Hello everybody and welcome to the latest edition of C&F Talks. It's my pleasure to have with me today, Lawrence Wintermeyer, who is the Executive Co-Chair of Global Digital Finance. Lawrence is going to be joining us and speaking and in fact chairing, part of the session at the Tokenisation Summit which is being held in London on the 21st of November. Lawrence, welcome.

Well thank you very much, Maurice. And it's always a pleasure to chair City & Financial Conferences.

It's always great to have you with us, Lawrence.

Let's turn to our first question if we may. How do you think the US election is going to affect the digital asset market? Is it a turning point? Is it a watershed moment?

Well, I think it's a game changer for everything economic. So, one, you know, financial services look at the markets, certainly look at the price of Bitcoin in the crypto markets, but really from a tax perspective coming off inflation and, you know, broadly the regulation agenda, I think it's going to be key and so this is really a wake-up call to many other jurisdictions, particularly the UK.

You know, the digital space race has changed, and you've got really aggressive competitors now and they set out to win as you know in this space, Maurice. I think the question will be, let's see the evidence of what kind of policy or legislative frameworks are proposed, but I think it's time to get ready to look at how we better collaborate here in the UK with the US and then particularly on capital markets, digital assets, the organisation.

Maurice

Yeah, I read somewhere that somebody voicing a little bit of caution on this, saying that they thought that given the complexity of the US regulatory system, and in particular perhaps the fact that all the individual states have some say over regulation, that it might be quite some time before we see any substantial moves on regulation. Do you think that's right? or do you think there's going to be something of a bonfire of regulations, if not from day one, but in the first year of the Trump presidency?

You know, I think it's right to point out that across the, you know, eight or however many federal agencies there are with 50 states, there's a complexity. You know, certainly on the Republican side, there are a number that have looked at Europe and everything from MiFID and thought, boy, it's, you know, pretty great that there's an interoperability across 27 countries, although it seems to take quite a bit of time in Europe to do that. But I think practically, let's just focus on where the assets are.

You know, the capital markets are in the US and, you know, there's a long tail now, you know, as we get into Europe on that pie, you know, share of capital markets. You know, Europe led with MiCa, the UK has been, you know, reasonably aggressive with FISMA, stablecoin regime and now the digital security sandbox. But last year at this time, while everyone was saying, you know, boy, look at how progressive the rest of the world is, no one was paying attention to the 10 ETF or ETP applications in the SEC.

And so oddly enough, Gary Gensler did more for crypto in the US by approving those ETFs. You know, BlackRock was the fastest selling ETF, ETP in history, then went on to launch a money market fund on Ethereum on mainnet. So I'd pay a bit of attention to exactly what we're talking about moving.  The money is there. Certainly, the will is there. And so, I think, you know, again, regulation will probably come in bits and pieces. Let's see what it looks like.

And another one, Maurice, I know that you take interested in that the SEC, you know, gave the Bank of New York an exemption on SAB 121, which we were all concerned about back in June. So they look like they're very aggressively, you know, stands for positioning as the incumbent president gets ready to take office on the 6th of January. Pay attention.

Yeah. Watch this space.

Watch this space!

I think that's certainly true.

And of course, in the UK, we have a relatively new government here. In your work in this area, have you sort of picked up a renewed enthusiasm in this area on the part of the Labour administration?

No, unfortunately, it's a bit difficult to detect. We were happy in the manifesto that, you know, DMAT or the tokenisation of gilts was on the agenda.

Everyone in the Digital Finance APPG, which we sponsor, you know, right through to, as you know, UK finance. We all had that on our combined and individual agendas earlier this year. So, it was a good signal.

But the question is when, you know, I think many policymakers thought last year at this time, we've got a year to get this up and running. And is it it's sounding like it could be 24 months, 36 months? Well, that's just not going to be quick enough. I think the UK really needs to step in here and take a lead.

And what isn't clear is the Labour government's commitment to technology for digital. I think there's a gap there. But let's give them a bit of a breathing space because there's a big budget coming up. And we know that the chancellor has been busy with the budget.

But I think certainly coming out of Westminster last night, Maurice, where we had the Digital Finance APPG evidence session report launch, most of the narrative around the industry is that we need to really, you know, turn up the temperature on the advocacy agenda with this government.

Yeah, I suppose, you know, that there may be some news in the Mention House speech on, I believe it's Thursday night, isn't it? Because that's been trailed. I don't know whether it's been trailed accurately. There's been mention of the digital gilt being announced in more detail. I know it's announced as an intention, but in more detail there. So, I guess we have to wait for that.

But Lawrence, when you look at the various regions around the world, you know, obviously, by the sound of it, the change of administration in the US is going to drive progress there. It's going to bring, as you say, the rest of the world to the extent they're serious in this area.
It's going to bring them along slightly in this wake, they're going to have to accelerate. So, leaving aside the UK, where do you think the other fast moving regimes are? How is this going to play out? Who are the winners and losers?

I mean, you know, it's a good question. If we were speaking about frameworks, certainly from my perspective, Europe and MiCa really, you know, really provided the blueprint or the front running, particularly on crypto assets with MiCa.

And then, I think that's helpful in the context of securities and traditional securities, which are now being tokenised, because we have MiFID. And so, I think from 40,000 feet, there are clear channels and tracks depending on which asset class you're issuing, and how the treatment will be between securities and native securities that are digitised or tokenised versus cryptographic assets. So, but the question is, you need to ask the question of, well, you know, great. And that, you know, if you're an exchange or you're somewhere in the FMI, DFMI value chain, is that clear to you? But where are the assets and where are the investors? And I find this is often, you know, the question that people don't ask.

And so, in the case of crypto, you wouldn't necessarily look to Europe and say, boy, there are tons of asset holders. They tend to be in the US, you know, in Asia, the Middle East, in Asia, and then there's a long tail.

Certainly, there are a few in Germany and the UK. So other notable frameworks are certainly VARA, particularly on their, you know, tokenisation framework for digital assets. But, you know, again, it's going to be interesting to see what comes out of the US and how it's actually packaged. Are we going to get a single comprehensive framework?

I think certainly the smart money would focus on stablecoins, which the first taxi off the rank and the important asset because it's the on-ramp, off-ramp for anything related to, you know, blockchain or digital ledger technology. So, you know, you need to look at a number of different factors, I think, in these areas. So great, if you've got a framework, but you have the assets, it would appear the US has the assets, and now they need to get to the framework. And that's what we'll pay attention to.

With MiCa, I think the question is, well, great, are we going to see assets pouring into Europe? Let's wait and see. And the Middle East has a lot of capital but have only started on their framework. So it's a good start, but probably, you know, have some way to go.

Yeah, and they can move at speed in the Middle East as well. I mean, it would be interesting to see how these various trends develop.

Final question, though, Lawrence, in terms of GDF, as an advocacy group, as an information provider, what's your role? How are you going to capitalise on these developments? How do you see your role developing as the market develops?

Well, that's an excellent question and how we see it developing. We're at the time of the year where we ask all of our members and community just that question, which are what are the priorities that we need to have in place and serve the community for in 2025?

But the short answer to the question is we're actually really quite unique in that, we were really more of an open innovation community focused on digital assets, cryptographic assets, but on standards and advocacy. And we're funded by a small number of members, but we are open and an open innovation community to participation by the whole industry, whether you're regulated or unregulated. And so that gives us a great degree of strength in that open innovation community. And it also helps us in the way that we partner with everyone from the GFMA, to the ACI FMA, or some of the TradFi associations.

So, the number one focus for us is remaining really that authority and convening entity for bringing together regulated and unregulated firms to develop the advocacy and the policy standards agenda for crypto and digital assets, because it's integrating across now regulated and unregulated organisations.

And, you know, the big challenge at this year for us moving in 2025, is to get the balance of which jurisdictions we spend most time in. And that varies every year. So, we'll look forward to getting a bit closer to that when we hear from members their priorities.

But I have to say, Maurice, it's a bit difficult. I think we probably won't get through to some of the answers until the new US administration has been in office for the first 60 or 90 days, because it's too difficult right now for anyone in the US to work that out.

Yeah. So, it's really just, as we said, watch this space for a while. Lawrence, very good to be speaking to you today. Really enjoyed that. And looking forward to seeing you on the 21st of November at the Tokenisation Summit.

For our viewers, very much hope you'll be able to join us there. Further information at www.cityandfinancial.com. Thanks so much, Lawrence. See you on the 21st.

I look forward, Maurice. Thank you.