On The Brink with Castle Island - Brandon Mulvihill (Crossover Markets) on Digital Asset ECNs (EP.468)

Episode Date: November 2, 2023

Brandon Mulvihill the co-founder and CEO of Crossover Markets joins the show. In this episode we discuss: Brandon's career in the FX industry and the path to founding Crossover Markets ECNs and how this market structure came to evolve in the FX market The opportunity to bring ECNs to the digital asset market The CrossX platform and how this product is impacting the digital asset trading landscape Crossover's partnership with Hidden Road in launching Route 28 The evolution of the digital asset market structure and how non-custodial trading is evolving The regulatory landscape and the jurisdictional decisions that went into establishing Crossover Markets To learn more about Crossover Markets visit their website and follow the company on X.  

Today on the podcast, I sat down with Brandon Mulvahill, the co-founder and CEO of crossover markets. Crossover is a newly launched ECN focused on institutional digital asset trading. In this episode, we discussed the launch of their cross-ax product, their partnership with Hidden Road on Route 28, and the evolving market structure for digital asset trading and settlement. I think you'll enjoy this one. So without further ado, here's my conversation with Brandon Mulvahill. Matt Walsh and Nick Carter are partners at Castle Island Ventures, all of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guest and those may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific

inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market. And the Fed is a super. sleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. And print a couple

trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. Well, Brandon, thanks so much for joining us today on the podcast. Excited to hop into the world of ECNs. Likewise, definitely excited to get into it. Thanks for having me. lot to talk about. Why don't we talk a little bit about just how you got here? What was your background and how did you get into digital assets? Sure. So I spent 20 years in foreign exchange. And for the first 13 years, I was at a company called FXCM, which was predominantly a provider to the retail market of FX and CFD contracts. Interestingly enough, I managed the institutional business, which we called FXCM Pro. And for all the listeners today,

This was totally analogous to the relationship between Coinbase and Coinbase Pro in the sense that we had massive retail audience and we leveraged the economies of scale from that audience to build an institutional platform. We source liquidity in the foreign exchange market and distributed it to other institutions. We set up a market data business. I was even thinking this morning about one fact. we had an offering where customers, if they would allow us to re-hypithecate cash, we could pay interest on deposit, which looks and feels like staking. We had a prime-to-prime business. And that was a business that did around a trillion a year of volume. And again, I did that for 13 years. And then in 2017, I went to Jeffries, the investment bank. And I kick-started in FX prime brokerage business,

which we took, it was a small business that was clearing around 20,000 trades a year, and we grew that into a business that was clearing 300,000 trades a day. And really, my experience has always been centrally focused on retail brokers, market makers, and quantitative hedge funds. And so a lot of analogies and parallels I think we'll get into and certainly some differences between FX in crypto, but that's where I started. and then started to watch the crypto market, started to see some of those parallels and decided to found crossover markets. That's awesome. Thanks for that background. So were you paying attention

to just how the digital asset market traded? I'm curious what the impetus was to even start crossover. Sure. So at the time I was at Jeffries with my colleague and partner Anthony Mazurice. And everyone was, this was back in 2018. We were 2017, 2018. We were watching the crypto, space with a lot of envy. And in fact, we were looking at the time to light up a Bitcoin NDF that we would exclusively clear, which was an interesting project. And through that project, we got a lot of exposure to the various market participants in digital. And we started to form a view in the market about what was going well and some gaps that we thought could be addressed. I think broadly, one of the big areas, we thought that there was a gap was in the institutional

market. We thought specifically trading technology, we thought the decoupling of clearing and execution and things like in this area, we thought there was an opportunity to really be disruptive and kind of help create a better market structure in the industry. And so as the years went on, we just kept talking to participants and jotting down notes. And eventually, we wrote a white paper and for ourselves and realize the time was ripe in 2021 to take the jump and go right into the crypto space. Well, it's a fascinating market structure play that you guys have introduced here. So why don't we just talk about what is crossover?

What do you guys do? How would you describe the products? Sure. So we're an execution-only trading venue, which we define as an ECN. There are, you could also call it a quote-driven model or configure-based. liquidity, which we'll get into. And we are primarily aimed at bringing speed of execution and performance characteristics that would rival the equities of the foreign exchange market and bringing those things into the digital space, but doing it in a way where obviously you need to do it

in the way that crypto is traded today in terms of 24-7 trading, in terms of precision, both in the size of trading and also the price of trading. And part of what we do with the cross-ex platform and part of what we're up to is really just championing this idea that there needs to be a separation between who is clearing the trades, who is the custody of the cash or the coins, who is doing the execution. Obviously, the execution layer is where our expertise lies. And then also who is making the market and who is effectively putting on the trades. We like how that market structure is set up in equities in foreign exchange, and so we champion foreign exchange, and so we champion that idea in crypto, but we're specifically with crossover

and cross-ex focused on the execution there. I mean, it's a really compelling market structure in a world where we've just seen centralized exchanges blow up and this idea of bifurcating custody from the trading of these assets makes a ton of sense. Maybe just a couple of questions on ECN. So why was it a market structure that works so well in FX? and curious how you see this evolving in digital? Sure.

So in FX, what happened is when electronification, FX trading started, there were a couple dominant clobs or central limit order books, as they're known. And they performed quite well for some time. And then in and around 2004 or 2005, you saw the first examples of ECNs or quote-driven models. These platforms were terribly disruptive, and they're normally disruptive for, three reasons. They're disruptive because of configurable liquidity. They're disruptive because of their speed performance. But I'll cut right to the chase. All three of those things are the necessary ingredients to driving down spreads. And so to use an example, if you were to look at Eurodollar

on the largest central limit order book in foreign exchange, if you wanted to buy one million euro dollar, you would pay roughly one point or one pip, as it's called in that market. Whereas on an ECN for that same $1 million trade, you would pay around 0.1 to 0.2 of a PIP. So there was literally an 80 to 90% reduction in the cost of trading. There are some complexities. We can get into it in terms of fill ratios and things like this. But in the end, the ECNs were terribly disruptive in the FX space. And even if you look at today's market in FX, ECNs collectively do something like 200 to 500

billion dollars a day of trading volume. And so they've obviously done a great job of taking some big chunk of market share in the FX space. Is that a cost structure issue? How can these ECNs in the FX space compete so aggressively there? So the primary thing is configurable liquidity. If people think about a central limit order book, or we'll call it a clob going forward, if you think about a clob, what happens is it doesn't matter if you have 10 customers or 1,000, you always have one market data session and one pool of liquidity. And really to dive into that even further, Matt, if you imagine you and I, we both trade with the same crypto exchange today, the same claw.

You and I can be looking at our respective screens. We're going to seem the same pricing and the same liquidity. And then if you put on right now a big trade, I'm going to see my screen react to the fact that you just put on a big trade. It's called an all-to-all model. Normally, this is a very good model in the retail space. This is normally what you see. In ECN, with configurable liquidity, what happens is every time at Crossex, we add a new

taker of liquidity. We are creating an independent market data session and an independent pool of liquidity. And so if you think about user 10 versus user 20, from the perspective of the market maker, remember, market makers are in the business of big data. The more data they have, the better for them because they're trying to make predictions based on behavior today. Can they predict what's going to happen tomorrow, in a sense? If that market maker knows the behavioral characteristics of user 10, even though those characteristics are very different from user 20,

they can very accurately predict user 10's behavior tomorrow based on their behavior today. And even though user 20 might be very different, again, it's the same methodology. And so what happens is that the marketmaker is more comfortable being more aggressive in their market making and their, effectively their prices, their spreads because of that predictability. And so this is one of the main drivers for why you've seen in the FX space and in other asset classes, the cost to trade on ECN is normally always cheaper than a central load order book because you have effectively what we could think of as optimized matchmaking. That makes a ton of sense. So when you look at the digital asset market structure as it was, say, before ECNs, you're living in a world where you have retail brokerages that are also exchanges, that are also custodians that in some cases actually ran their own proprietary trading firms. It's just something that you look at and you say there's conflicts everywhere here and it doesn't look very safe. What's your view on how that will evolve over time? And curious if you think we'll just live in a bifurcated market where you have these kind of Wild West exchange. that coexist with the more institutional players? Right out of the gate, what I would say is I don't know that we see it as so binary

that exchange equals bad or exchange equals Wild West or anything like this. When we look at the digital market, we think what's confusing in and of itself is the word exchange. Because in financial services, the word exchange carries a very specific connotation to it. It matters. It's defined in a certain way. And you have members to the exchange. There's a clearing model and a mechanism for how things are expected to perform.

When we see exchanges in crypto today, what we see are brokers. And so retail exchanges to us are retail brokers, institutional exchanges to us are institutional brokers. And I say this because if you superimpose that concept on any other asset class, we see the same thing. We see in foreign exchange or inequities. We have retail brokers, institutional brokers. And there's absolutely a place.

in a market for those business models. In digital, though, where we thought there was an opportunity to be disruptive is that as an institutional brokerage or as an institutional exchange, there is no concept of fungibility. And so these exchanges have their clients captive. And so by definition, if you buy Bitcoin with one exchange, and again, for people listening in, just go ahead and conjure any exchange name that comes to mind. So imagine now you're buying your Bitcoin dollar with that exchange. By definition, you have to eventually close the position with the same exchange, right? You can't buy with Exchange A and sell with Exchange B. And what that means is that the exchange has you captive. And for that reason, there's two things that come out of this that we think are

noteworthy. First of all, the exchange itself doesn't really need to have the best inbreed technology. Because you look at how the exchange is selling to their audience, they're really selling peripheral benefits. They're selling the credibility of the exchange. They're selling the safety of their funds, perhaps. They're selling their onboarding experience. They're selling the charting package. They're selling all kinds of things. They're not really selling the value of the actual technology. And that is because they don't have to because they hold the customer captive. In our business model with Crossex, the client in order to buy Bitcoin with us must have a credit sponsor. Today we have two. We have Hidden Road Partners as a credit sponsor. And we also have

CBOE or CBO Digital, the American Futures Exchange. And so what happens is a client opens an account with either of those credit sponsors. And then they're given access to the Crossex platform. And they can buy Bitcoin with Crossex, but when they're ready to sell, they can sell anywhere else that they want. And so we're always in the business of competing for one leg of the trade. So we're competing for the market share of an institution every second of every day. And so for us, the first thing we see is for our tech, not only is it good, it has to be good for us to survive, because we're not holding anyone captive. And so for us, that's the first thing is really just the lack of fungibility.

And the second thing, and then obviously is the tech component to it, which we can get into why crypto got to where it is today. We felt like the tech, regardless of institutional exchanges or retail exchanges, when compared, if you look at digital compared to other financial asset class, we think there's a lot to be desired in the digital space. Without going too far into the regulatory implications of what might happen in the future here with this market structure, I'm curious your view on just the segregation of custody from a central limit order book exchange. Is this something that we will eventually see regulators really push for? Do you think that regulators will eventually say like

Coinbase you can't operate a custodian that is attached to your exchange? think we'll see a split like that? Yeah, absolutely. The offerings have to be walled off from one another. And so, for example, if you look at foreign exchange, you will have a bank that has a prime brokerage offering, who's also custody the funds of their clients. And then separately, you have the trading arm of the bank. Now, there's nothing wrong with those services, having multiple services ultimately being offered by the same pair of company. But there has to be a separation between the church and the state. The trading arm cannot know the information that the prime brokerage arm knows and that the custody all need to be walled off from one another in terms of

best practices. The thing that needs to come to fruition in the crypto space, and I think what we're going to see with global regulation, is simply client money rules. This exists in every other asset class. And so this is a mandated, regulated effort. where every broker or exchange, as we want to call them today, has to isolate the operating cash of the company that has to be separate from the client money account. Or in this case, it would be the coins that customers are holding. There needs to be a complete separation. Normally, what we see in every other asset class is that's something that's highly governed.

The broker has to run daily reports and send those reports to their local regulator. and so that reconciliation effort is a big part of the regulatory license that you need to operate that brokerage business. So we think that's a straightforward copy and paste into the digital world across the globe. Yeah, that makes a ton of sense to me. One of the things I'm really excited about that you guys just unveiled is this Route 28 concept in partnership with Hidden Road. So I'd love to hear a little bit more about the vision there, what the product looks like and how it's positioned in the market. Route 28 is an institutional brokerage or Hidden Road refers to it, a synthetic prime offering that brings multi-asset classes to the institutional customer base. I'll cite one example.

If you think of an online retail broker in Europe, let's say, today these brokers are trading crypto derivatives and they're accessing liquidity from various market participants. They're also trading index derivatives and accessing liquidity from a very different subset of market participants. They're also trading foreign exchange and they're getting that liquidity from a very different list of names. And so what Hidden Road is doing via Route 28, one of the things that they're doing, is they're offering those same market participants an opportunity to come to Route 28 and access all of that liquidity across crypto and index derivatives and in time foreign exchange contracts with one counterparty, which brings a lot of efficiency in terms of operations, cost of capital

and things along that nature. Now, Hidden Road brings one thing to the table that we think is rather unique. Not only the offering institutional exchange or brokerage offering, if you think of that way, they're also, as a core business, a prime broker. And one of the biggest challenges that crypto exchanges have today is that the market maker, if the market maker buys Bitcoin with Exchange A, that market maker is hedging somewhere else. And so for the market maker to unwind the trade with Exchange A, they have to skew their pricing. And when this happens, it creates temporary distortions of pricing to all the clients on that exchange. It's effectively a synthetic problem. It's a problem that doesn't need to exist. What's interesting about Hidden Road

is Hidden Road provides that market maker the same opportunity, or a different opportunity, I should say, to hedge over the name of Hidden Road. And so what that does is it preserves the credit of that liquidity provider such that that liquidity provider can continue to price just as aggressively at 4 p.m. in the day as they were earlier that morning. What that doesn't do is it doesn't speak to spreads. So that speaks to stability of price. It doesn't necessarily speak to the actual spread when a client goes to buy or sell. And that's where a cross-ex comes in. So cross-ex, we talked about

configurable liquidity. This is probably a good time to talk about why speed and performance matters. Right now, every crypto in exchange in the world has what's called throttling, which means they tell their market makers you can only give us 10 quotes per second or 100 quotes per second or whatever the number is. Everyone has a slightly different variance of that based on their tech. But there is a finite number that the market maker is allowed to provide. And if you think about it, if exchange A allows a market maker to do 10 quotes per second, and Exchange B allows 1,000 quotes per second, who do you think gets a tighter price? Obviously, Exchange B. This is fairly straightforward. The amount of quotes a market maker can

provide is directly correlated to spread. At Crossex, we have no quotes. We have no quotes. restrictions. In our first three months of trading, we processed over 50 billion quotes, and we're using less than 2% of our capacity. This is kind of a similar example with speed of execution. When we started crossover, everyone looked at us like we were a little bit crazy that you'd really need to be so fast in execution. People are trading on mobile apps or over the internet, on web sockets and rest APIs. And the answer was no, directly this is not important. The reason speed of execution is important is that indirectly it brings down the cost of trading. Right now, in the first three months of trading, we are processing 99% of our orders in sub 10 microseconds.

So again, similar example, there's a crypto exchange out there. I won't name them that's very aggressive in calling, referring to themselves as one of the fastest crypto exchanges in the world. They execute trades in one millisecond. So what does that mean? That means that a market may can come to Crossex and get 100 price updates from us in the time that they get one price update from that crypto exchange. So again, who is the marketmaker going to price more aggressively? So between speed and performance and configurable liquidity, what we bring to the table for Hidden Road by Route 28 is the technical capability in every asset class that they're in,

whether it's digital or index derivatives or forward exchange or other asset classes in the future, we're giving them technical capacity to always ensure that they are among the tightest spreads on offer in the industry. That makes a ton of sense. When I think about this from the perspective of a retail broker and maybe one that's not even in the crypto space yet, it seems like this would be a very compelling offering. I'm curious how you think about the taker side of this and particularly retail brokers that might not even be in the game yet, how they will be thinking about entering.

We think there's going to be a mass migration in the next few years of traditional online retail brokers adding spot crypto either directly to their platform or under some form of a subsidiary in rarer cases, maybe even under a related or slightly different brand. We think that, and we do have some, in speaking to a lot of these clients, this is more than I guess just thinking we know that they're coming into the space and we do have some big announcements, I guess, coming in the following weeks from here. I think when we look at the crypto space pre all the calamity that hit, that started really in the summer of last year, what we were seeing in the space is we were seeing these crypto exchanges amass huge audiences

of retail users. They had giant balance sheets and they were making all kinds of money. and it just felt like, wow, it could be possible that it might be easier for them to go launch stocks or FX or other contracts and things like this than it would be for a Tradfai retail broker to go offer spot crypto because of regulation and what was happening there. And I think since all these events have unfolded, I think the opposite is now true. I think that it's going to be very difficult for crypto exchanges with any level of speed to start to add effects and equity shingles to their offering. Whereas conversely, earlier on this call map,

we're talking about how should crypto exchanges treat client money? What do we think the regulators are going to do or mandate? Well, what I think the regulators are going to do or mandate to crypto exchanges is what they've already done to every other trad-file online broker. And so from that perspective, these online brokers behave in a way when it comes to capital adequacy, when it comes to client money, when it comes to re-hypothecation or staking, as it's called, in crypto, when it comes to marketing disclosures, they already behave in a manner that one would expect to enter the

crypto marketplace. So we think in the next two to three years, when you look at the top 20 brokers or exchanges on offering in terms of trading volume, we think at least half of them will be Tradfai names offering spot crypto versus today. It's purely crypto-native exchanges. That's fascinating. Yeah, I tend to agree with that. I'm also just curious how that will impact your product roadmap. You're going to have these new entrants that come in and they want new things that don't exist yet in the digital market. I think you'll see a proliferation of types of financial products that exist in TradFi that will come to crypto. How do you guys just think about that internally in terms of what to build next and who to build it for? I think this part speaks to

the team itself that we assembled when we founded crossover. We are three, the three founders, my two other co-founders and I, are all Tradfai folks. Our CTO was in equities and fixed income for 25 plus years. And then I met him in Foreign Exchange 10 years ago. Our CCO, and that's Vlad and Reisen, our CCO, Anthony Mazurice and I have worked on and off together in Foreign Exchange for almost 20 years. The reason I bring that at is twofold. When you look at the foreign exchange market, anyone who's worked in the institutional space in FX, by definition has had to understand global regulation. FX is an OTC market. It's fragmented. The currency movements cross regions and boundaries. And so it's just commonplace that if you've been in

FX for some period of time, you're going to be very familiar with the CFTC in the U.S. But you're going to be very familiar with the FCA. You're going to be familiar with Bofin. You're going to be familiar with AMF in France and the SPK and Turkey and the JFSA. and so on and so forth, in a way that in equities or futures, you might not be. There's lots of equities venues that are SEC regulated who have never even attempted to operate outside of the U.S. It's just not as global in offering as what you see in FX. The other thing that happens in FX that you don't necessarily see in the other asset classes is it's also commonplace for FX to have matching engines across the globe.

So it's very commonplace to see an FXCCN located in NY4, and also in LD4 in London, and then maybe in Singapore or in Tokyo. And so the management of those multiple matching engines is not a trivial task. I bring this up because in the digital space, it feels a lot more like FX in that regard, both in terms of operating technology, but also in regulation. You need to be very, very tuned in to the global landscape, not just one particular region or the other. you need to understand how all of the rules work and interact and what some of the boundaries are. And similarly, you need to understand that on the tech front.

For us, we're doing in the short term is what we've been doing, continuing to collaborate with Hidden Road and CBO Digital and continuing to foster the idea of the decoupling, the separation of church and state. So we want to keep bringing fungibility in the market. We want to keep obviously focusing on executing the trades through cross-ex. longer term what we're doing today we're in LD4 that's where all of our trading activity is happening we announced the CBO relationship a few weeks ago and on the back of that we stood up our platform in NY4 in the next year we will put our technology footprint either in SG3 in Singapore or in

Tokyo, Ty Y3 and the one thing I'll reveal for you here Matt that we think's pretty neat in terms of our roadmap is we will be unveiling at some point next year what we call distributed liquidity, which is, if I can summarize it neatly, in every other asset class, one of the challenges with operating matching engines globally is that the matching engines are independent of one another. So if you're operating in New York and Tokyo, they really feel almost like competitive matching engines. Even though it's the same company providing, there's no efficiency from a liquidity standpoint or from a credit standpoint. If a market maker is running out of credit in NY4 and has available credit in

Ty-Y3, there's no real way to bridge that gap. One of the things that we did from Crossex Day 1 was to using artificial intelligence was to build a global matching engine brain that basically understands and can predict all the liquidity characteristics happening in New York and in London and in Tokyo or Singapore. such that we could eventually have an opportunity where a maker and LD4 can interact with a taker who's in Singapore. And we think that will be very, very disruptive. So long story short, we think a lot of our FX experience will play really, really well into the future roadmap

of where we see institutional trading in crypto. Yeah, as you're talking, you know, I'm thinking about the historical barriers to more institutions coming into the space. And obviously, the tech is a big part of it. So the performance of the trading stack, Another thing that I hear a lot, and I'm curious your perspective on, is just these big institutions want to hold their assets with their existing custodians in a lot of cases. And in the case of the United States banking sector, it's really been hamstrung with this staff accounting bulletin 121 issue, where the banks in the U.S. are just structurally not able to play due to a very peculiar accounting law that the SEC has put out. It's not even a law. I shouldn't call it a law.

It's really just guidance. And so in my mind, that's holding back a lot of participation that would otherwise come in. And, you know, I'm curious just broadly your views on some of these barriers and how we can get past them as an industry. Yeah, well, I take just regulation and put that to the side because I think that's an easy one. We all recognize that regulatory frameworks and clarity is a pretty big gating item to invoke more institutional participation. And it's happening. And so as we see in Europe with Mika, as that's a very big. comes into play, we expect there will certainly be more institutional participation. I think the second

area where we go, though, I'll come back to the banking item. But for us, the second thing is just the cost of trading. Right now, if you're an institution, you want to buy an FX contract versus a crypto contract, in crypto, you're going to pay something in the neighborhood of 50 to 100 times more for that transaction. And so just mathematically, there's a barrier right there on how much trading you can actually do. And I marry this point also to the concept of fungibility. And so when you look at what Hidden Road is doing, what they're opening it up with fungibility is that in FX or in equities, you can have a quantitative trading shop, trade with 300, 400, 500 market participants, but net settle with one. Highly efficient from an operational standpoint. It reduces operational risk. It reduces costs in a big way.

And so we think that the likes of Hidden Road and CBO Digital and some others coming in the market, we think that they're addressing the fungibility in a big way. And we think what we're doing with Crossex and driving down the cost of trading will be collectively a massive step change to opening up both institutional participation and trading volumes in the space. I think the last thing, though, that you touched on is certainly correct. I think in any other asset class, you always have the comfort of choosing having your custody of choice. And the bigger the institution, the more onerous their requirements for where they want to keep their capital. And there's some legacy banks that are trusted and been around for a long, long time and have done a great job of safeguarding customer assets. Where I'm optimistic there, despite some of the more short-term challenges, is on the back of this ETF news,

Not only does the EFTF news bring in liquidity and more volume into the ecosystem, it specifically highlights this challenge. If you're going to create a real ETF marketplace that's sizable when we're talking about these are household names and blue chips, the banking issue has to be addressed. There's just no choice. Otherwise, there's just no way you're going to have a viable ETF marketplace. And I know that at first glance people will say, well, look, these are cash settled that doesn't address the coin. Well, not necessarily. If you look at the downstream flows, we expect very roughly, it'll change depending

month over month. But we expect the hedge legs of ETF trading to be done about 50% in futures and 50% spot. And so you're going to have to have on the back of ETF trading, you're going to have to address the banking item for where people can hold their coins. Yeah. I mean, it must be really frustrating as a market participant. I'm sure it is for me to see the U.S. try to mature this as an asset class, but really just not let the U.S. banks play in it.

It's just really perverse. You would think that the banking lobby being as powerful as they are would really have been able to make some steps there. But you know, you come off of this historic blowup with FTCS. And my view is that the U.S. regulators should be trying to make it easier for some of these trusted brands to play. But it unfortunately hasn't been the case. If there's one thing I've learned as an entrepreneur, it's I just have to find the optimism and everything. And so I've really diverted my attention to what's happening with AECA in Europe. I think their framework that they're putting in place is really smart. We went out and got a VASC, we applied for our VASC with the FSC and BBI.

And I think what those two stories tell that's quite interesting is one, rather than pigeonhole crypto into a specific asset class where you call it a commodity or a currency, they just created a framework where they said, look, it's just a new asset class. And then if I can get away with saying this, they basically copied and pasted some trad-fi rationale into that framework, which makes a whole heck of a lot of sense. And so I think the Europeans are given folks a lot of optimism. I think there's a lot of optimism coming out of the UK with the FCA. Hong Kong, obviously, from a retail perspective, is interesting. I think Singapore from an institutional perspective is interesting. And I do think, you know, when I look at market participants

in crypto, I'll go on a quick tangent here, but I think it'll make sense for folks. If you look at market participants, who seems to be last in line to come into the cryptocurrency space as banks? And to some degree, this makes sense. The largest banks in the world don't need to be the first movers. They can wait and wait and wait. And when they're ready and they come in, they're not going to have any shortage of demand. I think you could probably superimpose that analogy on the regulatory front where the U.S., the model for the entire world in terms of financial service regulation may not necessarily need to be first. As long as in the end, they put a framework in place and one that we can all read and that's clear and we can then go follow, I think it's going

to be a massive opportunity for everyone, even if right now it's slightly painful. Well, I love your optimism. And I guess to add to that, there is at least a framework that has been drafted. This fit act would really be this market structure clarity. So it is written. It has been voted out of committee in the House Financial Services Committee, I guess TBD on where it goes. But I guess we'll get there at some point. Maybe just talking a little bit about just where you're seeing demand. Is it BTC and Eith that's really driving this market in your mind? And curious how you think that plays out over the next few years in terms of just the scope of digital assets. Yeah, for right now, what we're seeing on our platform is BTC and ETH traded against the dollar,

USDC and USDT seems to be where most of the trading volume is. Ever since, kind of the positive news over at Ripple, we've had an influx of requests in demand for XRP, so we've definitely seen that. It's hard, this is such a innovative space. It's hard to make any predictions on coins or where things might be going in the future. Other than to say on the tokenization space, there's just so many really interesting use cases out there. When you think of, for example, J.P. Morgan and the J.P. Morgan coin, the ability to use a coin to meet over the weekend and overnight collateral calls is just so

smart. This is an institution that has collateral from their customers. And just for operational reasons cannot allow customers to meet calls or to do things efficiently based on the operations of the firm. But in terms of the knowledge of the firm, they're very aware of what level of cash and collateral that coin may have with them. And so the tokenization brings that optimal experience to companies. So I think with, in my mind where I'm optimistic is I think with tokenization in the institutional space, what I think in where I see most of the use cases being discussed is they all seem to be trying to address removing the friction so that folks can do things 24-7. And the more and more that that happens, I think the more

it's beneficial to a crossover, simply because of the fact that we, again, we think we can rival FX and equities platforms in speed and performance, but at the same time we operate 24-7-365 in a way that they just can't. That makes a ton of sense. I'm glad you brought up tokenization. I was going to ask you about your views on real world assets being tokenized, other types of securities. It sounds like you think this is a world that is coming. Absolutely. I think it's a world that's coming. I mean, I think it's even, like I said, for operating efficiency is one of the areas I get very excited about. I also think if I'm talking to my dad, how do I explain the world of cryptocurrency to him? I think one of the confusing parts is

that unlike foreign exchange where the currency itself is always being used for the same thing, in crypto, that's not necessarily the case. I look at Bitcoin as analogous to the Turkish lira or the Argentinian peso. I think Bitcoin absolutely has a place in the world to compete with global currencies. Whereas I look at Ethereum and I think it more is a token or a gateway to access the blockchain in the way that you would, if you were in Las Vegas, give someone your dollars in exchange for a ship that allows you to play the games in that casino. The MGM grant is not trying to compete with the Euro. They're trying to create efficiency for you to access their environment. And with Ethereum, I think of it the same way. I don't think of Ethereum is competitive to the Great British

pound. I think of it as a token that allows you to access the innovation that's been built on their blockchain. So in that regard, I think we'll also see a lot more tokenization as there's more blockchains and more use cases that come out with this stuff, which is really, really exciting. Yeah, I certainly agree with you on that. Well, I think the market structure, Wonks will really like this episode, Brandon, excited about what you guys are building. So where can we send people that want to learn more about what you guys are doing? Sure, crossover markets dot com, crossover markets on LinkedIn, cross over markets on X. I guess we call it nowadays, instead of Twitter, you can go to either of those three channels and find us. Well, congratulations

on the launch and thanks for joining. Anytime. Let's do it again soon. Appreciate it. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island. Visit castle island.vc. To listen to all of our podcast episodes, please go to On thebrink dashpodcast.com or just click on the tab in our website. Thanks for listening.