FinTech and Digital Assets Panel - at 361Firm's NY Tech Summit Feb. 25, 2025 The FinTech and Digital Assets Panel at 361Firm's NY Tech Summit discussed the evolving landscape of digital assets and fintech. Key points included the significant improvements in blockchain technology, particularly in payments and stablecoins, which are reducing volatility and risks in emerging markets. The panel highlighted the potential for tokenization of assets, with $1.5 trillion in tokenized assets in 2024 and projections of $16 trillion by 2030. They also debated the impact of regulatory policies and the potential for decentralized finance to disrupt traditional financial systems, emphasizing the importance of innovation and early-stage investments in fintech and blockchain.
FinTech and Digital Assets Panel - at 361Firm's NY Tech Summit Feb. 25, 2025
SUMMARY KEYWORDS
FinTech, digital assets, blockchain, stable coins, tokenization, payments, regulatory policy, venture capital, AI, decentralized finance, financial infrastructure, crypto winter, institutional investors, innovation, emerging markets.
SPEAKERS
Mark Sanor, Brian Neirby, Speaker 6, Bill Deuchler, Ben Narasin, Rich Sobel, Speaker 4, Margaret Butler of BakerHostetler, Stephen Burke, Speaker 2, Will Wolf
Mark Sanor 00:00
But we're very I'll come see in a second. We're very lucky to be here. Baker, host, teller, I once practiced law in Cleveland, Ohio. Baker, we love Cleveland, and that's Baker's head quarters, and we are here at their home. And I'd like Margaret to say a few words.
Margaret Butler of BakerHostetler 00:21
Mark, thank you so much. Thank you. Thank you. It's really a very few words, because all I want to say is thank you to Olga. I hope she's here for connecting me with Mark. And thank you, Mark, for bringing all these amazing people here. I have had such an amazing day listening to all of you, and I Well, thank you. I love all of you. I'm Margaret Butler. I am the head of the financial services industry team here at Baker, Hostetler. And so I want to thank my team, definitely. Joe Matteo, who's been putting everything together, Cynthia, Kevin e who is here, my Managing Partner, George Sam bollitus, who was also around for making this possible for all of us and for me. Because, like I said, I really just enjoy this so much. Thank you all for being here and get to the good stuff. I don't know if you need this one. I
01:18
don't know how he has it set up, probably. So
01:22
thank you for having us,
Bill Deuchler 01:27
I guess so. So this is Mark style. He just leaves the room and lets the panelists take over. Okay, so we can go ahead and do introductions when you talking about digital assets and fin tech and well, no, hey, I'm buying you time.
Mark Sanor 01:47
Get mark out of the way.
01:51
Go ahead. Okay,
Mark Sanor 01:55
that was your 2024, go ahead. Sorry. Go right.
Bill Deuchler 01:59
So I'll introduce myself, and then hand the mic over to my colleagues up here. For those of you who don't know me, I'm Bill D clear. Currently, I serve as trustee for our municipal police pension fund. I've been on the board there for eight years. We have more of a traditional portfolio, but more recently, we've we have an active conversation, and actually an allocation for private equity that we've yet to fund, private credit, which has been funded and specialty real estate, which is another asset class. Previously, I was CIO for two two family offices, and have been around the institutional world quite a bit, and also currently advise a venture capital fund in the fin tech and AI space that has some very interesting characteristics, and I'll talk a little bit about that generally, as far as what an allocator looks for. But I will hand the mic over to my esteemed friend and colleague, Rich Sobel,
Rich Sobel 02:55
thanks. It's nice to be here. Nice to see everybody I am kind of wearing multiple hats. The hat that brings me up here is I'm a founder partner in a $50 million early stage fund that invests in blockchain and web three fin tech fund was set up three years ago, four years ago, I knew relatively little about this, and it's been a tough couple of years in the digital asset space. We went through what some people would call crypto winter. That's over, and I think we're coming into a period that could arguably be called a tipping point, kind of a renaissance, in the penetration of these technologies and tools and business models that are going to disrupt major markets, and we'll talk a little bit more about that catalyst. One of the catalysts is the change in regulatory policy. I'm sure we'll talk a little bit about that. So I'm quite excited about the changes that come but it's clearly a risky area. So it's not some place you put the majority of your of your assets, but it's something that I'm quite excited about, and I'm happy to share my perspectives.
Will Wolf 04:18
Yeah, thanks. Thanks everyone for being here and for having me. I This is me and my partner, Vanessa's first time here. My name is Will. I'm a managing partner and co founder of arc capital, which is an early stage Digital Asset Fund we just got off the ground last year, and I met Mark, I think, last week or two weeks ago, and we joined and so this is our first time here. So Thanks for welcoming us. We we are basically inter I am also a fin tech co founder. Back in 2012 I co founded a company in the fin tech space. We went through Y Combinator and ended up getting acquired into Airbnb, and I manage some of their back end payments infrastructure. So I know a bit about the the payment rails, Rails, at least in the West, and sort of the fin tech ecosystem. Them, but we're very excited at arch capital to be investing in what we think is the future of financial infrastructure globally, which is web three, and what's being built there, all
Mark Sanor 05:11
right, this is what happens when I don't lead off. So this is good. It's good. But what I want are insights. What are you seeing that we don't know? Or what scares or excites, hopefully both.
Rich Sobel 05:25
I know in some of the areas that we're focused, there's tremendous change going on under the surface that's starting to come out of the ground. And one of those areas is payments, and payments using Blockchain and stable coins, is a 1,000% improvement on the old, incumbent way of making payments. It's particularly impactful when payments are going across border to emerging markets, which is reducing, or, in fact, sometimes eliminating, the volatility and risk in emerging markets currencies, which is making the world closer, so incumbents are being disrupted, and we're invested in a company I spoke about, I think, back in December, that is making remittances to Africa, and they're using the data on the chain to help those people who are making payments improve their credit scores, which opens up all kinds of new financial products to the UN banked folks right here in America. And so there are growing number of companies that are doing that. Some of the incumbents, like Visa and others, are coming around and looking to partner in this space. And the second area I'll mention, and then I'll leave, there's many areas, so I'm clearly leaving some out of respect for my esteemed colleagues. Here is tokenization of assets. So there is a better model for holding and trading securities, funds and real assets, and the tokenization model now works, and so it's been held up by the US SEC and the litigation and impediments that they had established. But those litigations, last week, they dropped the litigation against coin base, which is really like the red light, and they're also changing policy. So there's an executive order going on that Trump signed in his first week. Within 180 days, he expects a whole new set of policies to be proposed, and that's going to make major financial institutions see a green light to move more actively into this space, on bringing assets on chain, democratizing access, improving liquidity. I mean, it's like the frog in the frying pan that if you know people don't see it on a day to day, week to week, basis, but I assure you that within five years, there's going to be dramatic changes. And this year, 2024 there was one and a half billion, one and a half trillion, of tokenized assets. Conservative estimates put it at 16 trillion by 2030 so it's really going to change the way we deal with financial assets, and eventually all assets. I
Mark Sanor 08:10
like everything. Just didn't quite understand the frog and the frying plan. You don't see it
08:15
on a day to day basis, the frog in the well, you're not from
Will Wolf 08:17
Ohio, the boiling pot of water. Yeah, there you go. No, I agree with that completely. I think, I definitely do think that stable coins in this ecosystem, people sort of outside the ecosystem, don't appreciate maybe what's going on there. You know, we're very close with the teams at both Master Card and visa that have very intelligent blockchain web, three teams building very interesting things. A lot of people don't know. Visa has been settling actual, real payments on both Ethereum and Solana for almost two years, and they're growing that volume, and they, you know, that gets you to on Solana, 400 millisecond settlement times on global payments for visa. So that's pretty powerful for them, and that this is stuff that's really happening. And I also think in terms of the new administration in the US, I think they may not fully understand this yet, but I think the stable coin market right now, the is a couple 100 billion dollars, but the rate that it's been growing is, I mean, I think a couple years ago it was 10s of billions or less. And this is a new source of global demand for dollars, which is important with what's going on in sort of our treasury markets right now. You know, circle whole, which is one of the stable coin providers, holds 100 $50 billion of treasuries. And if that gets to a trillion or 2 trillion, that makes them pretty important. And people all over the world want dollar stable coins instead of their African currency or their South East Asian currency, and they can get it because it's just, you just need an internet connection. And so I think this is very powerful for the dollar, for the US system. I think the administration is going to realize that. And I think even broader, what the technology means is, over time, getting rid of middle men everywhere, globally in the financial system. I. Them because we don't need them anymore, and so this is going to take multiple decades, but I think that's the inevitable end game.
Bill Deuchler 10:10
One of the central themes, from an allocator standpoint, is investing in innovation. And you know, both ourselves and some of my colleagues from a much larger pension system were quite interested. You know, back actually around 18 or so in the blockchain space. Back then, it was much more nascent. Not much was going on, except people knew that Bitcoin was used by drug dealers and other nefarious schemes. But none the less, the idea of investing in innovation and seeing the kind of radical transformation to fundamental systems, to our economy was, was the attraction. And I think that things somewhat got put on pause with the FTX debacle and the crypto winter, but now things have matured considerably. And so you see, you know, the tremendous growth of the stable coin market and the ability to transact much more efficiently there, it's a great opportunity to participate in something that it's truly going to change the fundamental systems of how we interact. And I think also from an investor standpoint, both on the fin tech side, as well as the blockchain side, you can see various companies that have good ideas and who can master the go to market exercise. Well, all of a sudden, at very, very early stages of their growth, they are actually revenue positive. And if you can find companies that are revenue positive, and you can still get in at the seed and pre seed stage, that is a tremendous advantage, because then you can track them in a way that you can't track companies that are still pre revenue and and that's the whole venture capital exercise is either an exercise in the law of large numbers or just spray and pray, which is how it turns out. And there are very few who do it, but I think that this space facilitates a much more disciplined way to attack venture capital. And again, as an allocator, I've seen just two firms who have been able to master that. One is a master at understanding the law of large numbers and how to put the statistics in your favor. The other one goes after these types of companies, as I say, that are revenue producing and being able to act more like incubators or not. So I think that that again, you know, for an allocator perspective, the idea to be able to participate in significant innovation and then also seeing unique circumstances of the individual companies that you can then use to your advantage and build out your portfolios in a more robust way. There's two really great opportunities associated with this space,
Rich Sobel 13:02
I think it's probably clear to everybody here, but you know, what we do is not pure and simple crypto, and what we're doing is not trading currencies and trading staking or tokens on the secondary market. That's a different business. There are people who are good at it. We don't think that that's nearly as compelling as investing in companies and protocols that are building applications and tools that leverage the infrastructure that's been built. And so those are what we're looking at. Are more application, asset, light businesses that don't require a lot of money until until you figure out if it's going to work. So the risk return on those types of venture early stage investments is much more interesting. Again, I'm not speaking just for us, but I'm speaking for a class of investors. There are relatively few early stage GPS doing this, and most of them don't have a three fund track record. So it's an emerging market. I spent 20 plus years of my life working in another emerging market. That's how I ended up here. I have kind of an appetite for risk and comfort working in new environments where the model is you really have to underwrite the people and understand their business model. If they can't succinctly tell you what their business model they probably haven't figured it out yet, and they might, but it's a much higher risk. So we're investing in what I call my partners. Don't really like this, but because I'm kind of an older guy in this team, I call it the App Store for web three. So you're basically thinking about the phone comes out, the infrastructure is in place. Now you want the tools that solve real problems, and those are coming. And just to put a little icing on the cake, if you look at the NVCA data in 2021 a lot of money was raised. It was a. Hyped market, and in the last couple of years, relatively little capital has been raised for what they broadly call crypto and digital asset venture. So on top of all the other things that have been putting pressure on companies and funds, the lack of new capital flowing in creates a very interesting dynamic for capital that becomes available. So I fundamentally think there's a combination of reasons going to make it quite interesting. But as Tim Draper said to a group here, when people say, How's it going with your early stage deals? He said it's like raising kids. It's going to take a long time till you really know. But we're proud about the way things are going. We like talking about the portfolio. That's the way of giving people a tangible idea about the kinds of things that are coming out of the ground that will change our lives and our kids lives before you really know it.
Will Wolf 15:54
Yeah, I like that last part you talked about. One of the things we think about is, or a phrase I like to use is, every fin tech startup today is a crypto company. Some of them just don't know it yet, because I think that is what the new features that we'll be able to push the envelope and provide new functionality are going to be built on, like we've already got the stripes, and these guys that have, like, milked everything out of the current like legacy financial system with t plus one settlement and stuff like that. And so to push the envelope, I think they're going to have to offer crypto services underneath. And that's what I'm excited about, is to see, you know, PayPal now is another example. They have their own stable coin, and they're trying to integrate more utility into their consumer app, which I think is a little more interesting than, like the visa Master Card stuff, because they're not really targeting consumers, but we're seeing it with PayPal. Stripe, you know, I mentioned earlier, just did a billion dollar cash acquisition of a stable Coin Company, and stripe is arguably the, you know, the expert of the traditional credit card and payment rails, and they understood the value of this new ecosystem that they were willing to pay up for it. So I think that speaks a lot. But I think we're going to see a lot of even just traditional fin techs offering new products that wouldn't be possible without crypto rails, and I don't think a lot of their users are going to need to know or care that they're using stable coins or blockchains underneath. It will just be transparent, and we'll be able to do much more than we can today.
Mark Sanor 17:13
So questions to this group as we talked about fin tech 2019 we were in Detroit, and the guy runs a swimming school, and he said, even swimming school, everybody's a fin tech company, because, yeah, you interact with a customer. So I guess there's so by definition, every company is a crypto company. Potentially. Vince got a question. It's
Ben Narasin 17:41
going to push back a little, I think, stable coins and powering and amazing things. Basically, it's an alternative rail with no real cost associated, compared to the existing stuff and remittances. But I've always bridled at the term web three. The web changed everything for everybody. I'd love any of you didn't tell me anything that web three has changed in a material way. There's speculative currencies, there's meme coins, also speculative. There's an enormous amount of speculative products. Stable coin, though, to me, feels like a totally separate thing, and fractionalized ownership of assets is interesting, but I could just as easily do that in Oracle server. You have to trust me, if you're going to buy a 16 of the Mona Lisa from me. So I'm still questing for I did one blockchain related investment in 2014 I've never done any sense. I just can't find the the there. There other than stable coin transfers.
Mark Sanor 18:36
I love it when we don't all agree.
Rich Sobel 18:39
First of all, since 2017 the kind of power of the technology of blockchain has improved about 1,000% so the things that you could do in 2014 is kind of very, very insignificant compared to what the technology can do today. Second of all is, everybody talks about this boom on AI and how great AI is, and how much capital is flowing in, how many new businesses are having an AI component to them. But for AI to really work, you need to have smart contracts and blockchain based tools to help these agents interact with each other, for agents to make payments to each other for these automatic things to work. Software driven by blockchain is a key determinant to a big part of its pulling it along. And actually, interestingly, William and Vanessa and my partners and I are invested in a company together, nap the AI, that sort of services that space social is another one of the spaces that is allowing decentralized use of content and information to give users more control and allow users to essentially retain more of the economic value. So in. Say 10 years models like Facebook will not be monopolizing, that those tools will be decentralized. So it's
20:09
been 1,000% better since 2017 we're 10 years past that. Again, eight. Only where?
Rich Sobel 20:17
Okay, okay, listen, in the United States. I'm sorry, in the United States, the regulatory policy has been so hostile that they have essentially litigated and driven money and entrepreneurship away from this. So I think we're when you build a building, first you go down, and then it comes out of the ground. When you have a plant, first it goes down, you build the infrastructure, and then it comes out of the ground. So if we meet in a year or three, I think you'll be buying me lunch.
Will Wolf 20:47
So first off, I think it's a very good, good criticism. Oh, can I answer this one? Yeah, I think, I think it's a good criticism that that we get a lot, I think from a Western centric view, I think it's, it's fairly valid. Because I think, you know, for all the bad things I said earlier. Our financial systems work, you know, but I think there are those in, say, Venezuela or almost any African country, where they are just devouring stable coins us, dollar denominated stable coins, because their currencies are devaluing by 15% to the dollar, they can hold a stable coin just on their phone with internet connection, the government can't stop them from doing it, and they can get 8% yield in US dollar terms, while their currency goes down 15% a year. And that's literally saving people's lives. For a more anecdotal example, you know, there have been people. There was one, one girl, specifically that I know, did an interview, and she was able to escape Afghanistan with her family's wealth because she put it into Bitcoin and wrote down her 12 seed words where, you know, they couldn't find it when she left. So she could actually bring her wealth and, like, have a family somewhere else. So I think these things are happening, and it's, it's not Western centric, mainly the stable coin, which is that one was Bitcoin with the Afghanistan girl, but, yeah, sort
Ben Narasin 21:59
of like Charlie Munger argument the dollar is freely available all over the world, and there are many ways to hold it, but this is a pH I do like stable coin, as I led with, yeah, I think that's rational. I don't I think the dollar is not available
22:13
to
Speaker 6 22:16
Zimbabwe. And my thing is, I'm with him to where I'm going to push back as well, especially on the decentralization aspect of it, because you have large institutional players who are who see it as a threat to their to existing business models, right, and are innovating in that space in order to maintain some type of central control over what happens in this area. So I'm kind of also hesitant on saying, oh, that's going to decentralize everything, and you're going to completely eliminate middle men. I think they're just going to transform into something where they have some some grasp over the transactions.
Will Wolf 23:01
I also think it's a valid point. I don't know specifically, if you're talking about banks,
Mark Sanor 23:05
can you disagree with somebody not joking?
Will Wolf 23:07
Well, that doesn't that doesn't mean that I agree with it. I think it's a valid point. It's true. That's true. But I think, you know, part of me, I like that, maybe the Trojan horse analogy. But if you've been following, like with the new administration, a bunch has come out. I don't know if you've heard the term operation choke point 2.0 you know, we had silver gate bank go under, and it's become clear, and basically factual, that it didn't really fail. The Fed forced them to shut down by stopping them from doing crypto business. And I think we've seen now that there are over 47 banks in the last two years in the US that wanted to offer crypto products proactively, but the FDIC, and the FDIC shut them down and didn't let them do that. So I think to say that they don't want these things, you know, I think maybe some of them don't understand that it may ultimately destroy their businesses very far down the road. And maybe I'm wrong and they won't. So that's where I get the Trojan horse example. But I think a lot of these businesses want to offer these, whether it's a Bitcoin product or a stable coin product, to their customers getting involved, because there is
Speaker 6 24:06
a risk to the existing
Speaker 4 24:10
business model, right? So they're hedging Exactly. So that kind of makes my
Brian Neirby 24:13
point slightly different, pivot on the conversation. So we have what the state of Utah, Wisconsin, I know there's another one in there that's Louisiana, or this their treasury secretaries, you know, backing a crypto reserve, right? So those are three. We know that Don Junior loves crypto. We know that senior loves crypto. We know that Bobby loves crypto. So we have some tail winds coming out of this new administration. You. So I'm a nerd. I love the blockchain from a tech standpoint, I love the utilization and elasticity of Bitcoin. In particular, I believe all roads lead to Bitcoin. You walk around Istanbul, you see i. Are tickers everywhere of what's happening within all the coins. What's it going to take for the US to get to that point?
Bill Deuchler 25:12
You raise an excellent point, because since, since we are the world reserve currency, and because our economy, arguably, is the most robust in the world. A lot of the advantages of digital don't aren't readily apparent to us, but I think it's, as will has pointed out, if you're at all outside the US, if you are definitely in in a third world country, the advantage of the decentralized currency is huge. It is the litter, literally, night and day. And so I, I hate to say that it would be a crisis that would cause that, you know, to all of a sudden the light bulb go on. But it could very well be, but we're in a very enviable situation. I think the opportunity for the US is to be able to take advantage of all the features that digital offers and be able to build it into the system. The one thing that I'll say, that I've been saying for a real long time, is that one does have to be careful about Central Bank digital currencies, because digital currencies are programmable money, and if a central bank issues it, number one, it's tied to the monetary policy of that central bank and the state authority that oversees it. The other thing is that they can, for better or for worse, direct or Yeah, or imp, thank you. How the currency is used, and it is so easy. You know, everybody says, oh, micro monetary policy. Wouldn't that be just terrific, because then we can target like certain areas of the economy where it needs to be spent, things like that. Think about your bank account. All of a sudden you have digital currency in there. The next morning, you wake up and you don't so digital central bank digital currencies, will compromise freedom. They will compromise privacy in ways that we have no idea other than that. So I think kind of that's great. It's the decentralization aspect of it that is so critical for a real successful
Mark Sanor 27:21
so look, before you know, it's 330 just
Stephen Burke 27:23
on that bill. Isn't the bank financial settlements pushing for such beneficial currencies? Yeah,
Speaker 2 27:33
yeah. Certainly the the operational characteristics you know, are good, but one
Mark Sanor 27:38
so every, every quarter we revisit this subject. So it's time to revisit it. I
Will Wolf 27:44
think, I think they are and I think they will happen elsewhere. I think they're very unlikely to happen in the United States, at the Federal Reserve. Because what people usually mean, I think, by a central bank digital currency is the retail, the end user, you and I would have accounts directly at the Fed on this system. It would get rid of the banks entirely, like JP Morgan Chase would be gone, right? Like, we don't need them anymore. You would just have accounts directly with the Fed, because, because, other than that, the dollar is a central bank digital currency already. I mean, 98% of the dollars are digital. They just have to flow through the retail bank. But only the only the banks can have accounts with the Fed, not you or I, and so the banks own the Fed, so they're not going to let the Fed do a central bank digital currency, because they don't want to kill themselves. So that's that's my take.
Mark Sanor 28:28
Okay, so there will be a break out soon, and you can hammer this these questions, and we'll come back and have a de brief, and we'll have a I'll be here again, but let's thank this panel for kicking off the fin tech, digital. Now I'm joined our 361 firm community of investors and thought leaders. We have a lot of events created by the community as we collaborate on investments and philanthropic interests. Join us. You.