIONERS, MAKERS INNOVATORS AND ADOPTERS WITH BIG FIRMS AND SMALL FIRMS. WITH BIG FINANCIAL SERVICE COMPANIES AND SMALL [INDISCERNIBLE]. YOU HAVE TO BUILD A CONSENSUS AROUND WHAT SHOULD BE PUBLIC POLICY, 
4WHETHER IT BE CRYPTO CURRENCIES, SPECIFICALLY OR [INDISCERNIBLE]. SO THAT'S WHY WE'RE DOING THIS TODAY. WE'RE SO GLAD TO HAVE YOU HERE, I KNOW I AND MY FELLOW COMMISSIONERS WILL BE SITTING IN LISTENING TO A LOT OF THE PANELS. WE WILL LOOK TO BUILD CONSENSUS [INDISCERNIBLE]. THANK YOU ALL VERY MUCH AND LET'S HAVE A GREAT 2-DAY CONFERENCE. THANKS. >> ALL RIGHT, I'M NOT HEARING THE VOICE FROM ABOVE SO I'LL BE THE VOICE. WE'RE GOING TO KICK OFF OUR FIRST PANEL SO IF OUR MODERATORS AND OUR PANELISTS WILL GET STARTED. [INDISCERNIBLE]. >> GOOD MORNING, THANKS FOR JOINING US TODAY, I'M EXCITED TO KICKOFF THE FIRST PANEL CRYPTO ASSET MARKETS AND TRADING. GREAT LINE UP OF PANELISTS TODAY. TO MY LEFT WE HAVE JOHN, ENTREPRENEUR AND AUTHOR OF INSTITUTIONAL INVESTORS TAKE ON CRYPTO ASSETS. NEXT TO HIM, WE HAVE KELLIE LEFLER, CEO OF ACT GLOBAL ECOSYSTEM FOR DIGITAL CURRENCIES AND EXECUTIVE MANAGEMENT COMMITTEE, AND WE HAVE THEN [INDISCERNIBLE] HEAD OF MARKET STRUCTURE AT DRW, TRADING FIRM AND NEXT TO HIM WE HAVE PETER DIRECTOR OF RESEARCH AT [INDISCERNIBLE]. [INDISCERNIBLE] AT GEORGETOWN UNIVERSITY LAW CENTER. THANK YOUAL FOR JOINING US. SINCE WE HAVE A LOT OF QUESTIONS, AND NOT MUCH TIME, I WILL JUMP RIGHT INTO IT AND AT THE END, WE WILL HAVE TIME FOR QUESTIONS SO GET YOUR QUESTIONS READY. PETER, I WILL START WITH YOU, LET'S TALK ABOUT THE CURRENT STATE OF PLAY OF CRYPTO CURRENCIES AND TOKENS. MORE SPECIFICALLY, WE'VE HEARD OVER THE PAST YEAR OF PEOPLE ARE WORKING ON SECOND LAYER PROJECTS, TO FOSTER ACTUAL USE OF CRYPTO CURRENCIES [INDISCERNIBLE] HAS THAT HAPPENED YET? AND ALSO WHAT ABOUT SMART CONTRACT PLATFORMS [INDISCERNIBLE] >> THANK YOU AMIR, AND THANK YOU TO THE CTFC FOR HAVING ME. SO I AGREE WITH CHAIRMAN GIANCARLO'S COMMENT THIS IS MORNING, CRYPTOS ARE NOT A FAD. [NO AUDIO ]] STAND BY FOR CAPTIONS ] [NO AUDIO ] 
5--GENERALLY THIS IDEA OF DIGITAL SCARCITY, THIS IDEA YOU CAN SEND A DIGIT AT OBJECT, RATHER THAN A TANGIBLE OBJECT FROM THE INTERNET FROM 1 PERSON TO ANOTHER AND HAVE ASSURANCE THAT IT'S BEEN TRANSFERRED, THAT SOMEBODY'S GIVEN IT UP AND SOMEONE'S RECEIVED IT AND THEN IF THAT OBJECT HAS SOME SORT OF VALUE OR IT'S NITRIC OXIDED IN SOME WAY TO SOMETHING OF FUNCTIONALITY THEN YOU ACHIEVED SOMETHING QUITE MAGNIFICENT. YOU'VE DONE THE PHYSICAL SETTLEMENT YOU CAN DO FACE-TO-FACE BUT YOU'VE DONE IT GLOBALLY AND QUICKLY. THE NEXT LEVEL INNOVATIONS AS AMIR'S QUESTION TEED UP ARE I LIKE TO BREAK THEM DOWN CATEGORIES, INTO WHERE THE TECHNOLOGY HEADING, SO IS SCALABILITY, THIS QUESTION OF SECOND LEVEL PROTOCOLS IS PARAMOUNT. RIGHT NOW THE NETWORK CAN SETTLE ON OFERAGE, 5 TRANSACTIONS PER SECOND, FOR SCALE, VISA CREDIT CARD NETWORK CAN HANDLE ABOUT 250,000 CREDIT CARD AUTHORIZATIONS WITHOUT BREAKING THE STRETCH IT MILLION AND A THAT'S THE GLOBAL NUMBER THEY CAN HANDLE. IT HAS A LONG WAY TO CLIMB, NOW THAT MAY SOUND HOPELESS AT 5 TRANSACTIONS PER SECOND VERSUS 250,000 PER SECOND, BUT I WOULD SAY AGAIN REFERENCING CHAIRMAN GIANCARLO'S OPENING REMARKS, TECHNOLOGIES SCALE AND THEY SCALE EXPOTENTIALLY AND THEY CAN SURPRISE YOU. WE SEE MOORE'S LAW WITH COMPUTING AND DEVELOPMENTS IN CRYPTO CURRENCY THAT ARE PROMISING, 1 OF THE MOST PROMISING IS THE DEVELOPMENT OF A SECOND LAYER SOLUTION, LIGHTNING NETWORK ON BITCOIN AND ALSO POTENTIALLY THE SAME PRINCIPLES BUILT ON CRYPTO CURRENCIES ISSUES USING THE LIGHTNING NETWORK YOU CAN CREATE PAYMENT CHANNELS THAT WOULD ALLOW FOR MILLIONS OF TRANSACTIONS PER SECOND GLOBALLY. IT'S ESSENTIALLY AN UNBOUNDED NUMBER, IT'S A BIT TOO COMPLICATED TO EXPLAIN ON A PANEL WHERE WE WILL HAVE A PANEL WITH SEVERAL TOPICS BUT I WILL SAY WE HAVE A BUBBLE GUM SOMEONE AND YOU CAN OUTLINE A BIT COIN WALLET AND OUT WILL POP 1 OR 2 M& Ms, AND WHY IS THIS INTERESTING BECAUSE A TRANSACTION FOR 1 OR 2 M& MRs AND A FRACTION OF A PENNY AND IN ANY LITTLER DIGITAL SCHEME THAT IS A NONTRANSACTION, YOUR EXCHANGES AND FEES WILL BE FAR HIGHER THAN WHATUARY BUYING AND THAT'S INCLUDES CREDIT CARD NETWORKS BUT WITH THE LIGHTNING NETWORK BECAUSE IT'S SO CAPABLE OF HANDLING TINY TRANSACTIONS TAKEN--THEY CAN BE AN ECONOMIC PAYMENT. KIPAY FOR 1 M& M, AND THAT SOUNDS SILLY BUT IF YOU'RE PAYING IF BY THE KILO BYTE FOR WiFi, IT'S FAR LESS SILLY. THERE ARE ALL THINGS WE WOULD WANT TO MEET THROUGH MICROCHIP [INDISCERNIBLE]. REAL QUICKLY THE OTHER AREAS OF FIBER AND INNOVATION IN THE CRYPTO CURRENCY SPACE BEYOND DIGIT AT SCARCITY AND BEYOND BIT COIN'S INNOVATION, SCALABILITY IS 1, PRIVACY IS ANOTHER. IT'S FAR TOO PUBLIC. IT HAS A REPUTATION FOR BEING ANONYMOUS CRYPTO CURRENCY, EVERY 1 ENDS UP IN IT SO THAT DID CAN BE ANALYZED AND IT'S TRIVIALLY EASY TO USE BIG DATA TO FIGURE OUT WHO'S BIT COIN ADDRESSES ARE WHO AND SEE THE ENTIRE TRANSACTION [INDISCERNIBLE]. THIS IS A LOT LESS PRIVACY THAN THE REGULATED BY FINANCIAL SECTOR OF THE CUSTOMERS, SO THERE ARE MULTIPLE INNOVATIONS HERE, RING SIGNATURES THAT ARE ATTEMPTING TO BELTED NOT FULLY ANONYMOUS NETWORKS BUT NETWORKS WHERE THE USER HAS GRANULAR CONTROL OVER PRIVACY, THEY CAN HAVE PRIVATE TRANSACTIONS AND COMPLY WITH LAW ENFORCEMENT DEMANDS FOR TRANSPARENCY WHEN THERE IS PROPER PROCESS TO WARRANT REASONABLE SUSPICION. SO THE PRIVACY DEVELOPMENTS ARE ANOTHER. FLEX INTELLECTUAL IS WHAT I WOULD CALL THE THIRD CATEGORY AND THAT GETS INTO WHAT YOU WERE SAYING ABOUT SMART CONTRACTS. BIT COIN ENABLES YOU TO MAKE FAIRLY SIMPLE TRANSACTIONS, YOU CAN SEND A BIT COIN FROM 1 PERSON TO ANOTHER, CAN YOU SEND IT FROM 1 PERSON TO SAY A GROUP OF PEOPLE WHO EACH HAVE AN INDEPENDENT TEAM, THEY HAVE TO VOTE, SOME SORT OF VOTING RULE AS TO WHETHER IT TRANSFERS BEYOND THAT FOR A TRANSACTION. THAT'S AN ELEMENTARY SMART CONTRACT IS 3 PEOPLE NEED TO AGREE TO SEND THE FUNDS. CAN YOU HAVE MORE COMPLICATED CONTRACTS, THESE PEOPLE NEED TO AGREE AND WE NEED TO GET A SIGNAL FROM A TRUSTED ORACLE THAT SOMETHING IN THE UNIVERSITY HAS HAPPENED. I. E. IT RAINED IF PEORIA, SO THIS [INDISCERNIBLE] ON WEATHER SHOULD PAY OUT. THOSE KINDS OF SMART CONTRACTS ARE BUILT ON A NETWORK CALLED ETHERAPY ANDIUM AND THERE ARE SEVERAL OTHER COMPETITORS AND PUT ANOTHER LAYER ON TOP OF BIT COIN, A TECHNOLOGY CALLED ROOT STOCK COULD USE IT FOR A LOWER LAYER, AND AN INTERESTING QUESTION I'LL TEE UP FOR MAYBE--I PREEMPTED HERE BUT I KNOW YOU WILL LOOK AT JOHN NEXT. AN INTERESTING QUESTION IS FOR THOSE DIGIT AT ASSETS THAT REPRESENT SOME SORT OF COMPLICATED RELATIONSHIP LIKE A DERIVATIVE OR FOR THOSE DIGIT AT ASSETS THAT REPRESENT A USEFUL SERVICE ON A NETWORK, SAY THIS REPRESENTS ACCESS TO, YOU KNOW 80 TERRA BYTES OF FILESTERRAGE ACROSS THE WORLD SO CAN YOU MAYBE REPLACE AMAZON'S WEB SERVICES, OR DECENTRALIZED NETWORK [INDISCERNIBLE] AND THINGS LIKE THAT, SHOULD THERE BE A UNIQUE TOKEN WHICH IS ALMOST LIKE A DIGITAL COMMODITY OF A DIFFERENT SORT? BIT COIN IS [INDISCERNIBLE] GOLD SHOULD THERE BE A DIGIT AT COMMODITY FOR CONTRACTS LIKE FUEL OR OILS, PEOPLE REFER TO ETHERAPY AND THAT WAY. SHOULD THERE BE A DIGIT AT COMMODITY FOR DIGIT AT [INDISCERNIBLE]--OR MAYBE EVEN A DIGIT AT DOLLAR TO INCEPT VISE PARTICIPATION IN THOSE NEST WORKS AND PAY THOSE PROVIDERS OF THOSE SERVICES ACCIDENT SO THAT'S A ROUGH OVERVIEW OF WHAT'S NEXT AND RAPIDLY DEVELOPING IN OUR SPACE. >> [INDISCERNIBLE]. [LOW AUDIO ] >> YEAH, I THINK, YOU KNOW WE ARE REALLY--WHEN YOU MENTION SECOND LAYER AND THERE'S SO MANY DIFFERENT WAYS TO SOLVE THE SECOND LAYER AND WE'RE ACHING AN APPROACH WHERE WE'RE USING AN EXISTING SECOND LAYER ON TOP OF THE BLOCK CHAIN TO BREAK TRADITIONAL MARKET STRUCTURE TOGETHER WITH THESE AMAZING INNOVATIONS THAT WE TALKED ABOUT AND I GUESS IT IS HERE TO STAY, STAY, SO WE THINK IT'S IMPORTANT TO BRIDGE THE INSTITUTIONAL, REGULATORY AND INNOVATION SITE TOGETHER AND THAT'S REALLY WHAT WE'RE LOOKING AT DOING RIGHT NOW WITH THAT. AND I'LL TALK MORE ABOUT THAT. BUT I DO THINK THERE'S DIFFERENT WAYS TO APPROACH THE SECOND LAYER CHALLENGE THAT CREATIVE NEXUS TO FORM THE TRADITIONAL ECONOMY. [INAUDIBLE ] [. >> WE ARE REALLY LOOKING AT A WORLD WHERE IT'S ACHIEVABLE TO GET MORE EFFICIENCY, MORE PRIVACY, MORE TRUST THROUGH THE USES OF THESE TECHNOLOGIES, SO I AGREE IT'S NOT GOING ANYWHERE, AND THAT IT'S REALLY INEVITABLE AND I THINK IT WOULD BE INTERESTING, INTERESTING TO MAKE IT EXACTLY HOW WE GET DOLLAR AND EXACTLY WHERE WE'RE GOING, BUT THE PROMISE OF THESE TECHNOLOGIES TO BE TRANSFORMATIVE ARE REALLY [INDISCERNIBLE] IN THIS AND WHY THE PUBLIC SHOULD BE INTERESTED IN THE FACT THAT WE CAN GET THE REGULATORY ENVIRONMENT RIGHT AROUND IT BECAUSE WE'RE--THERE'S A LOT OF OPPORTUNITY HERE [INAUDIBLE ] >> SO JOHN, WE WILL TURN TO YOU NOW. BE CURIOUS WHAT THE COMMENTS ARE AND YOUR REACTIONS TO EVERYBODY'S COMMENTS. YOU RECENTLY WROTE A PAPER CHALLENGING WHETHER MANY OF THE COIN TOKEN PROJECTS OUT THERE LIVE UP TO THOSE EXPECTATIONS, EXTRACTING SPECIALLY REGARDING EVALUATIONS, POTENTIAL APPLICATION CAN YOU GIVE YOUR THINKINGOT CURRENT STATE OF CRYPTO CURRENCIES AND THEY'RE RELATED ECONOMICS? >> SO THE TRICKY THING ABOUT THIS ASSET CLASS, THE ASSET CLASS IS IT'S GOING TO HAVE TO--IT'S GOING TO MORPH FROM TODAY WHICH IS KIND OF A RETAIL INVESTOR CROWD FUNDED VENTURE CAPITAL THING TO RETAIL INSTITUTIONAL INVESTORS AND VENTURE CAPITAL THING TO THINGS THAT ARE ACTUALLY USED AND REALLY THOUGHT ABOUT BY ORGANIZATIONS AND INDIVIDUALS TO DO STUFF. AND THAT HAPPENS AND AS IT HAPPENS, THESE ARE GOING TO BE VERY DIFFERENT ANIMALS AND ALSO EACH OF THESE INDIVIDUAL ASSETS IS A DIFFERENT ANIMAL AND SO SOME OF THESE THINGS ARE GOING TO BE LIKE [INDISCERNIBLE] THEY WILL BE PREPARED SOFTWARE SERVICES, SOME WILL BE COLLECTIBLE AND SOME WILL BE LIKE A TRADITIONAL SECURITY WHERE YOU GET CASH. SO, THOSE ARE VERY DIFFERENT NOW TODAY, ANIMALS, WE HAVE THE PROBLEM [INAUDIBLE ]--RADICALLY DIFFERENT THINGS IF THEY WERE SUCCESSFUL, THEY WILL BE DIFFERENT THINGS. SO THIS CORRELATION IS A PROBLEM IS YOU KNOW I WOULD--I'VE BEEN HEARTENED BY THE LAST FEW MONTHS TO SEE CORRELATIONS BREAK DOWN TO SOME EXTENT, A LITTLE DISAPPOINTED TO SEE THEM IN THE LAST COUPLE OF WEEKS, BUT THAT CORRELATION IS SOME SIGN OF RATIONALITY, SO MY VIEW IS--IT'S AN IMPORTANT STEP, I TO PICK UP ON YOU KNOW WHAT KELLIE MENTIONED, [INAUDIBLE ] WHICH IS DRW LIKE T. D. AMERITRADE TO PROVIDE FOR PHYSICAL CONTRACTS ON REGULAR EXCHANGES AND BASICALLY BIT COIN THERE AND WHY IS THAT IMPORTANT BECAUSE IN MY VIEW, IT'S IMPORTANT THAT INSTITUTIONAL INVESTORS GET INVOLVED, RIGHT? THEY THINK THAT TODAY, WE'VE GOT THIS PARADOX SITUATION WHERE BECAUSE OF [INDISCERNIBLE] I GUESS, THEIR SENSE OF A LACK OF CLARITY, AND LACK OF INFRASTRUCTURE AND LACK OF CLARITY AND TOOLS IN TERMS OF MARKETING TOOLS, BUT ALSO CLARITY PERHAPS [INDISCERNIBLE], INSTITUTIONAL MONEY, INVESTORS AND ACTORS AND INVESTORS ON THE SIDELINES AND LEAVING RETAIL INVESTORS ALONE IN THE WOODS AT NIGHT TO FIGURE THIS OUT THEMSELVES, GETTING INTUITIONAL INVESTORS ENGAGED IS GOING TO HELP RATIONALIZE THE MARKETS AND THAT'S A GOOD THING, IT REALLY GOES THE OPPOSITE, THE INSTITUTION START FIRST AND THEN RETAIL COMES LATER, WE WILL WHERE FIGURE IT OUT, WE HAVE THE OPPOSITE, I THINK THAT'S--THAT'S BAD, I THINK, YOU KNOW THE LONGER IT TAKES FOR US TO RATIONALIZE IT, THE--YOU KNOW THE WORST FOR EVERYBODY. SO WHAT'S REQUIRED, OR WHAT WOULD BE HELPFUL HERE? I MEAN I HAVE LIKE A LITTLE--MY LITTLE SHOPPING LIST OF THINGS THAT I THINK ARE JUST EXAMPLES BUT 1 IS THINGS LIKE [INDISCERNIBLE] ARE ADDRESSING, AND ACTUALLY PROVOIDING AN EXCHANGE WHERE, YOU KNOW PHYSICALLY CONTRACTS AND TRADING SO THAT INVESTORS CAN INSTITUTIONAL OPERATE REGULATORY EXCHANGE AND THAT WILL BE IMPORTANT. I KNOW THAT'S GREAT, SO NOW WE NEED TO GET REGULATORY APPROVALS BUT YOU KNOW [INAUDIBLE ] SECONDLY, I HAVE NO INTEREST IN THIS WHATSOEVER, I AM NOT INTERESTED IN THESE COMPANIES OR SO FORTH, YOU KNOW OBVIOUSLY CONTINUED CLARITY, ABOUT SECURITY, WE HAVE A BIT WITH MORE AND MORE WOULD BE GREAT, I THINK STUFF LIKE--VERY TECHNICAL STUFF LIKE WHAT--YOU KNOW CLARITY FROM THIS, YOU SEE ON WHAT CONSITUTES POSSESSION OF PHYSICAL--SORRY OF PRIVATE] INAUDIBLE ] YES, WE'VE DONE OUR AUDIT AND WE CONSIDER THIS ENTITY OWNS THOSE CURRENCIES AND WE [INDISCERNIBLE]. CUSTODY, WELL, WE NEED BOTH SOLUTIONS, AND INSTITUTIONAL RATE BUT MAYBE ALSO STANDARDS FOR EVALUATING, YOU KNOW RIGHT NOW, THERE ARE VERY FEW PEOPLE IN THE WORLD ACTUALLY CAPABLE OF ASSESSING THE RELATIVE QUALITY OF 1 OVER THE OTHER LET ALONE STANDARDS FOR THAT, SO HOW DOES THE INSTITUTION COME IN AND SAY, [INDISCERNIBLE]. AND NOT THIS 1 SORE WHATEVER AND DEMONSTRATED THAT. YOU KNOW VERY BASIC THINGS LIKE A STANDARD FOR ACCOUNTING. SO, YOU KNOW, BEING ABLE TO INVEST IN COMPANIES HELPS TO HAVE AUDITED ACCOUNTS, WELL, TO AUDIT ACCOUNTS, YOU NEED THE STANDARD FOR CRYPTO CURRENCY AND BUSINESSES THAT DEAL IN THEM, IF YOU DON'T HAVE THAT RIGHT NOW, YOU [INDISCERNIBLE]. HOW YOU GET AUDITED ACCOUNTS. AND THEN, YOU KNOW THE BUSINESS ROUND IN THE U.S. [INDISCERNIBLE] TERRIFIC AND THEN AT SOME LEVEL, PETER TOUCHED ON THIS A BIT AND FLEXIBILITY OF THESE THINGS, WHAT--HOW CAN INSTITUTIONAL INVESTORS AND THEN RETAIL INVESTORS AS WELL, GET COMFORTABLE WITH THAT, WHAT THEY HAVE IS FLEXIBLE RIGHT SO THAT THEY'RE NOT GOING TO BE [INDISCERNIBLE] BECAUSE SOMETHING HAPPENED, YOU KNOW 3 OWNERS BACK. SO [INDISCERNIBLE] OF THAT, BUT MAYBE NOT ENOUGH. FOR [INDISCERNIBLE]. SO IN TERMS OF VALUEOT MARKETS, I THINK IT'S GETTING BETTER, I THINK THE TRICKY THING IS THESE ASSETS ARE HETEROGENEOUS ROW GENIUS AND THEY'RE ALSO GOING TO CHANGE THEIR CHARACTER OVER TIME AND 1 FACT THAT WILL BE HELPFUL IS GETTING INSTITUTIONAL MONEY INVOLVED IS THEY WILL PAY FOR RESEARCH, THEY'LL BE--THEY'LL [INDISCERNIBLE] THEY'LL INSURE THAT THINGS DON'T GO OFF THE RAILS AND ALSO OPERATING IN THE [INDISCERNIBLE]. SO I'M VERY KEY TO SEE THAT, YOU KNOW AND IN 2019. >> THANKS. THANKS JOHN. >> RICHARD, JOHN MENTIONED A BIT ABOUT EXCHANGES AND TRADINGS SO WHY DON'T WE TURN TO YOU AND SINCE YOU HAVE THE STRONG UNDERSTANDING OF MARKET STRUCTURE AND TRAINING, NO ASSETS, STARTING WITH THE UNDERLYING SPOT OR CASH MARKETS WHAT ARE SOME OF YOUR OBSERVATIONS MORE SPECIFICALLY, HOW MATURE ARE THESE MARKETS AND TRADING ACTIVITY AND ALSO WHAT CHALLENGES ARE YOU SEEING? >> GREAT, THANK YOU, AMIR. >> I THINK ABOUT THE STOCK MARKET AS BROKEN INTO 3 CATEGORIES THERE ARE WHAT PEOPLE CALL EXCHANGES AND CENTRALIZED EXCHANGES AND IT'S IMPORTANT TO THINK ABOUT A REGULATORY CONTEXT THAT THESE ARE NOT REGULATED IN THE WAY TOW WOOL TO THINK ABOUT THEM FROM THE TRADITIONAL FINANCIAL MARKET'S POINT OF VIEW. THERE ARE OVER 200 OF THESE ALL AROUND THE WORLD AND IN FACT THE U.S. PARTICIPANTS IN THIS MARKET ARE RELATIVELY LOW IN TERMS OF MARKET SHARE. I THINK IT'S IMPORTANT TO RECOGNIZE THAT MOST OF THE VOLUME ON THESE CENTRALIZED EXCHANGES ARE OUTSIDE THE U.S. THEY ALL USE VERY DIFFERENT TECHNOLOGIES, THEY HAVE DIFFERENT BUSINESS PRACTICES AND DIFFERENT BUSINESS MODELS, 1 THING THAT'S INTERESTING ABOUT [INDISCERNIBLE] TODAY IS THAT THEY OFTEN SERVE IN DIFFERENT HOMES. UNLIKE IN THE TRADITIONAL FINANCIAL MARKETS WHERE WE GOT DEFINED ROLES BETWEEN AND EXCHANGE AND A BROKER AND A CUSTODIAN AND CLEARINGHOUSE, THE CENTRALIZED EXCHANGES SIMULTANEOUSLY SO THEY CAN ACT AS AN EXCHANGE, ACT AS A BROKER, CUSTODIAN, CLEARINGHOUSE, LIQUIDITY PROVIDER ALL AT THE SAME TIME AND THAT RAISES INTERESTING QUESTIONS ABOUT THESE BUSINESS FUNCTIONS. THERE'S ALSO DIFFERENT REGULATORY ENVIRONMENTS AND DIFFERENT APPROACHES TO HOW THEY HANDLE REGULATIONS. SO I THINK THE STOCK MARKETOT CENTRALIZED EXCHANGE SIDE S&P DIFFERENT THAN WHAT WE'RE USED TO SEEING. IT'S DETAIL ORIENTED AND NOT [INDISCERNIBLE]. THERE'S ALSO SOMETHING CALLED DECENTRALIZED WHICH IS EXCHANGES TECHNOLOGY [INDISCERNIBLE] CRYPTO ASSETS IN ORDER TO HAVE SORT OF A DECENTRALIZED PLAY FOR BUYERS AND SELLERS TO COME TOGETHER [INAUDIBLE ]--I THINK THE THIRD CATEGORIES [INDISCERNIBLE] THAT'S VERY AWARE ARE CUMBER LYNN [INDISCERNIBLE] IS VERY ACTIVE IN THAT SPACE, WHAT WE DO AND WHAT A BUNCH OF OTHER COMPETITORS IN THAT SPACE IS THEY IDENTIFY COUNTER PARTIEDS, THESE COUNTER PARTIES ARE GENERALLY [INDISCERNIBLE] AND AML AND KYC PROCEDURES, TRADES ARE COMMUNICATED BI LAT RULY OF SKYPE [INDISCERNIBLE] AND THEN [INDISCERNIBLE] RENEGOTIATE IT THERE AND DOCUMENT IT AND [INDISCERNIBLE]. THAT'S ALSO [INDISCERNIBLE] OF THE UNDERLYING SPOT TODAY FOR [INDISCERNIBLE]. THERE'S GOOD AND BAD ABOUT HOW THE MARKETS OF DEVELOPMENT THAT 1 THING I WOULD HIGHLIGHT IS THAT THERE ARE SOME GOOD THINGS ABOUT IT AND THERE'S A LOT OF ENERGY AND ENTHUSIASM AND ADOPTION HAS BEEN FAST PARTICULARLY ON THE RETAIL SIDE, THERE'S [INDISCERNIBLE] A LOT OF COMPETITION ON THE NEGATIVE SPACE, SO MY EXPECTATION IS THAT THE SPACE [INDISCERNIBLE]. I THINK THE LAST THING I WOULD MENTION IS THAT WE'RE STARTING TO SEE DERIVATIVES MARKET [INDISCERNIBLE] THIS IDEA THAT WE CAN ALSO HAVE BASICALLY SETTLED CONTRACTS THAT [INDISCERNIBLE] MORE OF A TRADITIONAL REGULATORY CONTEXT AND DETAILS OF THAT ARE COMING TOGETHER BUT I THINK GETTING THESE ASSETS INTO THE WORLD MORE TRADITIONAL REGULATED ENVIRONMENT OPTION AND TRADITIONAL INVESTMENT AND RETAIL INVESTORS WITH THAT WAY [INDISCERNIBLE]. >> --IT'S IMPORTANT TO NOTE THORS THESE ONLY WORK BETWEEN NATIVELY DIGITAL ASSETS AND YOU COULD GO BUILT COIN TO ETHER AND FROM 1--BIT COIN TO ETHER AND [INDISCERNIBLE] IN OTHER WORDS AT THE MOMENT YOU DON'T SEE A DOLLAR TO BIT COIN TO CENTRALIZED EXCHANGE ALTHOUGH WE'RE SEEING DOLLAR BACK TOKENS EMERGE LIKE THOSE ANNOUNCED BY GEM NIGH AND [INDISCERNIBLE] RECENTLY. I THINK SOME PEOPLE LOOK AT IT INNOVATION AS GOOD POLICY AND REGULATION AND I THINK THAT'S WRONG, SOME PEOPLE THINK WELL, DECENTRALIZED IT SOUNDS LIKE YOU'RE TRYING TO TAKE AWAY THE INTERMEDIARY, AND THAT'S NOT THE OBJECTIVE, I WOULD SAY IN MOST TAIS INHIBITORS, THE OBJECTIVE IS TO TAKE AWAY THE BAD PARTS HERE SO THE CENTRALIZED EXCHANGE DISAMBIGUATES CUSTODY FROM THE EXCHANGE, SOMETHING THAT THE PARTIES COMING TO THE TRANSACTION BRING, I'M SELF-CUSTODYING MY AGES SET AND THE PERSON I'M BEING MASH WIDE IS SELF-CUSTODY THEIRS AND THE EXCHANGE HAPPENS THROUGH SMART CONTRACTS AND NO POINT IN THAT TRANSACTION IS 1 BIG COMPANY HOLDING A BUNCH OF BIT COIN FOR SOMEBODY AND A TARGET FOR HAPPY. THAT'S VERY EXCITING AND ALSO FROM A MARKET MANIPULATION STANDPOINT THIS IS AN INTERESTING DEVELOPMENT PRIMARILY IN MANY CASES BECAUSE THESE CENTRALIZED PROTOCOLS THEY WILL HAVE THE ORDER BOOK THAT THEY'RE CREATING, IT'S A ROBOT THAT'S KRETTING THEM, FULLY PUBLIC AND ALL THAT DATA IS MACHINE READABLE RATHER THAN BEING ON THE BOOKS OF SOME PRIVATE CORPORATION. SO IT PROVIDES NEW OPPORTUNITIES FOR SURVEILLANCE, PROVIDES NEW CHALLENGES TOO BECAUSE YOU WILL ASK, WHO'S THE REGULATED PARTY IF THIS IS JUST SOFTWARE, I THINK IT'S A REALLY INTERESTING AREA AND IT IS MOVING VERY QUICKLY. >> WHY DON'T WE HEAD BACK TO [INDISCERNIBLE] WHAT ARE SOME OF THE THINGS AND TRENDS YOU ARE SEEING INCLUDING LAWS, REGULATORY OPPORTUNITIES? >> [INAUDIBLE ] I THINK IT'S AN IMPORTANT QUESTION NOT ONLY--[INAUDIBLE ] IT'S VERY INTERESTING FROM THE ASSET QUESTION IN HERE TO SEE [INDISCERNIBLE]. [INAUDIBLE ] --HOW DO YOU BUILD A REGULATORY REGIME BASED ON THE ECONOMICS OF THOSE TRANSACTIONS AND WHEN YOU THINK ABOUT A UTILITY TOKEN AND THE SECURITIES TOKEN IN A TRADITIONAL SECURITY SECURITY AND A TRADITIONAL TRANSACTION, EQUITY BASED ASSETS LIKE STOCKS, YOU KNOW PRICES REFLECT THE DISCOUNTED VALUE OF LEGAL RIGHTS TO FUTURE CASH FLOWS, RIGHT? BUT WHEN YOU TALK ABOUT A UTILITY TOKEN YOUR PRICING WOULD HAVE TO BE ON THE PREDICTED VALUE OF THAT TOKEN ALONG WITH THE FEATURES OF THE CRYPTO ASSET ENABLING ACCESS TO THAT UTILITY VALUE AND THEN YOU HAVE TO DISCOUNT IT, RIGHT? SO THAT IS A--A DIFFERENT VALENTINEDUATION PROCESS THAN THE KIND OF VALENTINEDUATION PROCESS WOULD NORMALLY BE EMBEDDED IN INVESTING IN A COMMON STOCK. SAME THING IN TERMS OF SAY, A BOND WHERE YOU'RE THINK BEING YOUR RIGHTS TO EITHER FUTURE PAYMENTS OR PRIORITY RIGHTS IN CASE OF A BANKRUPTCY, SO THEN WHEN YOU CONSIDER THAT CHALLENGE, RIGHT? WE'RE REACHING A NUMBER OF VERY INTERESTING CONCLUSIONS. ON THE SECURITIES SIDE 1 OF THE MORE INTERESTING CONCLUSIONS IS THAT YOUR--THIS QUESTION, IS IT A SECURITY OR IS IT A COMMODITY? ONLY WORKS TO A BIT. BECAUSE AN S1, LET'S ASSUME THAT YOU WILL REGISTER EVERY SINGLE TOKEN UNDER AN S1, WELL AN S1 SORT OF OF PREMISED OR SHIFTING FROM NEW STAGE DEVELOPMENT FOR CAPITAL RAISING WHEN YOU LOOK AT THE REQUIREMENTS IN AN S1 THOSE REQUIREMENTS DON'T MAP VERY WELL, EVEN IF YOU'RE GOING TO REGISTER ALL OF YOUR UTILITY TOKENS, IN OTHER WORDS IT ASKS CERTAIN KINDS OF QUESTIONS THAT AREN'T AS RELEVANT, PLACES INTEREST AND EMPHASIS ON FINANCIAL STATEMENTS WHICH FOR A DEVELOPMENTAL COMPANY, FOR REVENUE IS RELATIVELY MEAGER IMPORTANCE AS COMPARED TO WHAT ARE THE PROSPECTS OF THE UNDERLYING PROJECT, RIGHT? AND THEN IT DOESN'T ASK MANY OF THE QUESTIONS THAT YOU WOULD WANT IT TO ASK, AND IT DOESN'T NECESSARILY IMPOSE SOME OF THE REQUIREMENTS THAT 1 WOULD WANT TO SEE, FOR EXAMPLE, PLAIN ENGLISH DISCLOSURE, WOULDN'T NECESSARILY EXTEND TO THE DESCRIPTION OF THE PROJECT ITSELF WHICH WOULD LEAD TO AN INFORMED DECISION MAKING BY A RETAIL INVESTOR, WELL THAT'S ALLOT SECURITIES LINE,OT COMMODITY LINE WE HAVE TO ASK SIMILAR QUESTIONS AGAIN TO THE EXTEND TO WHICH YOU HAVE PEOPLE WHO ARE INVESTING, MAYBE NOT IN A DISCLOSURE REGIME BUT AS A REGULATOR YOU WOULD WANT TO BE AWARE OF THE KINDS OF RISKS THAT WOULD BE OUT THERE LURKING AT NIGHT IN THE FOREST. IN THE ABSENCE OF NOT JUST RETAIL INVESTORS BUT FROM AN ENFORCEMENT PERSPECTIVE AND TO THINK WHAT KINDS OF PARTICULAR VULNERABILITIES MAY BE--INVESTORS MAY BE EXPOSED TO PRECISELY DUE TO THE CHARACTERISTICS AND FEATURES AND UNIQUE PRICING AND ECONOMICS OF THE ASSET, ALONG WITH THE RELATIVELY IMMATURE--WHEN I SAY IMMATURE IN A SENSE OF STILL IN DEVELOPMENT INSTITUTIONAL FEATURES TO SUPPORT THOSE ASSETS. AND YOU KNOW JUST FOR THE LAUNDRY LIST OF THINGS TO JUST KEEP IN MIND BECAUSE I DO SEE MY FRIENDS FROM THE SEC AND FINRA IN THE OFFICE, OR IN THE BUILDING, YOU KNOW,OT SECURITIES SIDE YOU LOOK AT AN S1, YOU THINK OKAY, WELL YOU'RE REQUIRED TO DISCLOSE GLONCHANCE, WHAT ABOUT BLOCK CHAIN GOVERNANCE, THE KINDS OF WAYS IN WHICH DECISIONS ARE MADE ABOUT MODIFICATION OF TOKE KNOW RIGHTS. KINDS OF DECISIONS MADE ABOUT EVERYTHING FROM UPGRADES OF SOFTWARE TO FORKING, THAT'S NOT NECESSARILY GOING TO BE UNDER YOUR TRADITIONAL S1, SOMETHING THAT WOULD HAVE TO BE DISCLOSED BUT INSTEAD THE EMPHASIS IS ON EXECUTIVE COMPENSATION. HOW MUCH THAT DOES THAT MAP INTO TO THIS PARTICULAR SECURITIES AND YOU CAN GO DOWN THE LIST AND DEVELOPING A PAPER THAT SPEAKS TO THIS? WE WILL SPEAK ABOUT THIS LATER BUT YOU WANT TO THINK ABOUT THE TOKEN AND WHAT KIND OF DISCLOSURES IN THE ABSENCE OF A TRADITIONAL SECURITIES LAW REGIME ARE BEING MADE FROM AN ENFORCEMENT PERSPECTIVE FROM THE CFTC, THAT'S JUST THE BEGINNING OF OUR CHALLENGES BUT JUST WHEN YOU THINK ABOUT THE ECONOMICS, THE CRYPTO ECONOMICS OF ICO TOKENS AND THEN YOU WANT TO THINK TO YOURSELF ABOUT THE REGULATORY CHALLENGES, I THINK AS A MATTER OF FIRST ORDER PRINCIPLES DO PEOPLE HAVE THE KIND OF INFORMATION THAT THEY NEED IN ORDER TO MAKE AN INFORMED DECISION IN THIS NEW ENVIRONMENT AND THEN WHAT KIND OF PRODUCTIVE ROLE CAN REGULATORS PLAY TO HELP TO FACILITATE THAT INFORMATION. >> GREAT, THANKS CHRIS WHY DON'T WE COME BACK TO TRADING SIDE AND KELLIE MENTIONED A FEW TIMES, WHERE DON'T YOU WALK US THROUGH IN MORE DETAIL OF YOUR PLANS AND ALSO TALK ABOUT WHAT PROBLEMS YOU'RE TRYING TO SOLVE? >> THANKS AMIR, AND THANKS TO THE COMMISSION, THE CHAIRMAN AND DAN AND AND YOURSELF PER FUTURE--POTENTIALING THIS TOGETHER, AND THIS IS AN IMPORTANT FIRST STEP IN BUILDING THAT BRIDGE I TALKED ABOUT JUST BRIEFLY. AND I'LL ANSWER YOUR QUESTION, FROM A BAKKT PERSPECTIVE BUT FOR CONTEXT LET ME GIVE YOU BACKGROUND ON INTERCONTINENTAL EXCHANGE OR ICE WHERE I SPENT THE LAST 16 YEARS. ICE WAS FORMED AROUND SOLVING PROBLEMS IN THE WHOLESALE ENERGY MARKETS ABOUT 20 YEARS AGO AND THOSE PROBLEMS WERE REALLY AROUND REALLY FUNDAMENTAL TECHNOLOGY TRANSFERS LIKE TECHNOLOGY AND RISK MANAGEMENT AT THE INSTITUTIONAL LEVEL. AND SOPHISTICATED WE WORKED ON THINGS LIKE PRICE DISCOVERY, STANDARDIZATION, CONNECTIVITY TO THAT MARKET AND DID SO IN SEVERAL OTHER MARKETS SUBSEQUENT TO THAT, SO FAST FORWARD TO 2014 WHEN WE STARTED LOOKING AT BLOCK CHAIN, CRYPTO, TALKING TO OUR CUSTOMERS, REALLY HOW WE DO R&D AT ICE IS TALKING TO OUR INSTITUTIONAL CUSTOMERS. WE WERE TALKING TO THEM ABOUT WHY ARE YOU IN THIS SPACE, WHY ARE YOU NOT IN THIS SPACE AND OVERWHELMINGLY NOT IN THE SPACE LARGELY DUE TO FACTORS LIKE PRICE DISCOVERY, TECHNOLOGY, REGULATION, STANDARDIZATION, AND WE SAW A ROLE THAT WE COULD PLAY IN BRINGING, YOU KNOW THESE 2 WORLDS TOGETHER EFFECTIVELY, SO IN AUGUST, WE,A NOUNSED THE FORMATION OF BAKKT. BAKKT IS ESSENTIALLY DESIGNED TO BE A REGULATED ECOSYSTEM TO DIGITAL ASSETS TO BOTH PROVIDE STRONGER INNS TUITIONAL MARKETS AND TO ALSO PROVIDE MORE USE CASES FOR CONSUMERS AND WHY IS THAT IMPORTANT? WE WANT TO CREATE THIS FLY WHEEL EFFECT FOR DIGITAL ASSETS WHERE THERE'S--WHETHER YOU BELIEVE THAT DIGIT AT ASSETSAR A STORE OF VALUE OR A MEDIUM OF EXCHANGE, THAT THERE'S A PLACE IN THE ECOSYSTEM TO BUILD THAT VALUE IN. SO WHERE ARE WE WITH BAKKT? WE HAVE A LOT OF WORK STREAMS GOING, WE PLAN TO LAUNCH OUR FIRST CONTRACT, SO IT WOULD BE A BIT COIN DAILY DELIVERY FUTURE'S CONTRACT IN THIS QUARTER, SO THIS QUARTER SUBJECT TO CFTC REVIEW AND APPROVAL. CFTC HAS JURISDICTION OVER BIT COIN BECAUSE IT'S BEEN DEEMED A COMMODITY WHICH WE THINK ISLET PROPER REGULATOR FOR THIS. WE'RE APPROACHING IT FROM A VERY INSTITUTIONAL PERSPECTIVE, IF YOU WILL, WE'RE LISTING THE CONTRACTINGS ON OUR REGULATED FUTURES EXCHANGE AND CLEARING THEM THROUGH OUR CLEARINGHOUSE AND THEN ESTABLISHING A WAREHOUSE FOR CUTODEUM SERVICES OF THE--CUSTODIAL SERVICES TO PROVIDE THE BIT COIN LAYER OF THAT SECURITY WE ALSO HEARD FROM INSTITUTIONS WAS MISSING FROM THE ASSETS CLASS. SO NOT JUST PRICE RISK, NOT JUST, YOU KNOW PERFORMANCE RISK BUT ALSO THE SECURE STORAGE WHICH IS THE NEW FEATURE OF THE ASSET CLASS, SO WE'VE HAD APPROVAL FROM BOTH EXCHANGE AND CLEARING BOARDS. WE'VE GONE THROUGH THE RISK COMMITTEE, WE PLAN TO FILE THE RULES PUBLICLY FOR REVIEW AND COMMENT IN THE NEXT COUPLE OF WEEKS, SO WE'RE TRYING TO TAKE A VERY TRANSPARENT APPROACH TO THIS ASSET CLASS TO GIVE INSTITUTIONS THE CONFIDENCE THAT WE ARE USING THE--THE MOST CONSERVATIVE APPROACH TO THIS ASSET CLASS. IT'S FULLY COLLATERALIZED SO IT'S PREFUNDED, PHYSICAL DELIVERY AND THE SECONDARY PIECE OF WHAT BAKKT IS, IS PROVIDING CONSUMER USE CASES TO BRIDGE THAT MEDIUM OF EXCHANGE AND WE'LL WORK ON THAT IN 2019 BUT WE HAVE HAD REALLY GREAT RESPONSE FROM THE INSTITUTIONAL INDUSTRY IN TERMS OF THOSE CUSTOMERS LOOKING FOR A SOLUTION UNDERSTANDING THIS ASSET CLASS IS COMING THEIR WAY BUT NEEDS MORE OF THOSE TRADITIONAL INSTITUTIONAL FRAMEWORKS TO ONBOARD. >> GREAT. THANK YOU. >> PETER, CHRIS WHY NOT COME TO YOU, WE TALKED ABOUT A REGULATORY APPROACHES, MAYBE YOU COULD TALK ABOUT THE SIMILARITIES AND DIFFERENCES YOU'RE SEEING IN THE DOMESTIC VERSUS INTERNATIONAL REGULATORY APPROACHES AND WHAT YOU WANT TO SHARE WITH SOME OF THE POLICY MAKERS AND REGULATORS IN THE AUDIENCE. >> I THINK 1 TECHNOLOGY TRANSFER WE NOTICE AS A REAL DIFFERENCE BETWEEN THE U.S. APPROACH AND THE INTERNATIONAL APPROACH IS IN MOST OTHER NATIONS THERE IS A UNIFIED FINANCIAL REGULATOR, SO THE FCA HAS REPRESENTATIVES HERE TODAY. THEY'RE YOUR 1 STOP SHOP IN MOST CASES FOR WHATEVER YOU'RE BUILDING AND THIS IS A DIFREPRESENTIATED ASSET CLASS THAT MIGHT TOUCH DIFFERENT THINGS, SECURITIES, MIGHT NOT BE, DEPENDENT CONCERNS DEPENDENTOT ASSET, WHERE THE U.S. APPROACH, WE HAVE THE CFTC, SEC, 5 OR 6 OTHER FEDERAL AGENCIES THAT MAY HAVE A PIECE OF JURISDICTION FROM THE STANDPOINT AND MONEY LAUNDERING THIS AND I THINKS LIKE THAT AND STATES THAT HAVE JURISDICTION OVER MONEY EXCHANGES AND CRYPTO CURRENCIES HAVE BEEN CLASSIFIED AS, YOU HAVE THIS PATCH WORK APPROACH AND THIS IS NOT GOOD FOR CONSUMERS AND INVESTORS BECAUSE THEY'RE NOT ALWAYS EQUALLY PROTECTED, SO SOMEONE IN ALABAMA IS PROTECTED DIFFERENTLY THAN SOMEONE IN CALIFORNIA, SOMEONE WHO WANTS GOOD DISCLOSURES ISN'T SURE IF THEY'RE SUPPOSED TO BE EXPECTING THE SEC TO ASK FOR THEM FROM THE INNOVATOR OR SOMEBODY ELSE. AND IT'S ALSO NOT GOOD FOR INNOVATORS BECAUSE IF YOU WANT TO START A BUSINESS, THAT MIGHT INVOLVE HOLDING CRYPTO CURRENCY FOR FOLKS, YOU DON'T KNOW WHICH BASKET YOU FALL INTO AND QUITE LIKELY YOU FALL INTO 8 OR 9 AND THAT MAY INVOLVE--OR MAYBE EVEN MORE IF YOU HAVE LICENSED CUSTOMERS, AND THAT PROCESS IS A HUGE IMPEDIMENT AND YOU WILL SPEND A GOOD DEAL OF YOUR SEED FUNDING IF YOU'RE A START UP ON COMPLIANCE AND THERE'S NOTHING WRONG WITH THAT, COMPLIANCE IS IMPORTANT BUT IT SHOULD BE RATIONAL SO I THINK THAT'S A BIG FEATURE OF THE U.S. APPROACH WHICH IS QUITE ACCIDENTALLY, A PRODUCT OF FEDERALISM AND OF OUR ORGANIC FINANCIAL REG RATTERY STRUCTURES THAT EMERGE AGAIN FROM CRISIS BACK IN THE 30S BUT IT'S AN ISSUE. >> I WOULD CERTAINLY ECHO THE FACT THAT WE DO HAVE A FRAGMENTED REGULATORY SYSTEM HERE AND THAT DIFFERENT AGENCIES HAVE REGULATORY TAKEN PUBLICLY DIFFERENT STANCES AS TO THEIR APPROACH. I THINK ALL OF THE REGATTORY AGENCIES ARE TRYING TO THINK THROUGH WHAT CRYPTO CURRENCIES MEAN FOR THEIR OWN SPECIFIC MANDATES AND I WOULD CERTAINLY WANT TO APPLAUD THE CHAIRMAN AND CFTC FOR HAVING A VERY ENGAGED OUTLOOK. I THINK IT'S NECESSARY. NOT JUST FROM A--FROM THE PERSPECTIVE OF FOSTERING INNOVATION AND ALSO FROM A MARKET INTEGRITY AND INVESTOR PROTECTION STANDPOINT. I WOULD SAY THAT EUROPE IS NOT EXACTLY THE POSTER CHILD FOR REGULATORY CLARITY EITHER. IF 1 THINKS THROUGH THE DIFFERENT APPROACHES FROM FRANCE RELEASED IN THE LAST FEW WEEKS THEIR OWN SORT OF ICO OPROACH, IT'S UNCLEAR WHAT THE RELATIONSHIP SHOULD BE BETWEEN ESMA AND SOME OF THE NATIONAL REGULATORS EVEN FROM FRONT AND REGULATORY DECISION MAKING PROCESS. ESMA STILL FRANKLY TRYING TO DEFINE ITS OWN AUTHORITY AND JURISDICTION OVER ICOs. THERE'S STILL SOME INTERNAL DEBATE AS TO ITS POWERS UNDER MIFIT. SIMILARLY WHEN 1 LOOKS HERE AT THE CFTC, THERE ARE SOME DEBATES AND QUESTIONS AS TO HOW EXPANSIVE ITS AUTHORITY IS BOTH UNDER THE CEA AND UNDER THE DODD-FRANK ACT. SO I THINK A LOT OF REGULATE ARES ARE GRABBLING WITH THOSE PROBLEMS BUT HAVING A UNIFIED REGULATOR SAYING IN THE UNITED KINGDOM OR HERE IN SINGAPORE DOES ALLOW FOR LESS FRICTION IN THE RULE MAKING PROCESS AND FOR THOSE JURISDICTIONS THAT ARE MORE INCLINED TO BE OUTFRONT, I THINK IT DOES GIVE THEM CERTAIN ADVANTAGES FOR SURE OVER THE UNITED STATES. >> ONE THINK THIS I WOULD SAY IS THE FEDERAL GOVERNMENT WAS ABLE TO PREEMPT AND AUTHORIZE INTERNET COMPANIES WHEN THEY WERE JUST STARTING UP IN AN INEFFICIENT PATCH WORK MANNER. WE DO NOT HAVE THE SAME ENVIRONMENT FOR FINANCIAL TECHNOLOGY AS WE DID FOR THE INTERNET. SO SOME PEOPLE THINK IT'S A FATE ACCOMPLI, THAT IT WILL LEAD, BUT I'M NOT SHOW SURE, THAT MAY HAVE BEEN AN ACT OF HISTORY WITH RESPECT TO U.S. LAWSOT SPEECH AND COMMUNICATION SIDE, THAT IS NOT SO TRUE ABOUT THE FINANCIAL TECHNOLOGY SIDE AND I THINK THE CFTC IS DOING GREAT WORK WITH LAB CFTC TO BE OPEN AND TO CLAIM WHAT IS RIGHTFULLY THEIR SUBJECT MATTER JURISDICTION IN THIS SPACE. I THINK THESE THINGS IN MANY CASES MOST ICOs ASIDE AND MOST CASES ARE DIGITAL COMMODITIES AND THAT CAN BE AN EXCELLENT SOURCE FOR SORT OF UNIFYING AN APPROACH HERE BUT WE ALSO NEED NEED HELP FROM BANKING REGULATORS, A FIN TECH CHART WOULD BE GREAT FOR SOMEBODY TO PROVIDE CUSTODY SERVICES OR EXCHANGE SERVICES WITH A SINGLE FEDERAL REGULATOR STOCK MARKET EXCHANGE SERVICES AND THANE ANTIMONEY LAUNDERING BECOMES VERY COMPLICATED AS WELL IN THIS SPACE BECAUSE HAVE YOU--THIS HAS BEEN OUT IN FRONT WITH THE CURRENCY GUIDANCE THEN HAVE YOU ANTIMONEY LAUND ARE BEING POLICIES AND AND CONTRACTS AND EXCHANGES WITH AML. >> I THINK BOTH PETER AND CRASE ARE RAISING IMPORTANT POINTS WE NEED SMART REGULATION NOT JUST TO PROTECT INVESTORS AND CONSUMERS IN THE SPACE, WHICH IS ESSENTIAL BUT ALSO TO SORT OF CLEAR THE WAY FOR RESPONSIBLE MARKET PARTICIPANTS TO INVEST AND BUILD IN THIS SPACE. THERE'S A LOT OF INNOVATION THAT'S YET TO COME HERE AND THAT NEEDS TO COME, YOU KNOW MY PREFERENCE WOULD BE THAT A SIGNIFICANT AMOUNT OF THAT HAPPENS HERE IN THE U.S. AND SOME OF THIS REGULATORY UNCERTAINTY AND PATCH WORK OF REGULATORS IS AN OVERHANG IN FIGURING OUT HOW DO YOU INVEST AND BUILD APPROPRIATELY IN THIS SPACE. WHEN YOU LOOK MORE SPECIFICALLY AT THE MARKETING AND TRADING OF THESE ASSETS THERE ARE THINGS THAT ARE VERY CLEAR THAT WE NEED TO DEVELOP IN THIS SPACE TO MAKE IT MORE SAFE ENVIRONMENT. ONE IS TRANSPARENCY. THERE'S A LOT MORE TRANSPARENCY IN THE EXCHANGE MARKET TODAY THAN IN THE TRADITIONAL MARKETS. IT WOULD BE REALLY HELPFUL TO BE ABLE TO KNOW WHO OWNS AN EXCHANGE AND WHAT THE RULES ON THE EXCHANGE ARE AND HOW THEY OPERATE ON THAT EXCHANGE AND SOME MARKET CENTERS HAVE BEEN VERY GOOD ABOUT THAT TYPE OF DISCLOSURE, BUT IT'S NOT WIDE SPREAD ACROSS THE BOARD. THERE'S VENUES THAT NEED TO BE ADDRESSED AND THERE'S ISSUES AROUND HACKING AND THEFT OVER THE LAST FEW YEARS AND A REAL ISSUE AND I THINK SMART REGULATION MAY BE PART OF THE SOLUTION CERTAINLY AROUND DISCLOSURE REQUIREMENTS ISSUED AND THERE'S CONCERNS ABOUT THAT ON BEHAVIOR OF DIFFERENT TYPES OF MARKET MANIPULATION AND SPOOFING AND THAT KIND OF THING AND CONCERNS ABOUT THEIR NOT BEING ENOUGH SURVEILLANCE ON THESE PLATFORMS, I THINK THOSE ARE AREAS WHERE WE REALLY HAVE MODELS FROM THE TRADITIONAL FINANCIAL MARKETS THAT CAN HELP US GET UP TO--UP TO STANDARD IN THOSE MARKETS. >> COULD I ASK JUST 1 QUICK QUESTION BECAUSE, YOU KNOW 1 OF THE REAL CHALLENGES THAT I SEE IS EVEN WHEN YOU GET THE PRIVATE SIDE, MARKET PARTICIPANTS TOGETHER, AT TIMES THAT TASK OF CREATING DEFINITIONS SORT OF LIKE THE TASK OF CREATING ENGAGEMENT CAN BE DIFFICULT IN PART BECAUSE OF THE PACE OF INNOVATION, RIGHT? , DIFFICULTIES OF TRYING TO FIND--WHAT IS BASIC, WHAT IS DECENTRALIZATION, WHAT IS AN EXCHANGE. >> WHY DID THESE EXCHANGES FALL INTO THE DEFINITION OF MONEY TRANSMITTER RATHER THAN SOME OTHER DEFINITION AND CAN WE BE NIMBLE ENOUGH TO COME UP WITH A NEW CLASS AND REGULATE IT IN THE SAME WAY. >> THAT'S RIGHT BECAUSE DEPENDING ON WHERE YOU ARE IN THE PRIVATE MARKET SYSTEM, PEOPLE HAVE DIFFERENT INCENTIVES AND THEY VIEW THINGS DIFFERENTLY AND I'M JUST CURIOUS ABOUT THE ABILITY--YOU KNOW, IF--WHO CAN DELIVER? IT'S A FORMIDABLE CHALLENGE FOR SURE REGULATORS, FOR RIGHT IS THIS? BUT EVEN ON THE PRIVATE SIDE, THERE'S A LOT OF CONSENSUS AS TO MANY OF THESE OPERATING TERMS IS THIS JUST A QUESTION OF--FROM THE MARKET SIDE, TECHNOLOGY TRANSFERS WILL JUST SHAKE OUT EVENTUALLY, CAUSE OF STANDARDIZATION, ECONOMIES OF SCALE OR IS THE PACE OF INNOVATION LIKELY GOING TO KEEP PRESSING THE ENVELOPE AND THEREFORE MAKING IT AN INTRACTABLE PROBLEM FOR A LOT OF THE GOVERNMENT REGULATORS. >> I WOULD SAY THAT THE PACE OF INNOVATION IS A REALICAL EVERYONE AND I DON'T WANT TO DISCOUNT THAT, I THINK MOST CHALLENGES FOR REGULATORS THESE ARE MOVING FASTER THAN WE'RE USED TO IN THESE TRADITIONAL MARKETS. ALSO THE JURISDICTIONAL ISSUES MAKE ITS REALLY TRICKY SINCE THIS IS A GLOBAL MARKET WITH PARTICIPANTS ALL OVER THE ROAD. WE DON'T JUST HAVE--DON'T JUST HAVE ISSUES AROUND JURISDICTIONS WITHIN THE U.S., BUT AROUND THE WORLD AND THAT'S SOMETHING THAT NEEDS TO WORK AT. I THINK IN THAT ENVIRONMENT, THERE'S A ROLE FOR SELF-REGULATION OF SOME FORM THAT CAN HELP FILL GAPS VERY CLEAR ABOUT HIS VISION AND POSSIBLE TO STEP UP THAT THERE WILL BE MORE INDUSTRY DRIVEN ORGANIZATIONS THAT COME UP IN FORM OR FASHION AND SORT OF SET THE TERMS IN THE STANDARDS AND I WILL SAY WHILE I'M REFERRING TO THE DIFFERENCES BETWEEN THE MARKETS AND THE DIGITAL ASSETS FOR MORE TRADITIONAL ASSETS, I DON'T THINK THE ANSWER HERE IS JUST TO TAKE EVERYTHING WE'VE DONE IN THE TRADITIONAL MARKETS AND YOU KNOW THROW IT ON TOP OF THE DIGIT AT ASSET MARKETS AND SAY WE SOLVED THE PROBLEM. I THINK THE TECHNOLOGIES ARE BOTH UNIQUE CHALLENGES BUT THEY'RE ALSO UNIQUE OPPORTUNITIES AND LOOKING AT TECHNOLOGY TRANSFERS LIKE SMART AND PUTTING RULES IN CODE THERE ARE REAL OPPORTUNITIES HERE TO USE THESE NEW TECHNOLOGIES TO COME UP WITH A BETTER REGULATORY ENVIRONMENT. BUT I'M REALLY EXPECTING INNOVATION TO HELP SOLVE THE PROBLEMS WE'VE SOLVED IN DIFFERENT WAYS IN THE PAST. >> DO YOU HAVE ANYTHING THAT THE REGULATORS SHOULD LOOK FOR? >> I LOOK TO CREDIT DEFAULTS WHERE WE SAW NUMEROUS REGULATORS FROM A STATE AND FEDERAL LEVEL AND WHEN YOU THINK ABOUT THE MONEY TRANSMITTER LICENSE VERSUS SOME OF THE FEDERAL REGULATIONS, I THINK THAT THAT CLARITY, THAT LACK OF CLARITY IN THE CREDIT DEFAULTS SWAP MARKETS IN THE EARLY DAYS LED TO THOSE MARKETS STAYING IN THE DARK, STAYING OUT OF--ESSENTIALLY CLEARED OUT OF MARKETS THAT COULD HAVE BEEN SAFER AND ULTIMATELY. THE CFTC AND SEC PROVIDED GUIDANCE THERE THAT HAVE CLEANED UP THOSE MARKETS AND IT'S INSTRUCTIVE TO LACK AT HOW MARKETS SOLVE THESE PROBLEMS IN THE PAST AND TO RICHARD'S POINT OUR CONSTRUCT MAY NOT PERFECTLY LOOK FOR THE ECOSYSTEM AND IT PROVIDES A FRAMEWORK TAKEN--THEY REGULATORY CERTAINLY IN PREVENTING REGULATORY ORBTRAG SHOULD BE 2 OF THE CENTRAL GOALS OF THIS INITIATIVE. >> ONE OF THE BEST THINGS YOU COULD DO FOR THE RETAIL INVESTORS HERE TODAY ARE THE 1S EXPOSED IS TO FACILITATE THE ENTRY OF INSTITUTION WILLA INVESTOR WHO IS WILL INVEST IN SELF-SIDE RESEARCH AND THESE WILL ACTUALLY BE DISCOVERY AND I--YOU KNOW I DON'T THINK REGULATORS NEED TO FIGURE OUT WORRYING ABOUT THE ECONOMICS OF THIS BUT BRINGING INSTITUTIONS INTO THE SPACE WILL ALLOW THEM TO FIGURE IT OUT AND AND THAT WILL FILTER THROUGH THE MARKET. THAT WILL BE REALLY VALUABLE SO I WOULD KIND OF--I WOULD ALSO--I THINK 1 COOPERATIVE AND SAY, OKAY, WHAT IS IT THAT'S HOLDING THEM BACK, YOU KNOW WE KIND OF HELP, YOU KNOW PAVE THE WAY OR AT LEAST REMOVE THE OBSTACLES SO THAT THAT CAN HAPPEN, I THINK IT'S TERRIFIC AGAIN WHAT BAKKT AND OTHERS ARE DOING FACILITATING THAT AND FACILITATING THESE PROBLEMS AND SOLUTIONS AND THESE WILL BE INCREDIBLY PRODUCTIVE AND MAYBE IT'S A BIT OF AN 80/20 APPROACH. THIS IS--THIS IS BASIC LYE LIKE THE STAR WANS CANTIN, OF THESE TOKENS AND EVERYTHING OUT THERE, YOU KNOW I'M NOT SURE, I THINK THERE'S A DANGER OF SORT OF CHASING SQUIRRELS IN TERPS OF LOTS OF LITTLE SPECIAL USE--YOU KNOW SPECIAL AND CASES THIS AND THAT. I MIGHT TAKE A BAR BELL APPROACH WHICH WOULD BE YES, DEAL WITH FRAUD WHEN YOU HAVE TO DEAL WITH FRAUD BUT OTHERWISE, A BIT OF AN 80/20 APPROACH. I THINK RIGHT NOW, LET'S START WITH THE KINDS OF THINGS THAT BAKKT IS DOING, BIT COIN TO BIT COIN, SECURITIES WE WILL HAVE PHYSICALLY SETTLED CONTRACTS AND YOU KNOW THAT'S BY THE WAY, YOU KNOW THOSE BIT COIN-BIT COIN [INDISCERNIBLE] IS THE VAST MAJORITY REALLY OF WHAT'S GOING ON TODAY IN TERMS OF ECONOMIC VALUE. GET THAT FIRST. THEN GET--RATIONALIZE THAT AND DEAL WITH THE KIND OF THINGS YOU HAVE TO DEAL WITH PUTTING OUT THE FIRES AND ONCE YOU'VE DONE THAT, IT WILL BE EASIER ITERATIVELY TO PROVIDE GREATER CLARITYOT LONGER TAIL AND THE MARKETS WILL THEMSELVES FIGURE THAT OUT. BUT THAT'S WHAT I WOULD WISH FOR AS AN INVESTOR. >> THANK YOU. >> BEFORE WE GO TO THE AUDIENCE, BEFORE WE GO TO AUDIENCE FOR THE QUESTIONS, JUST 1 FINAL QUESTION FOR THE PANELISTS, ANY FINAL THOUGHTS OR PREDICTIONS FOR 2019 AND WHAT WE MAY SEE IN THIS SPACE? >> I THINK THE LIGHTNING NETWORK IS WHAT I'M MOST EXCITED ABOUT, THERE'S BEEN A LAGGING ISSUE WITH BIT COIN AND AMAZING CENSORSHIP RESISTANT GLOBAL PAYMENTS NETWORK BUT CAN ONLY HANDLE 5 SECONDS PER TRANSACTION GLOBALLY, WE CAN DO MORE THAN THE VISA NETWORK CAN AND VISA'S NOT DOING SETTLEMENT, THEY'RE DOING CREDIT CARD AUTHORIZATIONS AND THE BANKS PULL THE FUNDS AND SETTLE LATER, WE CAN SCALE GREATER VISA, THAN I THAT'S INKRED CLINICAL COMMUNITY AND LITTENING HAS BEEN A LONG TIME COMING SOME PEOPLE MAY HAVE GIVEN UP AND SAID IT WILL NEVER SCALE, THIS MIGHT BE THE YEAR. >> I THINK JOHN WILL SEE WHAT HE'S ASKING FOR, I THINK WE WILL SEE ENCRUC INSTITUTIONALIZATION AND PROFESSIONALIZATION OVER THE YEAR AND, I THINK WE WILL SEE MORE INDUSTRY ORGANIZATION WHERE INDUSTRY WILL START TO COME TOGETHER IN VARIOUS WAYS TO DEFINE STANDARDS AND TO SOLVE SOME OF THESE PROBLEMS AND WHILE WE LOOK FORWARD TO SORT OF A GOOD BACK AND FORTH WITH THE REGULATORS ABOUT THAT, I THINK IT'S IMPORTANT THAT INDUSTRY LEADS IN SOME OF THESE AREAS. >> I WOULD JUST ADD, I THINK INVESTORS AT THE INSTITUTIONAL LEVEL START TO LOOK AT IT AS AN ASSET CLASS, AS A PLACE THEY NEED TO BE JUST BASED ON THE CONVERSATIONS WE'RE HAVING AND THE LEVEL OF DIALOGUE AND THE WORK THAT'S BEING DONE. WE'RE TRYING TO PAIR SOLUTIONS TO ONBOARD, TO MAKE SURE THAT WE CAN PROVIDE THAT FUNDAMENTAL CONNECTION TO THIS MARKET AND LET INNOVATION FLOURISH WITH THE RIGHT LEVEL OF REGULATION AND THAT LEVEL OF REGULATION AND INNOVATION CAN ABSOLUTELY GO HAND IN HAND IN THE ENERGY MARKET AND IN THE YEAR 2002, WE LISTED 3 CONTRACTS AND IT WASN'T A HIGHLY REGULATED, IT WAS A PATCH WORK OF REGULATION GLOBALLY. A LOT OF WORK WAS DONE BY THE COMMISSION OVER TIME AND OUR MARKET GREW ALONGSIDE REGULATION WHICH I THINK IS SOMETHING THAT YOU KNOW WE'VE ALL KIND OF ACKNOWLEDGED HERE WITH REGULATION MARKETS CAN SAFELY INNOVATE AND FLOURISH AND NOW WE LIST 500 OIL PRODUCTS ALONE AND THOUSANDS OF OTHER ENERGY CONTRACTS AND SO AS REGULATION AND INNOVATION HAS PARTNERED, THE SPACE AS GROWN AND I THINK THAT'S WHAT'S INCUMBENT ON ALL OF US PROVIDE A SAFE ECOSYSTEM FOR THE INSTITUTIONS COME IN BECAUSE THEY WON'T FIGURE IT OUT AND COME IN, WE NEED TO FIGURE IT OUT FOR THEM AND SET THE FRAMEWORK AND THEN LET THEM COME IN. >> SORY, I'M ALWAYS ASKED FOR THE FINAL THOUGHT. I THINK, I WAS OVER THE IMF AND I ASKED RANDY WAS TALKING ABOUT FIN TECH AND I THINK 1 OF THE DEVELOPMENT DEVELOPMENTS THAT I'LL BE INTERESTED IN SEEING IS HOW MUCH CROSS BORDER COLLABORATION WILL THERE ACTUALLY BE WHEN IT COMES TO FIN TECH AND FIN TECH REGULATION, 1 OF THE CHALLENGES WHEN YOU HAVE REGULATORY SAND BOXES AND THE LIKE IS WHEN YOU CREATE A SAND BOX, SAY, THE FCA OR ANYWHERE ELSE, YOU'RE ABLE TO GENERATE A LOT OF INFORMATION AND DATA BUT THE QUESTION IS, CAN THAT DATA--CAN THAT INFORMATION--CAN THAT LEARNING BE SHARED ACROSS BORDERS, AND HE HAD MENTIONED SOME OF THE REGULATORY CHALLENGES, YOU KNOW LITIGATION CHALLENGES AND EXPOSURE THAT CAN BE GENERATED WHERE THAT INFORMATION IS SHARED ACROSS BORDERS. AND IT WILL BE FASCINATING TO SEE HOW REGULATORY AGENCIES TRY TO FACILITATE AND PUSH THE TRADITIONAL MOUs AND INFORMATION SHARING DEVICES IN A WAY TO ACCELERATE LEARNING AND BEST PRACTICES WHEN IT COMES TO FIN TECH AND FIN TECH INNOVATION AND REGULATION. >> [INAUDIBLE QUESTION FROM AUDIENCE ] --AND I'M WONDERING IF THIS THING [INAUDIBLE ] KIND OF FOCUSING AND READING A NARRATIVE THAT JUST] INAUDIBLE BROADER IMPACTS BEING [LITTLER BENEFIT ON HERE. [INAUDIBLE ]--FOCUSING ON THE-- [INAUDIBLE ] >> LET ME JUST REPEAT THE QUESTION SO PEOPLE WHO ARE WATCHING ONLINE WILL HEAR IT. SO BASE QUESTION IF I SUMMARIZE CORRECTLY IS, HAS THE MARKET COME UP WITH A NARRATIVE TO SELL WHAT IS GOING ON IN THE SPACE SO, YOU KNOW TO COMBAT MAYBE SOME OF THE FEAR OR QUESTIONS OR CONCERNS OUT THERE? >> YEAH, IT'S A GREAT QUESTION AND THE POINT WAS MADE THAT THE INTERNET HAD A CLEAR NARRATIVE, IT WAS ABOUT FREE SPEECH AND FREE EXCHANGE OF INFORMATION AND KNITTING PEOPLE TOGETHER GLOBALLY AND OUR SPACE, THE CRYPTO CURRENCY SPACE DOESN'T HAVE AS CLEAR AS A NARRATIVE. THERE ARE 2 FACTORS INVOLVED THERE. I THINK WE ARE IN THE PROGRESS OF INNOVATION WITH RESPECT TO THE INTERNET, WHERE THE INTERNET MIGHT HAVE BEEN IN 1993 OR 19 NORIN WHICH CASE THE NARRATIVE HADN'T COALESCED, THIS IS A TOOL FOR ACADEMICS WITH UNIVERSITIES AT PAPERS OR IS THIS A TOOL THAT EVERY PERSON WILL USE, A GREAT TODAY SHOW, MORNING PROGRAM WHERE EVERYONE'S--KATIE CURIC'S THERE AND ERCH'S SAYING WHAT IS INTERNET ANYWAY? AND THAT WAS IN 1996 OR 97. SO IT TOOK TIME. FOUNDATIONAL TECHNOLOGY IN 1994 DIDN'T SCALE TO DO A LOT OF THINGS THAT CONSUMERS WANTED TO DO WITH IT AND THIS IS WHY I'M SO FOCUSED IN MY ENTHUSIASMOT LITTENING NETWORK AND PAYMENT CHANNELS AND GETTING THIS TECHNOLOGY TO SCALE TO DO MORE BUT THAT DOESN'T MEAN WE SHOULDN'T HAVE A NARRATIVE BEFORE IT SCALES TO EXPLAIN TO PEOPLE WHAT THEY CAN DO WITH IT ONCE IT SCALES. AND I THINK THE COMMUNITY HAS NOT DONE A GREAT JOB EXPANDING ON THAT NARRATIVE. WE TALK ANY DECENTRALIZATION ALL THE TIME BUT WHAT THE HECK DOES THAT MEAN. I THINK--A NEAT WAY TO ARTICULATE THAT THAT WOULD BECOME MORE OF A--AN EDUCATIONAL TALISMAN IS TAKE YOUR INTERNET SERVICE THAT YOU USE EVERY DAY WHETHER IT'S ONLINE BANKING, WHETHER IT'S SOCIAL NETWORKING, WHETHER IT'S CLOUD STORAGE FOR YOUR PHOTOS AND VIDEOS AND THINGS LIKE THAT AND WHAT'S BEHIND THE CURTAIN? ONE GIANT CORPORATION, INCREASINGLY JUST 1. THERE USED TO BE--THIS CONSOLIDATION THAT CHAIRMAN GIANCARLO WAS TALKING ABOUT, IS HAPPENING EVERYWHERE. WE'RE INCREASINGLY RELYING ON A SINGLE CORPORATION TO DO THINGS ON THE INTERNET. IF WE CAN RELY ON A OPEN BLOCK CHAIN NETWORK A REAL CLOUD, REAL SPREADSHEET ISN'T SKY THAT'S WORTH TRUSTING BECAUSE THERE'S NOT 1 PRIVATENTITY, THERE'S THOUSANDS OF PEOPLE COOPERATING AND USING CRYPTOGRAPHY AND BLOCK CHAINS THAT'S MUCH BETTER FOR CONSUMER PROTECTION, WELFARE AND ALSO INFOIVATION BECAUSE THEN THERE ISN'T 1 GATE KEEPER YOU WANT TO GO THROUGH IF YOU BUILD A WEBSITE. RIGHT NOW IF YOU WANT TO BUILD A FLAT FORM LIKE NETFLIX WITH YOU'RE GOING IT USE AMAZON. IT'S A STRANGE STATE OF AFFAIRS AND YOU WE CAN REPLACE THOSE LUMPY INTERMEDIARIES I THINK WITH BLOCK CHAIN NET WORKS BUT THAT'S THE NARRATIVE. BUT IT'S ALSO A TECHNICAL NARRATIVE. THIS IS NOT GOING TO MAKE IT THIS MUCH EASIER TO DO THING YOU WANT TO DO, THIS WILL MAKE IT BETTER BECAUSE YOU WON'T BE TRUSTING 1 ENTITY TO DO IT SO IT'S HARD TORE SELL BECAUSE IT'S ABOUT REARCHITECTING, NOT ABOUT THIS ISLY CONSUMER SERVICES. >> I AGREE WITH EVERYTHING PETER JUST SAID AND I WOULD AGREE THAT WE AS AN INDUSTRY HAVE NOT COME UP WITH THAT FORMULATION AS TO WHY THIS ZINGS AT HOME TO EVERYONE AND I THINK THATTA'S ESSENTIAL. FROM MY STANDPOINT, I THINK EVERYONE WOULD SAY IT'S MAGIC INTERNET MONEY, SO WHAT DOES THAT DO FOR ANYBODY? YOU KNOW WE NEED TO GET TO WHY DOES THIS, YOU KNOW MAGIC INTERNET MONEY ACTUALLY IMPROVE PEOPLE'S LIVES AND ME, YOU KNOW THIS DECENTRALIZATION THEME IS REALLY IMPORTANT IN A FEW WAYS. ONE IS IN TERMS OF INEFFICIENCY. THAT'S NOT SEXY. BUT WHAT IT DOES MEAN IS IT'S REALLY IMPORTANT FOR GROWTH, COMPETITIVENESS, IMPORTANT FOR JOBS AND THAT'S HOW, YOU KNOW ECONOMIES ADVANCES BY GETTING MORE EFFICIENT. SO THAT'S 1 REAL IMPORTANT POINT AROUND DECENTRALIZATION. PRIVACY IS A REALLY IMPORTANT POINT AND I THINK IF YOU THINK ABOUT HOW WE ALL GET USED TO THE FACT THAT WE DON'T HAVE PRIVACY ANYMORE, THERE ARE BIG CENTRAL DATABASES OF INFORMATION THAT GET HACKED AND WE LOSE ALL OF OUR IDENTITY. IN THESE AREAS, THIS TECHNOLOGY IS VERY PROMISING IN TERMS OF LETTING US GET BACK SOME OF THAT PRIVACY. AND THEN FINALLY, I WOULD SAY, THAT THIS TECHNOLOGY IS ALSO REALLY IMPORTANT FOR TRUST AND YOU KNOW WHEN THEY TALK ABOUT SOMETIMES, WHAT TYPES OF TRANSACTIONS, DIGITAL ASSETS WILL ENABLE, FOR ME IN IDEA THAT PEOPLE CAN INTERACT WITH EACH OTHER DIRECTLY WITHOUT TRUSTED INTERMEDIARIES IN WAYS THAT HAVE TRUST BUILT INTO THE SYSTEM IS ALSO REALLY COMPELLING AND WILL IMPROVE THE WAY WE'RE ABLE TO CONDUCT COMMERCE AND COMMUNICATE AROUND THE WORLD. TO ME THOSE ARE THE 3 VALUES, WE NEED TO START WITH THAT. THERE MAY BE DIFFERENT FORMULATIONS, DIFFERENT WAYS OF TALKING ABOUT IT SO THAT IT REALLY IS DRIVEN HOME BUT I THINK WE NEED TO START WITH THAT. I THINK YOU KNOW WE COULD JUMP INTO THE REGULATORY DISCUSSION AND I THINK WE LOSE THE WHOLE POINT ABOUT WHY SHOULD WE CARE ABOUT THIS AS A SOCIETY, WHAT IS THE ROLE OF REGULATORS IN THIS SO YOUR QUESTION IS VERY IMPORTANT. WE NEED TO START WITH WHY. >> CAN I ADD THOSE ARE TREMENDOUS POINTS. I WOULD ADD 1 OTHER, WHICH IS, I DON'T LIVE IN THE U.S. AND THIS IS A PARTICULARLY U.S. QUESTION, MEANING, IT'S PRETTY OBVIOUS TO A LOT OF THE REST OF THE WORLD WHY THIS IS GREAT, WHY MAGIC INTERNET MONEY IS TERRIFIC, PART OF THE ISSUE IS I THINK HERE, THE DOLLAR WORKS PRETTY WELL AND SO, YOU KNOW THE USE CASE IS SOMEWHAT LESS COMPELLING, I THINK A LOT OF THE REST OF THE WORLD VERY MUCH GETS IT SO THEY'RE GOING TO MOVE AHEAD AND SO FORTH AND THEN TO EARLIER POINTS THAT WERE MADE, THERE'S--YOU KNOW AS THAT MOVES AHEAD, THERE WILL WILL WILL BE A LOT OF INVESTMENT, INNOVATION AND SO FORTH AND WHILE IT MAY NOT BE AS IMPAGING A MESSAGE FOR THE AVERAGE PERSON IN THE U.S., IT'S IMPORTANT TO KEEP UP AND TO BE A PARTICIPANT IN THAT EVEN IF YOU DON'T QUITE HAVE THE SAME URGENT NEED FOR THIS NEW TECHNOLOGY TRANSFER THAT A LOT OF THE REST OF THE WORLD DOES. AND AND IT'S ONLY BEEN 10 YEARS BUT TO THINK THAT A 9 PAGE WHITE PAPER TALKED ABOUT A PEER TO PEER PEER TO PEER ECASH SYSTEM IS PRETTY PROFOUND AND IT MAKES YOU GO BACK TO--LOOK AT WHAT IT'S CREATED AND THE POTENTIAL IT HAS AROUND THE WORLD THIS, IS A FOREGONE CONCLUSION, YOU KNOW IT'S REAL LE SIMPLICITY IS THE ULTIMATE SOPHISTICATION SO THAT 9 PAGE WHITE PAPER IS KIND OF AN INTERESTING STARTING POINT TO WHY IS THIS IMPORTANT. >> I GRABBED AMIR'S MIKE, THAT WAS A GREAT QUESTION BECAUSE IT GOT EVERYBODY TO RESPOND, I WANTED TO BRIEFLY RESPOND TO PROFESSOR BRUMMER AND YOUR POINTS ABOUT SHARING ACROSS AGENCIES CROSS BORDER AND FOR EVERYBODY ATTENDING THE CONFERENCE, YOU MAY HAVE A TREAT, YOU MAY GET TO SEE AN IMPORTANT MOMENT TOMORROW WITH CROSS BORDER SHARING AMONGST REGULATORS BUT IT'S A TEASER, BUT YOU LED INTO IT, SO I HAD TO THROW IT OUT THERE. SO DON'T MISS TOMORROW. >> GREAT. DO WE HAVE TIME FOR 1 MORE QUESTION? YEAH, OKAY. LAST QUESTION. >> --RETAIL INVESTORS-- >> INSTITUTIONAL LAW? >> AS FAR AS REGULATIONS GO, ARE THEY GOING TO BE THE SAME FOR THE INSTITUTIONS AS FOR THE-- >> GOSH. I WOULD ACTUALLY LOOK TO THE OTHER END OF THE STAGE TO ANSWER BECAUSE I'M NOT A LAWYER. I MEAN I'M NOT SURE. I WOULD SAY THAT CLEARLY THERE ARE DIFFERENCES ALREADY IN TERMS OF HOW, YOU KNOW CERTAIN RETAIL INVESTORS AND CERTAIN KINDS OF RETAIL INVESTORS ARE TREATED UNDER U.S. SECURITIES LAW FOR EXAMPLE, SO WILL THERE BE SOME DISTINCTIONS? YES, I'M NOT SURE IT TAKES A RADICALLY DIFFERENT FRAMEWORK, IT MAY BE ON THE FRINGES MORE. >> BUT IT'S AN INTERESTING QUESTION, JUST SECURITIES LAW IS ALWAYS--IT GOES THROUGH ITERATIONS, USUALLY VIA THE SUPREME COURT AS TO WHAT CONSITUTES A SOPHISTICATED INVESTOR, RIGHT? AND WE HAVE DIFFERENT KINDS OF METRICS WITH WHICH TO JUDGE WHAT CONSITUTES A SOPHISTICATED INVESTOR AND SOMETIMES IT'S HOW MUCH MONEY YOU HAVE, HOW MUCH YOU EARNED OVER THE LAST YEAR, HOW MUCH YOU AND YOUR SPOUSE HAVE EARNED OVER THE LAST YEAR, THERE ARE ALL KINDS OF DIFFERENT WAYS AND INCLUDING FAMILIARITY POTENTIALLY WITH TECHNOLOGY SPACE, BUT I THINK THAT THIS IS 1 OF THOSE AREAS THAT WILL CREATE AN OPPORTUNITY TO RETHINK WHAT SOPHISTICATION MEANS, PARTICULARLY WHEN YOU GET INTO QUESTIONS OF DISCLOSURE AND HOW INFORMED IS SOMEONE AND WHAT KIND OF ADDITIONAL INFORMATION 1 DOES OR DOES NOT NEED, THIS IS GOING TO BE 1 OF THOSE AREAS THAT WILL ONCE AGAIN REQUIRE AT LEAST SOME KIND OF CONVERSATION. >> YEAH, 1 THING THAT'S PROBLEMATIC IS IF YOU ARE HOPING TO BIFURCATE THE REGULATORY SCHEME AND EXCLUDE PARTICIPATE OR ATTEMPT TO EXCLUDE RETAIL INVESTORS IN CERTAIN ASPECTS OF THE TECHNOLOGY AND TRADING TECHNOLOGY THAT'S PROBLEMATIC IN THIS SPACE, UNFORTUNATELY. OR FORTUNATELY. DEPENDS ON HOW YOU FEEL ABOUT RETAIL INVESTOR ACCESS TO THESE THINGS BUT THAT CONVERSATION IS NOT A FRUITFUL CONVERSATION ANYMORE BECAUSE THESE ARE GLOBALEC TECHNOLOGIES THAT WORK ON THE INTERNET AND PEOPLE IF THEY'RE DETERMINED WHICH MANY RETAIL INVESTORS ARE GET WILL AHOLD OF THEM. SO IF YOUR THOUGHT IS, WELL, WE WILL NOT ALLOW THOSE PEOPLE TO PARDISSIPATE OR WE WILL NOT ALLOW OF PEOPLE TO BE ON THE OTHER SIDE OF PARTICIPATION WITH THOSE PEOPLE IN ORDER TO PROTECT THOSE PEOPLE, YOU'RE ACTUALLY PROBABLY JUST GOING TO LEAVE THEM UNPROTECTED BECAUSE THEY WILL SEEK IT OUT NO MATTER WHAT, IT'S A GLOBAL TECHNOLOGY AND THE INTERNET CONNECTION AND A COMMONLY AVAILABLE HARDWARE, PHONE OR COMPUTER. SO THAT'S AN IMPORTANT MAYBE PARADIGM SHIFT WHERE IT'S POSSIBLE MAYBE TO REMOVE FROM PARTICIPATION FROM PERSONS WHO YOU THOUGHT YOU NEED TO BE PATERNALISTIC TOWARDS WITH OLDER ASSETS BECAUSE THEY'RE ALWAYS STEMMING FROM A SINGLE OR HANDFUL OF REGULATED ENTITIES, THAT IS NOT THE CASE ANYMORE. >> GREAT. WELL, I THINK THAT'S ALL THE TIME WE HAVE. SO PLEASE JOIN ME IN THANKING THE PANELISTS. [ APPLAUSE ] >> TOKENNIZEATION, EXPLORING THE OTHER SIDE OF THE COIN. PLEASE WELCOME OUR MODERATOR CFTCGENERAL COUNCIL DAN DAVIS AND OUR GUEST PANELISTS. . >> WELL, GOOD MORNING EVERYONE. IT'S A PLEASURE TO BE HERE. MY NAME'S DAN DAVIS, I WAS ANNOUNCEDOT GENERAL COUNSEL OF THE CFTC, VERY EXCITED ABOUT OUR SECOND PANEL HERE ABOUT TOKENNIZATION, EXPLORING THE OTHER SIDE OF THE COIN AND HOW TOKENNIZATION WILL EVOLVE OVER TIME AND WHAT ARE THE NEAR AND LONGER TERM IMPACTS. WE HAVE AN EXCELLENT PANEL HERE TODAY AND WE WILL INTRODUCE THEM AND GET STARTED, TO MY LEFT IS PATRICK MERK, SPECIAL COUNCIL AT THE LAW FIRM OF [INDISCERNIBLE]. AND TO HIS LEFT IS VINCE MULINAR I, AND WE HAVE KRISTIN SMITH WHO'S DIRECTOR OF EXTERNAL AFFAIRS AT THE BLOCK CHAIN ASSOCIATION, AND THEN TO HER LEFT IS ERIN WRIGHT A CLINICAL PROFESSOR OF LAW AT CARDOZA LAW SCHOOL AND THEN FINALLY PERRY ANN BOHRING WHO IS PRESIDENT AND FOUNDER OF DIGITAL COMMERCE. SO PEOPLE DON'T NORMALLY SEE THE GENERAL COUNCIL HEADING A PANEL. IT'S A PLEASURE FOR ME TO BE HERE TODAY. I'M USUALLY THE 1 GETTING THE QUESTIONS, BUT I JUST WANT TO START OFF BY SAYING CHAIRMAN GIANCARLO WHEN YOU ESTABLISHED THIS LAB, HE PUT IT IN THE OFFICE OF GENERAL COUNSEL SO I'VE HAD THE OPPORTUNITY OF HAVING MR. GORFINE AND THE CFTC TEAM REPORTING TO ME OVER THE LAST YEAR, YEAR AND HALF AND I WOULD BE REMISS IF I DIDN'T TAKE THE OPPORTUNITY TO THANK THEM PUBLICLY FOR THEIR EXTENSIVE WORK AND THEIR DILIGENCE AND DEDICATION TO MAKING THE CHAIRMAN'S VISION A REALITY AND I THINK THAT THIS CONFERENCE ALONG WITH THE EXTENSIVE HELP THAT WE RECEIVE FROM THE OCEO, IS REALLY A MILESTONE FOR LAB CFTC AND IT'S--IT'S DESIRED TO FULFILL ITS MISSION OF BEING IN TOUCH WITH THE INNOVATION COMMUNITY AND FIGURING OUT WAYS THAT WE CAN BE A SMART REGULATOR AND HAVE EFFECTIVE AND DYNAMIC MARKETS. SO OUR FIRST PANEL, FOCUSED ON CRYPTO ASSET MARKETS AND TRADING. THIS PANEL WILL BROADEN THE SCOPE A BIT AND WE WILL TALK ABOUT THE EVOLUTION OF DIGIT AT AG SETS, THE IMPACT OF TOKENNIZATION AND IMPLICATIONS FOR OUR MARKETS AND OUR REGULATORY FRAMEWORK. SO, YOU KNOW PATRICK LET'S START OFF WITH YOU, COULD YOU HELP US UNDERSTAND THIS NEW WORLD THAT WE'RE STARTING TO COME INTO AND WHERE IT SEEMS LIKE ANYTHING CAN BE TOKENNIZED AND WHAT DOES TOKENNIZATION MEAN AND WHAT ARE THE IMPACTS OF IT. >> SURE THING AND--IT'S A--IT'S FASCINATING QUESTION, I WILL PREFACE THIS BY SAYING THESE ARE MY STRONG BELIEFS WEEKLY HELD, FREE TO BE CHALLENGED ON ANY OF THEM, I HOPE YOU DO AND WHEN WE TALK ABOUT THINGS LIKE WHAT IS TOKENNIZATION AND I'M SURE EVERYONE ON THIS PANEL HAS THEIR OWN THOUGHTS ON WHAT THIS MEANS FOR THEM AND THINGS LIKE THAT. AS FAR AS EVOLUTION OF IT, IT'S INTERESTING BECAUSE I WAS A TELECOM LAWYER HERE IN D. C. AFTER GRADUATING LAW SCHOOL HERE IN D. C. AND I PICKED UP STAKES, SOLD EVERYTHING, MOVED TO SEATTLE, JOINED A START UP 10 YEARS AGO, ABOUT. AND THAT STARTED FOCUS ON DIGIT AT CURRENCY, RIGHT? BUT IT WAS A VERY DIFFERENT KIND OF DIGIT AT CURRENCY, AT THAT TIME IT WAS CENTRALIZED DIGIT AT CURRENCY, WE WILL BUILD THE CURRENCY FOR THE INTERNET, IT TURNED OUT WE WEREN'T BUT SOMEBODY ELSE DID AND WE'VE BEEN TALKING ABOUT THAT IN THE LAST PANEL. AND WE DID SOMETHING, WE WERE IN THE SPACE OF GAMIFICATION, I DON'T KNOW IF ANYBODY'S FAMILIAR WITH THAT TERM BUT IT'S USING ECONOMICS AND GAME DESIGN TO BUILD ECONOMIES ACROSS THE WEB TO INCENTIVIZE COMMUNITIES TO DO CERTAIN THINGS WHICH ALL SOUNDS A BIT FAMILIAR BUT DEFINITE RIGHT? IT RHYMES WITH WHAT WE'RE SEEING NOW, SO WHEN WE TALK ABOUT THE EVOLUTION FOR ME, IT BEGAN WITH ALL OF THESE IN A CENTRALIZED CONTEXT. WE WOULD RUN THE CURRENCY, WE WOULD WITH PEOPLE WHO ARE BUILDING COMMUNITIES ON THE WEB TO HELP THEM DEVELOP THESE INCENTIVE STRUCTURES AND THINGS LIKE THAT. NOW FAST FORWARD A COUPLE YEARS AND 1 OF THE DEVELOPERS OF THE COMPANY, IN 2010 SAYS, HEY, HAVE YOU SEEN THIS BIT COIN PAPER? RIGHT, YOU SHOULD LOOK AT THAT, RIGHT? BECAUSE THAT WAS THE EMPLOYEE NUMBER 1 BUSINESS GUY, GENERAL COUNCIL ISSUE KIND OF HONOR WHO IS DOING THOSE THINGS, START UP TYPICAL FASHION, BUYING RAMEN NOODLES FOR THE DEVELOPERS TO KEEP THEM FED AND BUSY. SO I TOOK A LOOK AT THAT AND I JOKINGLY SEDENTARY TO MY CEO, SOMEONE JUST OPEN SOURCED OUR BUSINESS MODEL, JUST SO YOU KNOW, RIGHT? AND WE LAUGHED ABOUT IT AND KEPT DOING OUR THINGS BUT THE COMPANY'S NOT HERE ANYMORE AND BIT COIN STILL IS SO MAYBE IT WASN'T SUCH A JOKE. A YEAR LATE ARE I GET MORE INVOLVED IN THE BIT COIN COMMUNITY GENERALLY SPEAKING AND THE BLOCK CHAIN COMMUNITY, CRYPTO CURNESSY AND THE REAL THING THAT DREW ME IN WHEN I STOPPED AS SOMEBODY WAS TALKING ABOUT EARLIER IS BIT COIN AS MAGICAL INTERNET MONEY AND I STARTED THINKING ABOUT, WOW THIS, IS A MARKETPLACE THAT'S OWNED BY NO 1 THAT CREATES PROPERTY RIGHTS AND THINGS. AND THAT WAS THE LIGHT BULB MOMENT FOR ME AND THAT POINT FORWARD I WENT DOWN THE RABBIT HOLE AND I HAVEN'T STOPPED. SO WHEN I THINK OF TOKE KNOWIZATION TODAY I THINK OF IT AS A CONCEPTUAL SPACE THAN A THING YOU CAN GRAB AND IT'S AN INTERESTING SPACE. IT'S GIVEN PERMISSION TO A LOT OF PEOPLE TO THINK ABOUT HOW THE ECONOMY SHOULD WORK AND HOW IT SHOULD BENEFIT THEM, RIGHT? AND OTHERS, RIGHT? AND HOW WE CAN THINK ABOUT THE DIFFERENT POWER STRUCTURES IN MARKETS AND IN HOW WE ESTABLISH PROPERTY RIGHTS IN JUST NEW WAYS, WHETHER THOSE ARE GOOD WAYS OR BAD WAYS TO BE DETERMINED, RIGHT? BUT IT'S GIVEN PEOPLE PERMISSION TO RETHINK A LOT OF THESE THINGS. IT'S ALSO OPENED UP NEW TYPES OF MARKETS RIGHT? SO WE'RE THINKING ABOUT, WHEN WE SAY TOKENS AND WE THINK ABOUT TOKENNIZING DIFFERENT THINGS, SO A LOT OF PEOPLE ARE WORKING ON STRUCTURES AND THINGS LIKE THAT TAKING REAL WORLD THINGS AND THAT I CANNING TOKEN REPRESENTATION OF A BLOCK CHAIN ON THOSE THINGS, WHERE THE POWER MARKET IS MORE DECENTRALIZED IN WHAT YOU CAN DO IF YOU WERE TO SAY, DO IT IN A TRADITIONAL FORMAT AND THAT'S INTERESTING. WE'RE ALSO TALKING ABOUT OTHER TYPES OF THINGS. WE'RE TALKING ABOUT NETWORK BACK TOKENS, SO SOMETHING LIKE SCIAFUND--PROBABLY NOT MANY PEOPLE ARE FAMILIAR WITH THAT OFFERING BUT IT WAS VERY INTERESTING. IT WAS A TOKEN THAT REVENUE GENERATES FROM TRANSACTION FEES OF THE NETWORK, [INDISCERNIBLE] NETWORK, IT WAS OFFERED AS A SECURITY AND AS THE TOKEN HOLDER YOU COULD TAKE THE REVENUE FROM THE NETWORK THAT WAS GENERATED AND THAT'S AN INTERESTING WAY OF FUNDING A NEW MARKETPLACE AND A PROJECT AND IN THAT CASE DECENTRALIZED FILE STORAGE AND/OR IT'S TOKEN BY TOKENS SO IT'S A BLOCK ROUTE CREATING A SCALING SOLUTION FOR DIFFERENT TYPES OF BLOCK CHAINS WHEREBY HOLDING THE BLOCK [INDISCERNIBLE] TOKEN YOU ARE ESSENTIALLY HOLDING ON TO A PIECE OF POOL OF TOKENS EARNED ACROSS MULTIPLE BLOCK CHAINS SO THERE'S ASSET BACK TOKENS, NETWORK BACK TOKENS, TOKEN BACK TOKENS AND CURRENCY TOKENS LIKE BIT COIN AND [INDISCERNIBLE] WHERE THEY JUST FUNCTION AS THE CURRENCY OF THE MARKETPLACE THAT THEY WERE DESIGNED AND DEVELOPMENT IN SO THERE'S ALL THESE DIFFERENT TYPES OF THINGS SOME OF WHICH EXISTED BEFORE, SOME OF WHICH ARE AUTHENTICALLY, GENUINELY NEW TYPES OF THINGS THAT YOU JUST COULDN'T HAVE CONCEIVED OF OR BUILT BEFORE. SO WHEN I THINK OF TOKENNIZATION AND I'M SURE OTHERS WILL KIND OF CHIME IN AS WE GO THROUGH THE PANEL, I THINK OF IT MORE AS THIS CONCEPTUAL SPACE AND IT'S A NEW CONCEPTUAL SPACE FOR PEOPLE TO KIND OF RETHINK SOME OF THE DIFFERENT POWER STRUCTURES AND WHAT CAN BE DONE WITHIN THE ECONOMY TO MAKE IT A LITTLE BIT BETTER FOR EVERYONE. >> OKAY, YOUR COMPANY RECENTLY ANNOUNCED THAT IT'S HELPING FACILITATE A TOKENNIZED SECURITIES OFFERING SO COULD YOU WALK US THROUGH THAT NEWS AND EXPLAIN MORE BROAD LE HOW YOU EXPECT TOKENNIZATION OF ASSETS TO EVOLVE? >> SURE. THANKS, DAN AND CFTC AND THE LEADERSHIP IN ENGAGING WITH MARKET PARTICIPANTS. I WOULD SAY AS A BIT OF FRAMING GOING TO HOW WE ALL VIEW THE DIGIT AT SPACE A BIT DIFFERENTLY, WE ARE A BROKEN DEALER IN AN ALTERNATIVE TRADING SYSTEM AND QUALIFIED MATCHING SERVICE AS WELL FROM DEPARTMENT OF TRANSFERRING, SO I THINK FOR US IT'S LESS CONCEPTUALIZED AND IT'S REALLY LOOKING AT PHYSICAL ASSETS THAT ARE IN THE MORE EFFICIENT AND CREATING BETTER ACCESS TO THAT CAPITAL AND LIQUID INSTRUMENTS AND PUT THEM ON A PATH TO LIQUIDITY. SO WITHIN, AND IT'S ABOUT CREATING A NEW MARKET STRUCTURE, BUT FOR US IT'S THE COMFORT OF INSTITUTIONAL PARTICIPANTS TO THESE NEW ASSET CLASSES IF INDEED THEY ARE NEW ASSET CLASSES OR EXTENSION OF THESE EXISTING ASSAY CLASSES BY HAVING FAMILIAR TRANSACTION CAPABILITIES. RIGHT? THAT GOES TO HOW DO WE--HOW DO WE RAISE THAT CAPITAL, HOW DID WE TRADE, WHAT IS THE EQUIVALENT OF CLEARANCE OR SETTLEMENT PROCESS THAT IS INDEED REGULATED AND I KNOW THAT'S A LITTLE BIT OUTSIDE THE BOUNDARY OF SOME OF THE OTHER CONVERSATIONS OF FULL DECENTRALIZED. BUT WE'RE IN AN EVOLUTIONARY PROCESS, AND I THINK OUR TECHNOLOGIES ARE WELL IN ADVANCE IN THEIR CAPABILITIES OF WHERE OUR REG RATTERY COMFORT IS AND WHEN WE TALK ABOUT INSTITUTIONAL PARTICIPANTS WE NEED TO HAVE THAT MARRIAGE IN THE EARLIER STAGE OF THE CYCLE. SO I THINK TO ANSWER THAT SPECIFICALLY, THE DEAL THAT WE JUST CLOSED MONDAY EVENING WAS MUCH DIFFERENT THAN ANYTHING THAT'S BEEN DONE YET. IT WAS THE TOKENNIZATION OF THE ASPEN RESORT SO TAKING A PIECE OF THAT CAPITAL ACT AND TOKENNIZING IT AND WHAT WE'RE SEEING A REAL DEMAND AROUND REAL ESTATE, FOR EXAMPLE, TROPHY ASSETS THAT A LOT OF INVESTORS HAVEN'T HAD THE OPPORTUNITY TO PARTICIPATE IN AND ASSET OWNERS TO BE ABLE TO HAVE--INSTEAD OF SELLING THE ENTIRE ASSET MAYBE A PORTION OF THE ASSET TO HAVE ACCESS OF LIQUIDITY SO I THINK WE'RE SEEING THIS DISCOUNT THAT'S BEEN AFFORDED TO ILLIQUID INSTRUMENTS, COMPRESSING THAT DELTA CAPTURE, STARTING TO COME MORE MOST BECAUSE YOU CAN TAKE A SMART CONTRACT AND YOU CAN MAKE IT INTO THINGS THAT THE MARKET MAY WANT, DEBT, EQUITY, REVENUE PARTICIPATION, PROFIT PARTICIPATION OR, YOU KNOW, LOVE TO TALK MORE ABOUT THINGS THAT YOU CAN BE DOING THAT ARE OUTSIDE SECURITIES THAT ARE GAME CHANGING AND PHYSICAL ASSETS AND ENGAGING I SAY SHARED ECONOMY. HOW DO YOU--HAVE UTILIZATION OF ASSETS WITHIN THE LUXURY AUTOS, WHETHER IT'S OTHER PHYSICAL ASSETS AND IMPACT INVESTING, HOW DO WE MOVE THIS PARADIGM TO DO GOOD AROUND THE WORLD LACKING AT SUSTAINABLE DEVELOPMENT GOALS, SUSTAINABLE DEVELOPMENT GOAL NUMBER 5, HOW DO WE CREATE PRIVATE SECTOR OF MEWMENT FOR CAPITAL AND GENDER EQUALITY AND INCLUSION, SO THESE INSTRUMENTS ALLOW US TO BE CREATIVE AND HOW DO WE BEGIN THAT PATHWAY TO CAPITAL FORMATION IN NEW WAYS AND THAT'S JUST NOT JUST IN SECURITY MARKETPLACE. >> SO OBVIOUSLY THERE ARE--THERE ARE A LOT OF PLACES WHERE TOKENNIZATION CAN POTENTIALLY IMPACT, THIS NEW OFFERING YOU HAVE IS CERTAINLY A NEWER AREA AND THEIR CERTAINLY SEEMS TO BE DIFFERENT WEARS WHY IT CAN COME SPUT LET ME TURN IT OVER TO YOU NOW, AT CHAMBER DIGIT OF COMMERCE THAT YOU ALL RELEASED A TOKEN ALLIANCE REPORT. IT WAS VERY INTERESTING, I WAS WONDERING IF YOU COULD WALK EVERYBODY THROUGH THAT REPORT AND TALK ABOUT SOME OF THE TOKENNIZATION PROJECTS THAT YOU'RE HEARING ABOUT ASK WHERE DO YOU THINK THINGS ARE GOING. >> SURE DAN. THANKS FOR HAVING ME HERE TODAY, AT THE CHAMBER OF DIGITAL COMMERCE WE LAUNCHED THE TOKEN ALLIANCE A YEAR AGO AND THIS WAS IN PRESPONSE TO THE ICO RELATED ACTIVITY THAT WE WERE SEEING. A TON OF MONEY BEING RAISED, THROUGH INITIAL COIN OFFERINGS OR TOKEN SALES, A LOT OF THAT WAS EXCITING AND INTERESTING INNOVATION BUT THERE WERE ALSO THINGS THAT WERE CONCERNING TO US AND MAKING OUR JOBS AT THE CHAMBER MORE DIFFICULT AND WORKING WITHLET POLICY COMMUNITY IN PROPOSED DISCLOSURE MOTING BLOCK CHAIN. SO WE ESTABLISHED THE TOKEN ALLIANCE AND A TIME OF REGULATORY UNCERTAINTY TO DRAFT--SO REALLY THE BIGGEST QUESTION THAT THE FOLKEN MARKETPLACE IS DEALING WITH TODAY IS WHEN WOULD A TOKEN NOT BE CONSIDERED A SECURITY. SO IN THE ABSENCE OF HAVING REALLY CLEAR GUIDANCE, WE HAVE PUT FORWARD GUIDE LINES FOR TOKEN SPONSORS AND TOKEN TRADING PLATFORMS AND IT'S ULTIMATELY OUR PROPOSAL OF HOW WE WOULD LIKE TO SEE A NEW GOVERNANCE MODELS DEVELOPED FOR THE TOKEN ECOSYSTEM. THIS INITIATIVE IS BEING CHAIRED BY FORMER SO REGULATORS THE FORMER CHAIRMAN OF THE CFTC JIM NEWSOME IS A CO CHAIR AS WELL AS PAUL ATKINS WHO IS A FORMER SEC COMMISSIONER SO OUR WHOLE ETHOSE IS BRINGING THE--ETHOS TOGETHER TO WORK TOGETHER AND THINK THROUGH THE GOVERNANCE CHALLENGES OF TOKENS. OUR INITIAL REPORT OF UNDERSTANDING DIGIT AT TOKENS IS NOW AVAILABLE ON OUR WEBSITE AND ON GITHUB, IT'S A FREE RESOURCE FOR EVERYBODY AND COVERED UTILITY TOKENS SPECIFIC AND NOW THAT PART OF THAT HAS BEEN PUBLISHED WE'RE MOVING FORWARD TO SECURITY TOKENS AND JUST TO KIND OF DIG INTO THE TYPES OF TOKENS THAT WE'RE SEEING, WE DO HAVE A TOKEN TAXONOMY THAT WE PUT TOGETHER, FIRST WE SEE 2 DIFFERENT TYPES OF ASSETS THAT ARE BEING TOKENNIZED, 1 WOULD BE BLOCK CHAIN BASED ASSETS. THESE ARE ASSETS THAT SOLELY EXIST IN A BLOCK CHAIN WORLD OR NETWORK. SO YOU CAN THINK OF BIT COIN, ETHERAPY AND WOULD BE THE EXAMPLES OF THOSE, AND THEN WE'RE ALSO SEEING TOKENNIZED ASSETS, THESE ARE ASSETS THAT EXIST OUTSIDE OF A BLOCK CHAIN NETWORK AND VINCE SPOKE ABOUT THAT A MOMENT AGO AND THEN WE HAVE 5 DIFFERENT TYPES OF TOKENS, GENERALLY THERE CAN BE MORE BUT THE MAIN 1S WOULD BE A UTILITY TOKEN, CRYPTO CURRENCY, COMMODITY OR HYBRID WHICH COULD HAVE FEATURES OF ALL OF THE ABOVE AND WHAT WE WOULD LIKE TO SEE IS THE POLICY COMMUNITY TAKING INTO THE ACCOUNT OF THE ATTRIBUTES OF ALL OF THE ABOVE WHEN WE'RE REGULATING THESE TOKEN SPONSORS, THE TRADING PLATFORMS AND THE NETWORKS. >> GREAT. THANK YOU. >> KRISTIN LET ME TURNOVER THE SAME QUESTION TO YOU, THE BLOCK CHAIN ASSOCIATION'S BEEN VERY ACTIVE IN THIS SPACE, WHAT ARE YOU SEEING WITH TOKENNIZATION AND WHAT PROJECTS ARE YOU WORKING ON. >> GREAT. THANKS, DAN AND THANKS TO THE CFTC FOR HOSTING THIS TODAY. BEFORE I GET TO THE QUESTION QUICKLY, THE BLOCK CHAIN ASSOCIATION LAUNCHED LAST MONTH WE WORK HAND IN HAND WITH POLICY MAKERS TO BUILD THE REGULATORY ENVIRONMENT FOR THE TOKEN ECONOMY TO THRIVE. AND WE DO THAT BECAUSE WE'VE BEEN ABLE TO BRING TOGETHER SOME OF THE SMARTEST AND MOST SOPHISTICATED PLAYERS IN THIS SPACE. WE INCLUDE EXCHANGES SUCH AS COIN BA BA BASE AND GEM NIGH AND POLYCHAIN-GEMINI AND POLYCHAIN CAPITAL ASK PROJECT GROUP INTERSTELLAR AND Z-CASH AND MORE THAT I'LL TALK ABOUT BRIEFLY HERE BUT BY BRINGING THESE PLAYERS TOGETHER, WE ARE DEVELOPING SOLUTIONS AND TRYING TO GET THEM EMPELEMENTED. SO BACK TO YOUR QUESTION, 1 THAT WE'RE EXCITED ABOUT IS PROTOCOL LABS, THEY HAVE A PROJECT CALLED FILE COIN. THIS IS A DECENTRALIZED STORAGE SYSTEM. SO IF YOU HAVE EXCESS CAPACITY ON YOUR HOME COMPUTER, CAN YOU TRIBUTE THAT NOT NETWORK AND GET PAID IN ORDER TO STORE PEOPLE'S FILES. THIS SYSTEM ONLY WORKS BECAUSE THE FILE COIN IS MECHANISM OF THE PAYMENT THAT IS EMBEDDED INTO THE SOFTWARE AND ALLOWS FOR THESE MICROTRANSACTIONS TO TAKE PLACE, AND ALL THIS IS HAPPENING BECAUSE OF THE TOKENS. ANOTHER EXAMPLE I HAVE IS BLOCK STACK, THERE ARE 1 OF OUR MEMBERS OUT OF NEW YORK CITY, THEY'RE DOING A SIMILAR TO PROTOCOL LABS WITH DECENTRALIZED APPLICATIONS, AND WILL INTERACT WITH THE SYSTEM BY CONTROLLING THEIR OWN DAT AT SO THE DATA AGAIN IS NOT STORED ON THAT SINGLE POINT OF VARIABILITY SO THIS IS AN EXAMPLE OF OUR MEMBERS THAT ARE DOING THINGS WITH TOKENS IN THIS SPACE. >> GREAT. THANK YOU, LET ME TURN IT TO YOU NOW THERE'S BUZZ ABOUT SMART CONTRACTS AND POTENTIAL IMPACT ON THE MARKET AND WHAT THE USE CASES ARE. COULD YOU TALK ABOUT THEM AND HOW THEY RELATE TO THE TOKENNIZATION MOVEMENT AND AND WHAT THE LEGAL AND REGULATORY CHALLENGES MIGHT BE AND THANKS AGAIN TO THE CFTC FOR HOSTING THIS. THIS IS A WONDERFUL EVENT. IN MANY WAYS, I HOPE TO BRING SOME OF THE THOUGHTS THAT THE OTHER PANELS WERE DISCUSSING TOGETHER--PANELISTS WERE DISCUSSING TOGETHER. IN MANY WAYS WE'RE TRYING TO BUILD A TOKEN ECONOMY. SO IN MANY WAY WHEN IS YOU THINK ABOUT A BLOCK CHAIN, IT'S GREAT AT KEEPING TRACK OF WHAT OWNS WHAT AT WHAT POINT IN TIME. WE SEE THAT BEING USED TO MANAGE VIRTUALIZED ASSETS, SO THINGS LIKE BIT COIN AND ETHERAPY AND AT THE HYPOTHESIS OF MANY AND WHAT THEY'RE WORKING TOWARD SYSTEM THAT OVER THE NEXT 5, 10, 15, 20, 25 PERIOD OF TIME MORE AND MORE ASSETS WILL BE REPRESENTED BY BLOCK CHAIN. THAT WILL NOT JUST INCLUDE BIT COIN AND ETHERAPY AND. IT WILL INCLUDE SOME OF THE 1S THAT WERE DESCRIBED, EPITHELIAL LECTUAL PROPERTY, SECURITIES, WHOLE HOST OF ASSETS. AND ONCE WE DO THAT WE GAIN CAPABILITIES. SO THINK ABOUT WHEN THE INTERNET EMERGED WE TURNED LETTERS INTO E-MAILS. WE HAD FOR THE FIRST TIME IN HISTORY THE ABILITY TO TAKE THE WRITTEN WORD AND ZIP IT ACROSS THE GLOBE IN A FRACTION OF A SECOND. IN MANY WAYS WITH THE BLOCK CHAIN WE'VE DONE THE SAME THING TO AN ASSET. WE TURN THAT INTO SOMETHING HIGHLY LIQUID AND CAN BE TRANSFERRED ACROSS THE GLOBE TO ANYBODY THAT HAS AN INTERNET CONNECTION AND BECAUSE THAT IS AN EFFICIENCY WITH COMMUNICATIONS WE'RE ABLE TO ENGAGE IN ECOMMERCE, THE HYPOTHESIS IS THAT ONCE YOU'RE ABLE TO DO THAT WITH ASSETS, YOU CAN SEE A SIMILAR FLOWERING OF BUSINESSES, OPPORTUNITIES AND NEW EMERGING FORMS OF ACTIVITY ON THIS. AND THE MECHANISM THAT TRANSFERS THESE ASSETS IS CALLED A SMART CONTRACT AND IT'S A BIT OF A MISNOMER AND IT ENABLES THINGS TO TAKE REMETABOLISM RESENTED ON THE BLOCK CHAIN AND TRANSFER IT AND OFTEN TIMES AUTOMATED OR RAPID FASHION TO ANOTHER PARTY ANYWHERE ACROSS THE GLOBE. SO WE'RE SEE THANKSGIVING MARRIED TOGETHER AND DEFINING THESE PROPERTY RIGHTS LIKE PAT WAS MENTIONING SO YOU CAN USE CODE TO DEFINE THE NEEDS, AT ANY POINT IN TIME AND BECAUSE THESE ARE ORGANIZED, SOME OF THESE ARE SCARCE. SO WE CAN MIRROR SCARCE DIGIT AT ASSETS IN THE WORLD FOR THE FIRST TIME IN HISTORY. IF YOU THINK ABOUT WHAT HAPPENED BEFORE YOU HAD A BLOCK CHAIN, YOU HAD A FILE, THIS IS PRETTY ENDEMIC WITH THE COPYRIGHT INDUSTRY, ASK COULD BE REPRODUCED HERE WE HAVE END REPRESENTATION THAT CANNOT BE REPRODUCED IT HAS SOME CARCKITY TO IT ASSUMING THE URPD LYING PROTOCOL IS NOT MODIFIED. AND WHAT WE CAN DO IS INTERESTING, IS WE CAN ENCODE RULES AROUND THESE DIGITAL ASSETS SO I'LL GIVE YOU EXAMPLES JUST TO KIND OF HAMMER HOME WHAT'S BECOMING POSSIBLE NOW AND IN THE FUTURE. SO WHEN YOU THINK ABOUT ASSETS THAT MOVE RAPIDLY, YOU LOOK AT PAYMENT, MOST FOLKS GET PAID EVERY 2 WEEKS AND WHEN YOU BEGIN TO APPLY THIS IN THE CONTEXT OF A BLOCK CHAIN SYSTEM, CAN YOU IMAGINE A WORLD WHERE PEOPLE GET PAID EVERY MINUTE, EVERY SECOND. THOSE THESE ARE THOUGHTS OR IDEAS THAT ARE SYSTEMS ARE READY AND BEYOND THAT YOU CAN ENCODE RULES AND ERNE CODE LAWS SO CAN YOU HAVE A SYSTEM WHERE EVERYBODY'S GETTING PAID EVERY MINUTE, THEIR BANK ACCOUNT IS GOING ON EVERY MINUTE BUT AT THE SAME TIME THERE'S AUTOMATIC TAX REMITTANCE, COLLECTIONOT PART OF THE GOVERNMENT. SO THE GOVERNMENT'S ACCOUNT GO UP EVERY SINGLE MACHINEUTE OR WE CAN USE SOMETHING CALLED THE NONFUNDABLE TOKEN OR ASSET TO REPRESENT THINGS LIKE TITLE TO REAL PROPERTY OR DEED TO REAL PROPERTY AND YAWBD THAT BECAUSE YOU CAN HAVE TOKENS THAT YOU CAN FAKE A TOKENNIZED PEES OF ART AND YOU CAN REPRESENTIGEITALLY ALL THE RYES, AND INSTEAD OF HAVING A LICENSE AGREEMENT, THAT EFFECTIVELY JUST DESCRIBES WHO OWNS A RIGHT IN AN ASSET, CAN YOU ALMOST HAVE A PHYSICAL MANIFESTATION OF IT AND REP RECELTATION OF IT THAT YOU CAN SEE. AND THAT CAN BE GENERATED ON THE FLY. SAME WITH REAL ESTATE, YOU YOU CAN REPRESENT TITLE TO REAL PROPERTY AND TIE IT TO REAL WORLD ASSETS SO 1 PROJECT I WORK ON REPRESENTED TITLE TO REAL PROPERTY IN AUSTRALIA, AND TIED IT TO THE CRYPTO AGREEMENT THAT RELATED TO THE PURCHASE AND SALE OF THE PROPERTY, IT PUT INTO USING A SMART CONTRACT TECHNOLOGY TO DEPOSIT INTO ESCROW SO A BUYER COULD DEPOSIT INTO ESCO, A LENDING PART COULD SATISFY ITS LONE AND ONCE'S THAT CRYPTO GRAPHICALLY PROVEN TO BE CREAK, THAT'S ALMOSTLY REMATED TO THE SELLING PARTY AND THE TITLE REGISTRY WAS UPDATED AUTOMATICALLY. AND THAT TOOK--EFFECTIVELY 10 MINUTES, 10 SECONDS OF EVERYBODY THAT WAS SYNCHRONIZED TO DO THAT TRANSACTION AND THOSE ARE THE TRANSACTIONS THAT TODAY, YOU KNOW TAKE 30 DAYS FROM MANY GOVERNMENTS AROUND THE GLOBE TO FULLY SETTLE. SO WE'RE MOVING TO AN AREA WHERE THINGS CAN MOVE FASTER AND QUICKER WE CAN GAIN TRUST AND SMART POWER WITH INNOVATION. SSO THIS WOULD NOT BE A CFTC CONFERENCE IF I DIDN'T TURN TO LEGAL MATTERS SO 1 THINK THIS WE'RE TELLING PEOPLE IS JUST BECAUSE YOU TOKENNIZE SOMETHING THAT'S NOT AUTOMATIC YOU'RE OUTSIDE OF THE CFTCs OR SEC'S JURISDICTION BECAUSE A TOKEN MAY REPRESENT A CONTRACT MAYBE THE ZAP,--BUT THE YESTERDAY THAT YOU KNOW IF I HAD--ASARON DESCRIBED THAT SORT OF CONTRACTURAL ARRANGEMENT OR SOMETHING LIKE THAT WHICH IS VERY INTERESTING, IF I HAD DEVELOPED THIS IN PAPER, THEN ALL THESE WOULD ALSO APPLY BUT BECAUSE IT'S ON A BLOCK CHAIN, YELLOW, RIGHT? IT'S ALL FINE. AND OF COURSE IT'S NOT, NOT EVEN A BIT TRUE, RIGHT, BUT THE NICE THING ABOUT SOME OF THE REGULATIONS AND WE TALKED ABOUT REGULATIONS IS A LOT OF IT, MARKET REGULATION IS PRINCIPLES BASED WHICH MEANS IT DOESN'T REALLY MATTER WHAT TECHNOLOGY YOU'RE USING TO REPRESENT THESE RIGHTS. AND THE REALITY OF WHAT HAPPENED IS I'VE CREATED A DERIVATIVE CONTRACT UNDER THE C. E. A. AND IT'S REGULATED UNDERWENT THE C. E. A. AND WE HAVE TO HAVE THEM COME AND VISIT WITH YOU ALL AND MAKE SURE WE CAN DO NAIN A COMPLIANT MANNER AND I THINK THERE'S A GROWING REALIZATION THROUGHOUT THE ENTIRE ECOSYSTEM THAT THAT IS THE CASE, THAT I DON'T THINK THAT'S A NEW THING, PARTIC PLAN TO ANALYZE BY AGES LIKE YOU ENTERING THE MARKET AND REALLY WORKING THROUGH CREATING PLATFORMS THAT ALLOW PEOPLE AND HARBORS AND OTHERS TO ALLOW PEOPLE TO DEVELOP THE TYPES OF COMPLIANCE FEATURES THAT YOU NEED TO MEET THE GOAL OF THE REGULATORS LIKE THE CFTC AND OTHER MARKET REGULATORS OR ANY MONEY LAUNDERING AND ALL THESE FRAMEWORKS BUT WHAT IS INTERESTING AND I THINK AARON ALLUDED TO IT A BIT IN HIS COMEBT COMMENT IS THAT WE'RE MOVING PAST A POINT WHERE A LOT OF THE REGULATION IN THE SPACE IS DRIVEN BY THE LIMITS OF TECHNOLOGY, RIGHT? TO SOME DEGREE, A LOT OF WHAT WE HAVE IN TERPS OF MARKET REGULATION TODAY WAS DRIVEN BY THE LIMITS OF WHAT TECHNOLOGY COULD DO AT A CERTAIN POINT IN TIME. NUCLEOTIDES WE'RE IN A SPACE WHERE THE TECHNOLOGY CREATES BOUNDLESS OPPORTUNITIES AND WHEN WE TALK ABOUT WHAT WE WANT IN TERMS OF COMPLIANCE AND RECKULATION OF THESE DIFFERENT SPACE, IT'S REALLY A QUESTION OF WHAT SHOULD THE OPTIMAL POLICY BE IN THIS SPACE? NO LONGER LIMITED BY WHAT THE TECHNOLOGY CAN OFFER AND I THINK THAT'S THAT'S NEW AND IT'S A REALLY INTERESTING OPPORTUNITY FOR DIFFERENT MARKET REGULATORS TO GO BACK TO FIRST PRINCIPLES AND THINK ABOUT, WHAT ARE THE RISKS WE'RE TRYING TO MANAGE? REVISITING THE OLD REGULATIONS AND SAYING WE'RE RESETTLING SAY, SECURITIES IN 3 DAYS, RIGHT? AT EQUITY SECURITIES IN 3 DAYS, WAS THAT SOMETHING THAT WE'RE DOING BECAUSE THAT SERVES A PARTICULAR POLICY GOAL OR IS THAT 3 DAY SETTLEMENT WINDOW DRIVEN BY THE TECHNOLOGY THAT EXISTED AT THE TIME AND IF SO, WHAT IS THE OPTIMAL SETTLEMENT WINDOW? IS IT 0 IN PROBABLY NOT BECAUSE WE NEED TO DO COMPLIANCE CHECKS AND THINGS LIKE THAT, IS BUT IT MIGHT BE LESS THAN 3 DAYS, TOO, SO THAT'S THE BIG OPPORTUNITY FOR REGULATORS WHEN THEY'RE ADDRESSING THIS SPACE? BUT BLOCK CHAIN MAGICAL NOT A GOOD THING WHEN YOU TRY TO THINK ABOUT THOSE THINGS HERE. >> LET ME OPEN IT UP TO PANEL HERE, WHAT'S BEEN YOUR EXPERIENCE WITH THE INNOVATOR COMMUNITY ABOUT THEIR KNOWLEDGE OF THE LEGAL AND REGULATORY SCHEME, REACTION TO THE LEGAL AND REGULATORY SCHEME, WHAT'S THE FEELING OUT THERE? >> YEAH, I PENE WE'RE DEAL WITH ENTREPRENEURS, THIS MAY BE THEIR FIRST PROJECT OR VENTURE THAT THEY'VE ENGAGED WITH AND THEY'RE TRYING ON BUILD USEFUL THINGS, BUT AT THE SAME TIME REGULATORY LANDSCAPE IS TRICKY HERE SO IF YOU CAN REPRESENT ANYTHING ON A BLOCK CHAIN INCLUDING POTENTIALLY ASSETS OR OTHER TOKENS THAT HAVE DIFFERENT CHARACTERISTICS, THEN YOU WILL BUMP INTO SECURITIES LAWS COMMODITIES LAWS, CONSUMER PROTECTION LAWS, STATE REGIMES, OTHER AML REQUIREMENTS AND THEY ALL GET PUNNEDLED TOGETHER AND IF YOU WORK WITH ENTREPRENEURS OR TALK TO ENTREPRENEURS, THEY ALL SAY SOMETHING LIKE I'M TRYING TO REPRESENT BLOCK CHAIN WHY AM I HAVING TO DEAL WITH EVERY SINGLE LEGAL REGIME THAT'S OUT THERE? AND I THINK IN PART THE CHALLENGE IS THAT MANY OF THESE ASSETS EVEN THOUGH THEY'RE INHERENTLY NOT SPECULATIVE IN NATURE BECAUSE THERE'S A DEGRIEF SCARCITY THAT THEY HAVE, THEY HAVE TURNED COMMODITIES INTO SOMETHING THAT LOOKS LIKE A SECURITY. THAT'S THE TRICKY PART. THEY'RE NOT INTENDED TO BE ISY CURITYS, IN MANY INSTANCES THEY'RE NOT INTENDED TO BE SECURITIES BUT BECAUSE THEY'RE TRADEABLE AND HIGH LIIC WIDE JUMPS AND ACCESSED ACROSS THE GLOBE, THEY RESEMBLE SOMETHING THAT LOOKS LIKE A SECURITY AND POETIC PATS POINT WE HAVE THE OPPORTUNITY TO LOOK AT WHAT OUR LAWS ARE INTENDING TO DO IF IT'S TO PREVENT MARKET MANIPULATION, WHY DON'T WE FASHION LAWS THAT ADDRESS THAT, OR PRESENT A CONSUMER HARM, WHY DON'T WE THINK ABOUT WHAT'S THE APPROPRIATE WAY TO DO THAT SO WE CAN MAKE SURE THAT UNSOPHISTICATED PURCHASERS ARE NOT DUPED IN SOME SORT OF WAY AND I THINK WHAT'S REALLY INTERESTING IS WE COULD ADD THE PERFECT AMOUNT OF FRICTION IN THESE SYSTEMS THROUGH THE TECHNOLOGY SO TO PAT'S POINT, IF REALLY WE WANT SOMETHING TO TRADE AND FOR IT TO TAKE A DAY, WE CAN DO THAT. WE CAN ACTUALLY ENCODE RULES THAT SAY, THIS CANNOT BE FULLY TRANSFERRED UNTIL A GAY IS PASSED OR UNTIL COMPLIANCE CHECKS ARE PROVEN AND RECORDED AND WE CAN ACTUALLY SEE AND ATTEST TO THE FACAS ACCOUNT THAT THAT OCCURRED AND THAT'S EXCEPTIONALLY POWERFUL BUT FROM THE ENTREPRENEUR'S PERSPECTIVE IT'S A LAND MINE AND IT'S DIFFICULT TO ENGAGE IN THIS AND LAWYERS CAN'T EVEN PROVIDE OPINIONS HERE. THAT'S CONCERNING. LAWYERS THAT WORK HARD, AND THEY CAN'T ADVISE CLEENTSOT ISSUES. IT'S A TOUGH POSITION TO BE? >> IF I COULD ADD A FEW THINK THISS HORMONE, SOME OF THESE FOLKS WORKED ON THE JOBS ACT SO THE BEST INTENT OF THE REGULATORY OUTCOMES IN THE RULE MAKING PHASE AND AGAIN NOT TO PICK ON CROWDFUNDING BACK IN THE EARLY DAYS OF TITLE 3 BUT I WAS IN THAT GROUP, WORKING THROUGH THAT AND 5 YEARS LATER IN RULE MAKING MANY, MANY, MANY, MANY FRIENDS HAVE GONE OUT OF BUSINESS, WHILE THEY HAD THE BEST TECHNOLOGY READY TO GO, THE REG LATTER RULE MAKING WAS THERE, AND CERTAINLY THE TECHNOLOGY CAN DO THINGS WELL IN ADVANCE AND MORE EFFICIENT THAN OUR ABOUT YOU REGULATION WE CAN'T JUST JUMP INTO THAT AND I THINK CASE IN POINT WHEN WE LOOK AT HISTORY OF MARKETPLACES FOR US WE GO BACK O THE EVOLUTION BECAUSE OF MORTRADING AND ADVANCES WE HAD THE PAPER CRISIS OF THE 70S. AND THIS IS A TECHNOLOGY SOLUTION AND TOCK REGISTRY HELD WITH RECORDED OWNERSHIP WITH TRANSFER AGENTS. AND WE THINK SMART CONTRACTS ARE THE NEXT EVOLUTION OF RECORDED OWNERSHIP THAT ALLOWS US TO DO SO MUCH MORE BUT WE STILL HAVE TO BE COGNIZANT THAT INEFFICIENT OF TECHNOLOGY, THERE'S CLEARANCE SETTLEMENT DEPOSITORY PROCESS THAT CURRENT REGULATIONS STILL--WE HAVE TO ADHERE TO SO THERE'S SECURITIES LAW THAT WE NEED TO GO FORTH BUT IF WE OPERATE TODAY, AT LEAST FROM AN SEC OR FINRA STANDPOINT AND THINGS WITH CFTC AS INNOVATORS AND ENTREPRENEURS WE CAN'T OVER LOOK THAT. >> SORRY, JUST QUICKLY, TO POINT OUT THE POINT I WAS MAKING HERE ABOUT HOW MANY OF THE RULES ARE SET BY THE TECHNOLOGY ASTERISKS THE TIME. THE DTCC FOR AS MUCH GOOD AS ITS DONE WAS PLAN B, PLAN A WAS A DECENTRALIZED SOLUTION, RIGHT BUT THE TECHNOLOGY WASN'T THERE AND YOU COULDN'T DO IT SO INSTEAD WE DID THE CENTRALIZED DTCC, SO ANOTHER EXAMPLE OF WHERE WE ARE TODAY AND WHERE WE CAN GO WITH IT. I DIDN'T MEAN TO INTERRUPT. >> I FOUND THAL GROUP IS A HIGHLY COMMUNICATIVE PEOPLE, AND THERE IS A LOT OF GOING ON AND ONLINE SOURCES, YOU KNOW [INDISCERNIBLE] AT THE COIN CENTER HAS 50,000 TWITTER FOLLOWERS OR SOMETHING OF THAT NATURE SO EVERY TIME THERE ARE DEVELOPMENTS THAT ARE HAPPENING, THESE PEOPLE ARE ENGAGED AND KNOW ABOUT IT AND A LOT OF PEOPLE THAT WANT TO DO THE RIGHT THING AND WANT TO COMPLY AND WANT TO FOLLOW THE LAWS AND THE CHALLENGE THAT THEY HAVE IS TRYING TO FIND, YOU KNOW WHICH SIDE OF THE COIN DO THEY FOND, ARE THEY A SECURITY TOKEN OR NOT AND WE NEED CLARITY IN THAT SPACE TO GIVE GOOD ACTORS THE TOOLS TO COMPLOY AND DO THAT. >> YEAH THE CHAMBER OF DIGIT AT COMMERCE WE LAUNCHED OVER 4 YEARS AGO AND WE HAVE EXPERIENCE WITH INNOVATORS AND BRIDGING THE DIVIDE BETWEEN THE TECHNOLOGY COMMUNITY AND THE POLICY AND LAW ENFORCEMENT COMMUNITY. OVER 4 YEARS AGO, SOME OF THE BIGGEST CHALLENGES WE WERE FACING WAS ISSUES AROUND THE EARLY DAYS OF BIT COIN, THERE WAS [INDISCERNIBLE] HIGH PROFILE SCANDALS AND THE SENTIMENT IN WASHINGTON D. C. EARLY DAYS WAS THAT OF FEAR, ANXIOUS, SKEPTICISM. LAW ENFORCEMENT DIDN'T UNDERSTAND IT, THEY KNEW WAS CRIMINAL THERE ACTIVITY GOING ON, DIDN'T KNOW HOW MUCH, DIDN'T KNOW HOW TO STOP IT. SO 1 THING WE DID AT THE CHAMBER OF DIGITAL COMMERCE IS LAUNCH THE BLOCK CHAIN ALLIANCE WHERE WE BROUGHT IN BLOCK CHAIN AND CRYPTO INNOVATORS TO GIVE FREE RESOURCES TO LAW ENFORCEMENT TO TEACH THEM HOW TO USE THIS TECHNOLOGY. THAT GROUP AS BEEN UP AND RUNNING FOR OVER 3 YEARS, WE HAVE LAW ENFORCEMENT FROM ALL OVER THE WORLD PARTICIPATE NOTHING THAT GROUP AS 1 OF THE GO-TO RESOURCES AND FOR LAW ENFORCEMENT WE'VE BEEN INCREDIBLY SUCCESSFUL AND THE LAW ENFORCEMENT COMMUNITY AND GIVE THEM THE TOOLS THEY NEED TO DO THEIR JOBS EFFECTIVE LOAMACYY AND NOW HERE WE ARE AROUND TOKENS AND THERE'S QUESTIONS ABOUT HOW TO COMMRI WITH THE LAWS. WHAT I CAN SAY AND WORKING WITH COMPANIES IN THE SPACE IS THESE COMPANIES THEY WANT TO BE LAW ABIDING CITIZEN. THEY WANT TO DO THE RIGHT THING AND IF WE--IF WE ARE ABLE TO WORK TOGETHER AND ABLE TO GIVE THEM THE TOOLS AND CLARITY TO DO SO, I BELIEVE WE CAN HAVE A REALLY HEALTHY AND RESPONSIBLE MARKETPLACE. >> THANKS SO OBVIOUSLY WE'RE INTERESTED IN THE INNOVATOR COMMUNITY TO HAVE AN UNDERSTANDING OF THE RULES AND REGULATIONS WE ARE AND IN OUR LAB, WE ARE OFTEN ENCOUNTERING WHAT'S DESCRIBED IN PANEL HERE, INNOVATORS WHO HAVE FASCINATING IDEAS, THEY'RE NOT LAWYERS, THEY'RE TECHNOLOGISTS OR SOMETHING ELSE AND THEY SEE OUR RULE SET AND SEE THE CEA AND IT JUST SEEMS LIKE AN ALPHABET SOUP AND YOU TACK ON EVERYTHING ELSE AND IT'S A REALLY MUDDLED ALPHABET SOUP AND 1 OF THE THINGS WE TRUE I TO DO IS CLARIFY THE ARLA BET SOUP A BIT. BUT LET ME--I GUESS LET ME ASK THE OTHER SIDE OF THE QUESTION, I'LL DIRECT THIS TO CHRIS AND THEN PERRIANN E AND THEN OBVIOUSLY WE WANT INNOVATORS TO LEARN OUR RULE SET AND COMPLOY WITH OUR RULE SET. BUT AT THE SAME TIME I THINK THE WHOLE COMMISSION IS CLEAR AND OPENING TO LISTENING ABOUT WHAT ARE THINGS WE CAN DO TO IMPROVE OUR ROLE SET, WHAT KIND OF THINGS WE NEED TO LOOK OUT FOR YOU KNOW HOW CAN WE SKATE TO WHERE THE PUCK'S GOING TO BE. SO WHAT THINGS DO YOU HAVE AND WHAT DO YOU HAVE TO US AS A REGULATOR OF THINGS WE NEED TO THINK ABOUT AND WORK ON AND CONSIDERING AS TOKENNIZATION CONTINUES TO DEVELOP. >> THINK YOU GUYS ARE DOING A WONDERFUL JOB BY HAVING THESE CONVERSATIONS, BRINGING REGULATORS FROM AROUND THE WORLD, FOLKS FROM ACROSS DOWN AT THE SEC AND CAPITOL HILL AND OTHERS AND HERE AND HAVING CONVERSATIONS LIKE THIS, AS THE CHAIRMAN SAID THE FIRST STEP IS UNDERSTANDING AND EDUCATION IN THAT SPACE. I WOULD SAY, AS GOING BACK TO PROTOCOL LABS WITH FILE COIN. YOU KNOW FILE COINS DON'T EXIST TODAY BUT WE'RE GOING TO WANT THEM OUT IN THE SYSTEM IN THE FUTURE, ONCE IT'S READY AND READY TO LAUNCH. THAT'S NOT A SECURITY. FILE COIN RAISED CAPITAL UNDER SECURITIES LAWS ABOUT YOU WE DON'T WANT THE SYSTEM WHEN IT'S UP AND RUNNING TO BE UNDER THOSE SECURITIES LAWS SO WE NEED TO FIND A WAY TO CARVE OUT THESE SYSTEMS THAT ARE DECENTRALIZED THAT ARE FUNCTIONAL AND FIGURE OUT WHERE IS THAT LINE AND WHEN DO WE GET ACROSS THAT LINE AND WE MIGHT ACTUALLY NEED HELP FROM CAPITAL HILL ON THAT 1 ALSO. SO WE HAVE THERE WAS A LOT OF ACTIVITY IN THE LAST WEEK OF THE HOUSE LAST WEEK, CONGRESSMAN WARREN DAVIDSON FROM OHIO HOSTED A ROUND TABLE AND I WAS THERE. MANY OF OUR MEMBER COMPANIES SPOKE AT THAT EVENT AND TALKING ABOUT THESE ISSUES WOO HAD CONGRESSMAN BUD SENT A LETTER TO THE SEC SEEKING MORE CLARITY ON THESE ISSUES, CONGRESSMAN EMMER INTRODUCED A RESOLUTION TALKING ABOUT THE IMPORTANCE OF LIGHT TOUCH REGULATION IN THIS SPACE AND THESE 3 LAWMAKERS ARE WORKING TOGETHER TO PRODUCE LEGISLATION THAT WOULD PROVIDE MORE OF A LINE. SO I DON'T KNOW IF IT'S CRITICAL THAT THIS COMES FROM CONGRESS BUT I THINK IN THE MONTHS AND YOU KNOW INTO 2019 WE'RE GOING TO SEE, A LOT MORE WORK ON THEIR END SO IT WOULD BE GREAT IF WE CONTINUE TO HAVE THESE CONVERSATIONS AND WORK TOWARDS FINDING THAT DEFINITION BECAUSE THE DEVIL'S IN THE DETAILS AND WE WANT TO GET IT RIGHT TO HAVE A HIGHLY FUNCTIONING TOKENING ECONOMY. >> I WOULD SAY THE CFTC HAS BEEN THE SHINING GLIMMER OF HOPE IN THE CRYPTO-INDUSTRY. YOU HAVE BEEN TRUE CHAMPIONS FOR THIS INDUSTRY AND I BELIEVE YOU ARE DOING YOU KNOW THE BEST YOU CAN AND APPLYING THE RULES YOU HAVE TO FOSTER INNOVATION AND THE BLOCK CHAIN MARKETPLACE, WHERE THE U.S. REALLY FACES CHALLENGE SYSTEM JUST THE WAY OUR GOVERNMENT IS ORGANIZED WHERE WE HAVE A PATCH WORK OF DIFFERENT TYPES OF REGULATORS AND A LOT OF THESE REGULATORY FRAMEWORKS WERE WRITTEN DECADES AGO BEFORE INTERNET WAS CONCEIVED AS AN IDEA AND AS TIME WHAT WOULD BE MOST HELPFUL WOULD BE COORDINATION AMONG THE AGENCIES AND I KNOW YOU GUYS HAVE HAD EFFORTS IT WOULD BE GREAT TO HAVE LEADERSHIP WITHIN THE HIGHEST LEVELS OF GOVERNMENT TO REALLY GIVE THE FEDERAL GOVERNMENT MARCHING ORDERS IN TERMS OF WHAT DIRECTIONS WE'RE ALL GOING. YOU KNOW WE HAVE THE CFTC APPLYING YOU KNOW THE CEA. YOU HAVE THE SEC,A APPLYING SECURITIES LAWS. YOU HAVE FINSEN REGULATING THIS AS CURRENCY. IRS TAXING THIS AS PROPERTY. IF WE HAD A GENERAL DIRECTION IN TERMS OF WHAT IS THE VISION OF BLOCK CHAIN IN THE UNITED STATES OF AMERICA, IF WE COULD HAVE SENIOR LEADERSHIP IN THE ADMINISTRATION OF RECOGNIZING THE POTENTIAL OF BLOCK CHAIN AND NURTURE AND FOSTER DEVELOPMENT AND GIVE DIRECTION TO THE REGULATORS SO WE ALL HAVE A COMMON GOAL TO WORK SIDER TOWARDS THAT WOULD BRING A BIT OF ORGANIZATION TO THE REGULATORY AND WHICH TODAY ARE QUITE TREACHEROUS. >> YEAH. >> GO AHEAD. >> JUST TO PIGGYBACK ON HER THOUGHT, THAT'S WHAT WE DID WITH THE INTERNET, THE INTERNET RAISED A HOST OF THE QUESTION WHEN IS IT CAME TO COPYRIGHT PROTECTION, FIRST AMENDMENT RIGHTS AND WE PUT TOGETHER, YOU KNOW PRESIDENT CLINTON PUT TOGETHER A FRAMEWORK THAT HELPED GUIDE AGENCIES IN ORDER TO HELP ANSWER SOME OF THESE QUESTIONS AND THE END RESULT OF THAT IS THAT U.S. WON THE INTERNET, MOST INTERNET TECHNOLOGY CAME OUT OF THE U.S., LARGE INDUSTRIES WERE BUILT AND WE--WE ENJOY THE FRUIT OF THAT LABOR TODAY, IF THE HYPOTHESIS IS CORRECT, THAT THIS REALLY IS, A NEW COMMERCIAL STACK, POTENTIALLY EVEN A FOUNDATIONAL AREA FOR THE NEXT GENERATION OF THE INTERNET, WE WANT TO BE IN THE GOOD POSITION TO MAKE SURE THAT INNOVATION HAPPENS HERE AND NOT IN ANOTHER JURISDICTION THAT POTENTIALLY CAN PROVIDE MORE COORDINATION, I THINK 1 TECHNOLOGY TRANSFER THEY WOULD JUST CAUTION AGAIN, GOING UP TO THESE FIRST PRINCIPLES, IF--IF EVERY SINGLE ASSET OR MORE AND MORE AND MORE ASSETS OVER THE NEXT 20 YEARS ARE REPRESENT AS TOKENS, THAT MEANS THEY'RE NOT ALL GOING TO BE SECURITIES. MANY OF THEM WILL NATURALLY BE COMMODITIES AND WHAT DOES THAT MEAN FOR THE CFTC, I IT MEANS THINKING ABOUT AND REAL LYE UNDERSTANDING WHAT THESE NEW MARKETPLACES WILL LOOK LIKE. THEY MAY NOT BE EXCHANGES, THEY CALL THEM EXCHANGES TODAY BUT IN REALITY WE'RE TALKING ABOUT NEW MARKETPLACES BUT WITH THAT THESE ASSETS ARE SO LIQUID, I THINK THE MAGGOR CONCERN BECOMES MARKET MANIPULATION, AND SOMETHING THAT I THINK AND SOMETHING THAT WE NEED TO ADDRESS THAT IN A MORE OPEN, TRANSPARENT AND GLOBAL SETTING. THAT'S A DIFFICULT QUESTION AND 1 THE U.S. CAN'T ANSWER ALONE SO MAYBE COPYRIGHT IS A GREAT EXAMPLE TO LOOK AT WHERE THERE'S A SIGNIFICANT AMOUNT OF COORDINATION AND STANDARDIZING THE RULES THAT WE CAN HAVE A FAIR AND OPEN PLAYING FIELD AND THE OTHER THING THAT'S IMPORTANT TO THINK ABOUT HERE IS THE DEMOCRATIZING ASPECT OF CAPITAL, FOR THE MOST PART TODAY, CAPITAL IS LOCKED IN CERTAIN REGIONS OF THE COUNTRY AND WE NOW HAVE $200 MILLION UP TO A TRILLION DOLLARS OF ASSETS THAT ARE AVAILABLE AND FOLKS WANT TO BASICALLY DEPLOY THAT TO FUND INNOVATION, THAT IS GREAT FOR AMERICA. THAT MEANS YOU CAN START A COMPANY IN ARKANSAS OR OHIO OR MICHIGAN, OR ANYWHERE REALLY AROUND THE GLOBE, FIND FOLKS THAT WANT TO USE YOUR TECHNOLOGY, ENJOY IT AND YOU DON'T NECESSARILY NEED TO GO WALK TO SILICONE VALLEY OR NEW YORK IN ORDER TO RAISE CAPITAL. THAT IS HUGELY EMPATHFUL. I THINK IT WILL POTENTIALLY SOLVE OR AT LEAST SOFTEN SOME OF THE PROBLEMS WE'VE SEEN IN TERMS OF DEVELOPMENT AND TECHNOLOGY ACROSS THE COUNTRY AND SOMETHING THAT I THINK EVERYBODY--I THINK WE AGREE WOULD BE A GOOD THING GOING FORWARD. SO IT'S ABOUT GETTING THE RULES RIGHT. KNOWING THERE'S VAST POTENTIAL AND WE SHOULD BE CAREFUL NOT TO INADVERTENTLY CLOSE A LOT OF OPPORTUNITY HERE BY PASSING LAWS THAT MAY HAVE UNINTENDED CONSEQUENCES THAT WE CAN'T PREDICT AT THIS POINT IN TIME. >> I WANT TO START WITH COMMENTING ON CHRIS' COMMENT BUT, BUT FROM OUR POINT FROM AARON BUT IT'S IMPORTANT TO RECOGNIZE FROM THE SEC AND FINRA, AND DEMYSTIFY, THAT THEY DON'T HAVE CFTC EQUIVALENTS MAYBE NOT JUST YET BUT THEY'VE BEEN ENGAGING HAD WHICH IS HELPFUL AND TO AARON'S POINT, NOT ALL OF THESE INSTRUMENTS GARRING TO BE SECURITIES, IN FACT, WE THINK--IT'S NOT IN OUR PERVIEW AS FINRA AND SEC REGULATED TO THE ENTITIES, WHETHER IT'S MACHINE TO MACHINE AND TOKENS WHETHER IT'S APP DEVELOPMENT, TOKENS, COINS HOW YOU REFER TO THEM, SO IMPORTANT FOR INNOVATION AND ENTREPRENEURSHIP AND CONTINUED GROWTH OF OUR ECONOMY, I AM HUGELY EMPATHETIC TO THE FILE COIN TEAM AND OUR FRIENDS AT COIN LIST WHEN YOU LOOK AT THE STRUCTURE OF WHICH THAT WAS RAISED CLEARLY IN THE SECURITY FRAMEWORK, WHICH THE POWER OF FILE COIN IS NOT GOING TO BE REALIZED SECONDARILY TRADING ON ITS FAR EXAMPLE, THERE'S TOO MUCH FRICTION, DOESN'T DO IT JUSTICE, I THINK THIS ISN'T MAYBE A TAKE AWAY ACTION, I WOULD LOVE TO SIT AND TALK WITH CHRISTINE AND OTHER FOLKS IN PERRIANN, AND HOW DO WE LOOK AT TAKING THAT SECURITY, HOW IS IT RAISED THAT WAY? IT CAN BE DECOUPLED? BECAUSE THERE'S NOT A CLEAR MECHANISM IF WE WANT TO GO TO THAT KIND OF CONCEPT AND THESE INSTRUMENTS LARGELY DON'T BELONG TRADING ON AN ATS BECAUSE THAT FUNCTION IS NOT A SECURITY. MAYBE THE CAPITAL RAISING IS SO GOING BACK TO INDUSTRY PARTICIPANTS COMING FORTH WITH SOLUTIONS OF HOW TO MAKE THE MARKETPLACE BETTER, HOW TO CONTINUE TO FOSTER THAT INNOVATION, WITH HELP FROM THE REGULATORS AND GIVING US RUNWAY TO DO THAT WOULD BE REALLY IMPORTANT. >> YEAH, AND SO, AARON BROUGHT UP THE PRINCIPLES FOR ECOMMERCE WHICH I AGREE, WERE REALLY FUNDAMENTAL AT SHAPING HOW ENTREAT POLICY WORKS IN THE U.S. TODAY AND THE U.S.'S ABILITY TO GRAB SUCH A LARGE SHARE OF THAT INNOVATION, 1 THING TO NOTE ABOUT THAT IS THAT WE TALK ABOUT PRINCIPLES BASED REGULATION, WE TALK ABOUT TECH NEUTRAL REGULATION, THAT WASN'T TECH NEUTRAL, RIGHT? THAT WAS TECH POSITIVE. THAT WAS SOMEBODY WITHIN THE WHITE HOUSE AND DEVELOPING THIS FRAMEWORK AND THESE PRINCIPLES THAT TO BE TECH POSITIVE TO SAY, WE DON'T ACTUALLY WANT TO BE TECH NEUTRAL EXCLUSIVELY BECAUSE THAT ACTUALLY JUST FAVORS INCUMBENTS WITH MARKET POWER, WE WANT TO BE TECH POSITIVE, WE WANT TO SAY WHAT ARE THE PARTS OF THIS TECHNOLOGICAL REVOLUTION THAT ARE HAPPENING, THIS DISRUPTIVE TECHNOLOGY, THAT REALLY ENHANCE OPPORTUNITY FOR EVERYONE IN THE WAYS THAT AARON DESCRIBED, I THINK AND SOME OTHERS, RIGHT? AND THEN THINK ABOUT HOW WE CAN USE OUR EFFORTS AND OUR POWERS AS REGULATORS, MARKET REGULATORS TO GUESTATE THAT AND REAMLY HELP MAKE IT GROW, RIGHT? IT'S A BIT EARLY FOR THAT AND BUT WE DO WANT TO HAVE REGUTORS AND IT'S VERY IMPORTANT. SO I THINK YOUR POINT HAVE HAVING SOMEBODY ORGANIZE A WHITE HOUSE TASK FORCE OR SOMETHING, TO HELP COORDINATE, THAT WAS PART OF A RECOMMENDATION, I WAS PART OF A PANEL FOR MISSING CHILDREN AND I CONTINUING WAS 5 YEARS AGO THAT ADVOCATED FOR A-LED TASK FORCE TO CREATE INTERAGENCY COOPERATION IN THIS SPACE, SO, IF IT TAKES 5 YEARS, THAT'S FINE BUT IT WOULD BE NICE TO SEE SOMETHING LIKE THAT HAPPEN TO HELP BRING CLARITY AND LASTLY BECAUSE I BECAUSE WE'RE AT THE CFTC, I HAVE TO MAKE MY TERRIBLE CFTC JOKE, SO WE DO HAVE CLARITY, IF ANYONE WANTS TO DO ONIONS FOR MOVIE FUTURE TICKET SWAPS, YOU'RE CLEAR, YOU'RE GOOD, NO PROBLEM. EVERYTHING ELSE, HAZY. EMPLOY. >> WELL AT LEAST THERE'S SOME CLARITY IN THE MARKET. >> WELL, WE ALWAYS APPRECIATE AS AN AGENCY ANY FEEDBACK WE CAN GET FROM WHAT'S GOING ON IN THE COMMUNITY. THAT'S WHAT THIS CONFERENCE IS FOR. THAT'S WHAT WE'RE TRYING TO DO. SO I WOULD LIKE TO CONTINUE THIS CONVERSATION OFFLINE ABOUT THINGS THAT WE CAN DO AS AN AGENCY TO GET PRODUCTIVE RESPONSIBLE REGULATION. LET ME JUST THROW OUT 1 LAST QUESTION, I'LL GIVE THIS 1 TO VINCE AND ANYONE CAN CHIME IN AND WE WILL OPEN IT UP TO QUESTIONS. FUTURE LOOKING, YOU KNOW, 5 TO 10 YEARS WHERE DO YOU THINK THIS TOKENNIZATION MOVEMENT IS GOING IN HOW DO YOU THINK IT COULD IMPACT OR CHANGE MARKETS? AND YOU KNOW HOW--HOW SHOULD WE AS THE CFTC KEEP PACE WITH ALL OF IT? >> WOW, LET ME DUST OFF MY CRYSTAL BALL; I THINK THIS IS TRULY THE EVOLUTION OF FINANCE AND I THINK IT'S STARTING FROM A FINANCE MARKET STANDPOINTOT UNREGISTERED SECURITY MARKETPLACE. I THINK BECAUSE THERE IS A LACK OF MARKET INFRASTRUCTURE AND A LACK OF STANDARDIZATION AND BEST PRACTICE, WHICH GOES TO A LOT OF THE EARLY COMMENTS AROUND CONTINUITY OF INFORMATION, SYMMETRY OF INFORMATION THAT CAN NOW BE AVAILABLE TO SMART CONTRACTS IN A REALTIME HASHING BASIS SO THAT THEY ALL HAVE IN INFORMATION THE TIMELY BASIS. I THINK BRINGING A LEVEL OF LIQUIDITY, FROM ILLIQUID INSTRUMENTS 2.4 TRILLION IN LIQUID TRIEWMENTS FROM LAST YEAR, THEY NEED A PATHWAY TO LIQUIDITY. THAT SERVES UP COMFORT AND YOU WILL SEE THE TRANSITION OVER TO MORE OF THE PUBLIC MARKETS, I THINK INNOVATION AND ALL THESE TRIEWMENTS ARE THEY COMMODITIES AND A LOT OF CASES, I THINK THEY ARE SO TREMENDOUS GROWTH FOR INNOVATION, INNOVATION WITHIN A COMMODITY FRAMEWORK. AND YOU KNOW THAT'S JUST--THE BEGINNING OF OUR OWN LENS OF WHERE WE SEE THE STANDARDIZATION AND GREAT VARIABILITY OF ACCESS TO DISTRIBUTION AND ACCESS TO CAPITAL AND HAVING A LEVEL PLAYING FIELD. ANYBODY ELSE WANT-- >> I'LL DUST OFF MY CRYSTAL BALL. MAYBE IT'S NOT 5 YEARS, MAYBE IT'S 20, BUT I THINK THAT THIS IS MORE THAN THE FUTURE OF FINANCE. I THINK THIS IS THE FUTURE OF FINANCE, THIS IS THE FUTURE OF THE INTERNET, THIS IS IN MANY WAYS THE FUTURE OF HOW WE DELIVER RULE BASED SYSTEMS OR GOVERNMENTAL SERVICES ONLINE AND IF WE THINK ABOUT THE INTERNET, JUST DEALT WITH COMMUNICATIONS AND NOW WE'RE TALKING ABOUT THE ABILITY TO MOVE AROUND ASSETS, THERE'S A STRONG POSSIBILITY THAT THIS WAVE THAT WE'RE SEE COULD BE MUCH LARGER THAN THE INTERNET ITSELF. AND I THINK WE'RE BUILDING INFRASTRUCTURES SO THAT WE HAVE THE RAILS FOR GLOBAL CURRENCY SYSTEMS, MAYBE THAT'S SOMETHING NATIVE LIKE BIT COIN, MAYBE DIGITALIZATION OF TRADITIONAL CURRENCIES ON A BLOCK CHAIN LIKE INFRASTRUCTURE, THIS TECHNOLOGY HAS THE ABILITY TO REPRESENT PARTS OF AGREEMENTS INTO SOFTWARE. SO OUR AGREEMENTS WILL NO LONGER BE PAPER BASED, THEY WILL MORE MORE LIKE COMPUTING SYSTEMS LIKE WE HAVE TODAY. THAT WILL SIT ON TOP OF IT, WE HAVE THE ABILITY TO BUILD MARKETPLACES THAT ARE ACCESSIBLE ACROSS THE GLOBE, REGARDLESS OF WHERE YOU RESIDE, YOU WILL HAVE ACSESSION TO FREE MARKETPLACES. THERE'S INCREDIBLE INNOVATION DEALING WITH VOTING, WHERE FOLKS ARE THINKING ABOUT HOW TO BUILD SECURE VOTING SYSTEMS AND POTENTIA WILY WE COULD SEE NOT JUST A UNIFIED VOTING SYSTEM THE GLOBE COULD RELY UPON AND WHEN YOU BUNDLE THAT TOGETHER TO BUNDLE PROPERTY RIGHTS OR ASSETS MANAGED VIA PROPERTY RIGHTS, FUNDAMENTAL SYSTEMS WE HAVE HERE AND ENJOY HERE WILL BE AVAILABLE FOR THE GLOBE. I THINK THATTA THAT'S REALLY POWERFUL AND I THINK THAT WILL BE TO A LOT MORE FREEDOM, A LOT MORE OPPORTUNITY, AND A LOT MORE ABILITY TO BEGIN TO OPERATE ON A LEVEL PLAYING FIELD FOR EVERYONE. THAT'S REALLY IMPORTANT. >> OKAY, I THINK WITH THAT WE WILL OPEN IT UP FOR QUESTIONS. >> AARON STANLEY, FORS CONTRIBUTOR, I WOULD LIKE TO GET THE THOUGHTS ON THE PREVIOUS PANEL THAT NOW WE CAN TOKENNIZE EVERYTHING AND THERE'S WEALTH CREATION IMPLICATIONS INVOLVED IN THAT, BUT YOU KNOW WOULD IT BE DESIRABLE FOR THESE TYPES OF ASSETS AVAILABLE TO RETAIL INVESTORS NOT JUST CREDIT INVESTORS AND WHAT WOULD NEED TO HAPPEN TO POTENTIALLY FACILITATE THAT? >> WELL THE AGE OLD CREDITOR DEFINITION AND FENDING FOR 1S SELF-FORERALITY SON PURINA IS WELL OVERDUE AND TIME FOR CHANGE OF THAT. WE ARE SYSTEMATICALLY BOXING OUT RETAIL INVESTORS FROM GREAT OPPORTUNITIES FOR WEALTH CREATION AND AS THE EARLIER PANEL SAID, THEY WILL FIND THOSE OPPORTUNITIES ELSEWHERE AND THAT WILL BE AROUND THE GLOBE. WE NEED TO CONTINUE TO FOSTER OUR INNOVATION AND ACCESS TO CAPITAL AND IT IS, NO PUN INTENDED BOTH SIDES ARE THE COIN, IT IS ACCESS TO CAPITAL AND ABILITY TO HAVE WEALTH CREATION TO THESE NEW INNOVATIVE PRODUCTS THAT RETAIL INOVERLAPPINGS SHOULD HAVE AND IT'S NOT HAPPENING TODAY IN OUR CURRENT SYSTEM. >> I AGREE. IT'S RIPE TO REVISIT DRAWING THE LINES IN TERMS OF WHO PARTICIPATES IN WHAT MARKETS AND WHAT OPPORTUNITIES. AS KRISTIN POINTED OUT, WHEN YOU'RE TALKING ABOUT SOMETHING LIKE FILE POINT, RIGHT? THERE'S 2 QUESTIONS, 1, WHO GETS TO PARTICIPATE IN THE CAPITAL FORMATION AND THE WEALTH CREATION THAT COMES FROM BUILDING THESE DECENTRALIZED NETWORKS, RIGHT? WHO SHOULD BE ABLE TO PARTICIPATE, WHO SHOULD BE GATED OUT OF THAT, WHO SHOULD JUDGE THE RISK BETTER. IF I MADE THE ACCREDITED STANDARD TODAY, DOES THAT MEAN I HAVE ACTUALLY A BETTER SENSE OF RISK PRESENTED IN THESE NETWORKS. I WOULD QUESTION WHETHER THAT'S ACTUALLY TRUE. I MIGHT HAVE MORE ABILITY TO W STAND LOSS, RIGHT? ALTHOUGH I ALSO QUESTION THAT KNOWING SOME PEOPLE IN THAT CATEGORY. [LAUGHTER] BUT ALSO, IT HAS A DIRECT IMPACT ON THE ACTUAL GOVERNANCE AND THE FUNCTIONING OF THESE PROJECTS, RIGHT? IF YOU NOT ONLY ARE YOU GATING PEOPLE OUT FROM THE OPPORTUNITY TO BUILD WEALTH FOR THEMSELVES BUT YOU'RE GATING PEOPLE OUT FROM THE ABILITY TO PARTICIPATE IN BUILDING THE FUTURE THAT THEY ARE ENVISIONING FOR THEMSELVES AROUND THESE NETWORKS, AND HOW THEY'RE RESTRUCTURING THESE MARKETS, RIGHT? IF I WANT TO GET INVOLVED IN A PROJECT LIKE FILE COIN 1 OF THE REASONS I WANT TO DO THAT IS BECAUSE I WANT TO BREAK UP THE MARKET STRUCTURE THAT EXISTS TODAY AROUND AWS AND ALL THESE AND GOOGLE, RIGHT? I WANT TO PARTICIPATE THAT. I PLANTED A FLAG IN THE FUTURE FOR WHAT I WANT THE FUTURE TO LOOK LIKE AND I'M NOT ALLOWED TO PARTICIPATE IN IT, BECAUSE I'M NOT AN ACCREDITED INVESTOR AND THAT'S JUST A VERY--THAT'S NOT THE RIGHT--THAT'S NOT THE POLICY GOAL I THINK ANYBODY IS TRYING TO ACHIEVE, RIGHT? AND SO, IT'S REALLY A RIPE TYPE TO RETHINK WHERE WE ARE DRAWING THOSE LINES AND ON WHAT BASIS? >> I THINK AND CHRIS MENTIONED THIS IN THE LAST PANEL, YOU KNOW 1 THING HERE THAT COULD BE INTERESTING TO EXPLORER IS SOME SORT OF TECHNICAL ACCREDITATION TO ACHIEVE THESE GOALS SO IF YOU ARE PROVING THAT YOU'RE SOPHISTICATED ENOUGH IN TERMS OF THE AMOUNT OF ASSETS THAT HAVE YOU, BUT REALLY THAT YOU UNDERSTAND THE TECHNOLOGY, YOU UNDERSTAND THE RISKS RELATED TO IT, AND YOU WANT TO PARTICIPATE AND REALLY JUST KIND OF CULTIVATE A NEW GENERATION OF TECHNOLOGY, MAKE THAT SHOULD BE SOMETHING THAT'S SUFFICIENT AND ALSO ACCOMMODATES THE GOAL OF REALLY WHAT THE ACCREDITED INVESTOR STANDARD'S TRYING TO ADDRESS WHICH IS, YOU KNOW SOME SORT OF INSTRUMENT OF HARM. >> AND HUNDRED PERCENT AGREE AND TO GIVE AN EXAMPLE OF THE REAL WORLD AND CONSULTANTS WHO HAVE THE TECHNICAL ABILITY TO TELL THEM WHAT TO INVEST IN, SO, I MEAN WE'RE SEEING IT, RIGHT? AND PEOPLE WILL ROUTE AROUND IT BUT THAT'S NOT THE RIGHT OUTCOME. >> IN THE BACK? >> I'M CAROL WITH THE LUMINOUS GROUP, WHAT WE'RE TALKING ABOUT HERE IS HOW DO WE CREATE A MECHANISM FOR THE RETAIL INVESTORS VERSUS THE ACCREDITED INVESTOR, I GUESS WE'RE SAYING NONACCREDITED RETAIL INNERVESTOR VERSUS THE ACCREDITED INVESTOR TO BE ABLE TO ACCESS THESE POTENTIAL INVESTMENT VEHICLES, --I GUESS SHOULD WE TALK ABOUT THE CRITERIA, THE USE OF COMPANIES, THE USE OF TOKENS AND REACH THIS MARKET SHOULD BE PRODUCING WE'VE HAD A COMBINATION OF SCAMS, ILCONCEIVED PROJECTS AND A LOT OF IMMATURE PROJECTS WHICH HAVE LED TO THOSE HIGH NUMBERS OF NONPERFORMING PROJECTS OVER THE LAST YEAR IT SEEMS TO ME THAT THAT'S REALLY THE CRUX OF THE ISSUE, WHAT KINDS OF THOUGHTS DO HAVE YOU ON HOW WE CAN PROVIDE THE RETAIL INVESTOR WITH THE KIND OF INFORMATION AND KIND OF PROTECTIONS, THAT I THINK IS WHAT'S HOLDING US BACK RIGHT NOW. >> I ACTUALLY THINK THAT'S THE WRONG QUESTION. THE RIGHT QUESTION IS MANY OF THESE PROJECTS HOPE TO BUILD A NETWORK, THEY WANT A LOT OF PARTICIPANT WANT TO BUILD THESE IS HOW DO WE OPERATE IN THIS SPACE SO THEY CAN WELCOMER IN THESE NETWORKS AND THE POSSIBILITY CAN SOMETIMES BE SPECULATIVE AS TO WHETHER OR NOT UNDERLYING INCREASE ASSET WILL INCREASE IN VALUE. AND THINK THE TRICKY PART IS MANY WAYS WE'RE CONFLATING SOME ENTREPRENEURIAL VENTURE WITH THE ABILITY TO OF FOLKS TO USE IT AND ENJOY IT I THINK THE REAL QUESTION IS HOW DO YOU ALIGN THOSE INCENTIVES IN AN APPROPRIATE WAY, I THINK IN MANY WAYS WE KNOW HOW TO GET MONEY INTO A VENTURE. WE--THATIA WORKING PRETTY WELL, WE HAVE A ROBUST VENTURE COMMUNITY IN THE WEST AND I THINK WE MAY NOT NECESSARILY NEED TO MODIFY THE RULES TO ACCOMMODATE A MORE INVESTMENT INTO THESE INITIATIVES. I THINK THE REAL QUESTION IS HOW DO WE GET ENTREPRENEURS CONNECT WITH THEIR END USERS SO THEY CAN BUILD POWERFUL NETWORK BASED ECOSYSTEMS SO THAT WE CAN SEE MORE INNOVATION IN THE TECHNOLOGY--IN THE INTERNET TECHNOLOGY SECTOR MORE BROADLY. >> I THINK IT'S A BIT OF A COMBINATION OF THE 2 ACTUALLY AND I HATE TO BE THE MIDDLE OF THE ROAD BUT CAROL I DO AGREE THERE IS A LEVEL OF INFORMATION AND DISCLOSURE THAT'S NEEDED AND MAYBE THIS IS JUST YAWBD BEYOND BLOCK CHAIN ENABLED PROJECTS WHEN WE'RE TALKING ABOUT DIGITAL SECURITIES AND SO FORTH WHERE WE LOOKED AT QUARTERLY REPORTING OR DISCLOSURES FROM FOLKS ON OUR PLATFORM SO FOLKS CAN MAKE BETTER INVESTMENT DECISION OR AT LEAST HAVE ACCESS TO MORE INFORMATION SO IT'S MORE OUTSIDE OF THE NETWORK EFFECT FOR US. AND VERY BORING AND I GO BACK TO SUITABILITY REQUIREMENTS BUT WHEN YOU'RE DEALING GENERALLY WITH REGULATED ENTITIES THEY HAVE A RESPONSIBILITY ASIDE FROM AML, KYC AND ALL THOSE THINGS THAT GO ALONG WITH IT. SO IT'S--IT IS A LITTLE BIT BROADER. >> YEAH AND I'M--I'M DEFINITELY WITH YOU ON THE DISCLOSURE PIECE BUT THAT'S A SEPARATE QUESTION. YOU'RE DEALING WITH AN ACCREDITED INVESTOR, EUROPE TACK ABOUT THE PURCHASER INVESTOR. >> BUT ADDRESSING IT FROM THE OTHER SIDE AS WELL AS WHAT WOULD HELP. >> WE GENERALLY AGREE MOST TIMES. >> I THINK MORE BROADLY THOUGH IN DEALING WITH THE RETAIL EITHER INVESTOR OR CONSUMER, WE'RE INCREDIBLY EARLY DAYS, YOU KNOW E-MAIL WAS NOT INVENTED UNTIL 1972, WE DIDN'T START USING IT UNTIL--THE AVERAGE PERSON, RETAIL PERSON DOESN'T TART USING IT ON--START USING IT UNTIL MANY DECADES AFTER THAT. WE'RE STILL IN EARLY DAYS OF THE BLOCK CHAIN IN CRYPTO SPACE AND THE BIGGEST RULE IS DON'T INVEST IN THINGS YOU DON'T UNDERSTAND AND I THINK WHERE WE ARE TODAY, AND WHERE WE ARE AND NEED TO BE IN ORDER TO BE WELCOMING THE AVERAGE PERSON IN THIS SPACE, I THINK WE HAVE A LOT TO DO FROM A TECHNOLOGY PERSPECTIVE. FROM A REGULATORY PERSPECTIVE AND MARKETING COMMONICATIONS AND P. R. PERSPECTIVE. >> I THINK THE SEC HAS GENERALLY TAKEN A PRETTY MEASURED TAKE HOME MARKET, I MEAN THERE IS A LOT OF LIKE REGULATORY WHITE SPACE FOR PEOPLE TO INNOVATE FOR A LONG TIME, MAYBE TOO MUCH, RIGHT? BUT THIS' ALSO BEEN TARGETED ENFORCEMENT OF FRAUD, TO YOUR POINT CAROL THERE'S BEEN FRAUD AND SCAMS AND A LOT OF ENFORCEMENT IN THAT AREA BY THE SEC, AND THE CFTC, AND THAT'S A GOOD THING RIGHT? WE WANT TO SEE THAT, I WOULD HOPE WE WOULD GIVE THE MARKET CONFIDENCE WHEN I SEE STEPPED UP ENFORCEMENT BECAUSE IT MEANS THE MARKET REGULATORS DO UNDERSTAND WHAT WILL HAPPEN HERE AND THEY WILL HOLD THEM ACCOUNTABLE WHEN SHY SEE THAT OBSERVING THAT THERE ARE CONTENT NEUTRAL REGULATORS, IT'S NOT THE JOB OF SEC OR CFTC TO MAKE CAPITAL ALLOCATION DECISIONS, THEY'RE THERE TO PROVIDE INFORMATION AND DISCLOSURES SO EVERYBODY CAN MAKE THEIR OWN MIND UP AND TAKE WHATEVER RISK THEY FEEL LIKE TAKES SO LONG AS IT'S SUITABLE FOR THE MARKET RETAIL SOPHISTICATED, AND ALL THOSE DIFFERENT THINGS. SO YOU WANT TO BE CAREFUL WHEN WE TALK ABOUT HOW WE REDRAW THESE LINES HOW DO WE PRESERVE THAT CONTENT NEUTRAL REGULATOR AND RIGHT? AND AT THE SAME TIME, YOU KNOW ALLOW FOR THAT STEPPED UP ENFORCEMENT OF FRAUDS AND SCAMS AND OTHER THINGS THAT WILL GIVE THE MARKET CONFIDENCE TO MAKE THESE INVESTMENTS. >> AND WE HAVE SEEN A SLOW DOWN IN NEW TOKEN GENERATION EVENTS AND ANNOUNCED RATES BY THESE PROJECTS AND IN THE PAST SEVERAL MONTHS. >> AND THE MARKET IS UP TOO, SO THERE'S ENFORCEMENT, STEPPED UP ENFORCEMENT AND OTHER THINGS AND COMMENTS AND PUBLIC COMMENTS TO KIND OF SLOW THINGS DOWN AND THERE'S ALSO JUST BEEN THE CORRECTION OF THE MARKET, RIGHT? AND THEREY A LOT OF I THINK IT'S FAIR TO SAY, THERE'S OVER EXUBEERANCE LAST YEAR. >> YEAH. >> [LAUGHTER] >> IN TERMS OF INVESTING IN THESE MARKETS AND AGAIN, I THINK THAT'S A GOOD THING. TO LET THAT SETTLE OUT. >> AND WHAT WE'RE SEEING ARE MUCH MORE THOUGHTFUL, REALISTIC PROJECTS AND A LOT OF THE GARBAGE AS LEFT, YOU KNOW IT'S SEC HAS SHINED THE LIGHT, WE ARE HERE, WE ARE GOING TO REGULATE THIS. FRAUD ABUSE IS NOT WELCOME AND WHAT HAS COME OUT THAT IS A MUCH MORE REALISTIC BUT ALSO SUSTAINABLE ECOSYSTEM. >> AGREED. >> SO I SEE THE CLOCK IS OUT. SO I THINK IT'S A GOOD MESSAGE TO CLOSE OUT ON THAT WE WILL CONTINUE TO MONITOR THE MARKETS FOR FRAUD MANIPULATION, YOU KNOW THERE ARE TIMES OUT BUT THE CONVERSATION WILL CONTINUE I'M SURE, I WANT TO THANK OUR ESTEEMED PANELISTS FOR TAKING THE TIME TO JOIN US TODAY AND THANK YOU FOR YOUR QUESTIONS AND THANK YOU VERY MUCH. [APPLAUSE ] >> YOU JUST WITNESSED A FANTASTIC PANEL ON TOKENNIZATION. WE HOPE THAT YOU CONTINUE THE CONVERSATION ONLINE USING THE #FINTECHFORARD18. WE INVITE TO YOU JOIN US ON THE MEZZANINE MALL LEVEL, LOCATED JUST 1 LEVEL DOWN ON THE ESCALATORS. THE CONFERENCE WILL RECONVENE AT 1 P.M. 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