Unchained - Olga Feldmeier on Why Switzerland Has Welcomed Crypto - Ep.137

Episode Date: September 17, 2019

Olga Feldmeier, CEO of SmartValor, describes how her upbringing in Ukraine when it was undergoing 10,000% and 5,000% annual inflation helped her understand the potential in Bitcoin years later, and helped her connect with Wences Casares, CEO of Xapo. She also talks about how Xapo was able to get regulated in Switzerland, without having to get a banking license, and why she believes Switzerland has been open to the crypto industry. She explains why she is now focused on security tokens and tokenizing other real-world assets with her venture SmartValor, why it is also licensed in Lichtenstein, why it is aiming to make South Korea its second home, and what her view is on Facebook's Libra.  Thank you to our sponsors! Simbachain: https://simbachain.com Kraken: https://www.kraken.com CipherTrace: http://ciphertrace.com/unchained Episode links:  Smart Valor: https://smartvalor.com/en/ Olga Feldmeier: https://twitter.com/OlgaFeldmeier Forbes interview with Olga: https://www.forbes.com/sites/montymunford/2018/07/30/qa-with-olga-feldmeier-cryptoqueen-and-ceo-smart-valor/#e3a3c9f3bcd1 Untold Stories interview with Olga (episode 14): https://cms.megaphone.fm/channel/untoldstories?selected=BWG5775450315 Xapo receives approval to operate as a financial intermediary in Switzerland: https://blog.xapo.com/xapo-regulatory-status-in-switzerland/ SmartValor white paper: https://res.smartvalor.com/public/SMART-VALOR-WhitePaper.pdf SmartValor launches in Switzerland: https://www.coindesk.com/smart-valor-launches-regulated-crypto-exchange-in-switzerlandBusiness Insider interview on tokenizing physical objects:  https://www.businessinsider.com/smart-valor-ceo-tokenization-of-everything-icos-bitcoin-future-value-2018-1 Smart Valor makes South Korea its second home: https://news.smartvalor.com/korea-update/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Schitt. In case you haven't heard, I have another crypto podcast called Unconfirmed. It's shorter, news here, and comes out Fridays. If you haven't yet, go subscribe now wherever you get your podcasts. Also, find out what I think are the top stores in crypto by signing up from my weekly newsletter at Unchained Podcast.com. Crackin is the best exchange in the world for buying and selling digital assets. It has the tightest security, deep liquidity, and a great fee structure with no minimum or hidden fees. Whether you're looking for a simple fiat on-ramp or futures trading, Cracken is the place for you. CipherTrace cutting-edge cryptocurrency intelligence powers anti-money laundering, blockchain analytics, and threat intel. Leading exchanges, virtual currency businesses, banks, and regulators themselves use CipherTrace to comply with regulation and to monitor. compliance. Are you passionate about blockchain but fall short on the technical skills to build and

deploy blockchain applications? Then check out Simba Chain, the smart contract as a service blockchain simplification layer on SimbaChain.com and their new enterprise offering on the Microsoft Azure Marketplace. My guest today is Olga Feldmeier, CEO of Smart Valor. Welcome, Olga. Hello, Lara. Nice to be here. You have a really interesting personal story that I think give some insight into the downsides of centralization or perhaps the power of decentralization. So can you tell us about how you grew up in Ukraine and then came to leave and live in the West? Sure. You know, Laura, I had a very interesting life.

I was actually born in Western Ukraine, being actually a mixture of Russian, Polish, Ukrainian and Jewish blood. And as I was to nature, the Soviet Union collapsed. And with that, you know, Ukraine, that is worth and still is quite dependent on Russia in terms of economic relationships. Well, Ukraine was in very bad condition. And to save the country, what they started to do is basically to print money. So we used to have a hyperinflation of 10,000 per year, was down to 5,000% for, I think, around five years. So in that time, you know, it's really, it's really. It's really pretty crazy.

You know, all the people that work for the States, they got their salaries paid like much later, six, nine months. It's the same for my mother. I was a piano player. So by the time we got, you know, her salary, six months later, the monthly salary was enough to buy a piece of bread. Right. So, you know, we were carrying this bags full of paper money to the next shop to get rid of it, right? So and all of that, you know, it was very tough time. Basically, you're watching, you know, the collapse of the state, right?

Nothing is working. There is no electricity. People are dying on the street. Nobody's, you know, bringing them away. They're there for the days, right? And you watch all of this and you think like, oh, my goodness, how, you know, how could this happen? That was the moment for me, I started to study economics and macroeconomics, to microeconomics, to understand how could this happen.

And ever since, you know, I was pretty much big fan of, well, basically, it was always very fascinating to me, economy and finance and how this works. So I received a scholarship from German government and started to study in Germany. So, you know, a very, very kind of the beginning of the story. But this beginning of the story gave me also quite a solid view on, you know, why Bitcoin is needed. why I'm in this place now. And one other detail of this story that I love is that you didn't even know any German and you heard that they were giving out scholarships. So then you just crammed at the last minute to try to pass these exams.

I think you said it was something like nine months that you had. Yeah, wow. That's very, you know, intimate part of the story. That's true. And, you know, I learned that if you want something like really bad, then there's nothing that can stop you, right? I mean, there were all the other students that had German for the last 10 years, and I had no clue, right?

And I said, like, no, I'm going to make it. I'm going to learn German for this exam, right? And for nine months, but then I couldn't talk even to people. I was like, because I learned all this stuff by heart, right? The macroeconomy, macroeconomy book and all of this stuff. So I wasn't able to talk. I'm like, don't talk to me because I'm going to forget, you know, how this sounds, what central bank is doing.

against inflation. That's up like this. So it's really nuts. But you see, this worked out. Ukraine was receiving back then three scholarships for the whole country, right?

And I got one of those top three scholarships. It's amazing, right? It is amazing. Yeah, well, but you know, Laura, the rest of my professional I started at New Germany, I finished university,

in Munich. But then, you know, because you come from the other country and you speak with your funny accent, what you do is the first your first professional years, you're trying to prove everybody and yourself that you're not as good as them, right? So I, you know, I started really hard. I was one of the best students. I, you know, applied to all the top companies, investment banks, BCG, McKinsey. I received offers

from all of them. And somehow I then decided to go to BCC, you know, because BCG was, the Boston consultant group was a very diverse place. There were women, you know, not like an investment banking. There were more women. There were more people with diverse background. And that was just the right place to start for me. I did that for five years, all in financial services, working on big strategies for big banks, Deutsche Bank, like almost all European banks. Yeah. And at some point I said like, well, this is good to be advisor. But how does that? it is to be a banker. So I switched to Barclays Capital. I've done that for several years in London and then I decided to learn another side of banking, which was wealth management. So I joined

UBS here in Zurich, in Switzerland, in their headquarters as a head of sales for central and Eastern European region involves management. So that was also quite a phase. Yeah, and your next step after that was Zappo. So how did you get into Bitcoin? Like, did you know about Bitcoin before Zoppo? Yeah, well, you know, to be honest, I tried hard to understand it. And initially I didn't get it.

Like I was reading and here an economist wrote about it. I was like, no, like, I'm not getting. this like how is it just a code like what's value behind it and did you hear about it from the economist or how did you hear yeah yeah yeah exactly so that was because i was a very passionate to read off economist for many years so but but you know basically then i think it was just a great time in because you know by the time i kind of realized i'm fine you know i made my career in banking I'm as good as everybody else and maybe even better. I don't need to like, for the first time in my life,

I really asked myself, what do I want to do? And then by that time, you know, Bitcoin, you know, kind of appeared for at least people like me, you know, from banking. And by that time, I was lucky enough to meet Vancey Scazaris, you know, who was a founder of Xapo. And it was actually a very, well, we met here in Switzerland. It was one of, I think it was one of his first visits here, beginning of 2015. And that was because you had reached out to him, right?

Yes, exactly. I knew some guys here in Switzerland, some investors. And I said, like, you know, I'm actually quite, you know, tired of banking. I don't see, like, you know, the vision is not there for me. Like, I don't know why I'm wasting my time, sir. So, and I want to do something really exciting. I actually like Bitcoin and they told me, oh, you know, there is events. He's in San Francisco.

And then it's funny, I wrote him a letter, just like, you know, a letter on their security and exchange commission registration registered address. And I thought like, and everybody said like, oh, forget it. You know, you write a letter. Like nobody will ever come back to you. Like not an email. Yeah, exactly. You know, Laura, it's funny, like three days later.

I had an email from him. And he was like, Olga, let's meet next week. I'm in Switzerland. So it's like with those things, you know, there is a good timing and luck, but you also have to take a chance and take an action, right? And then both of them will meet and you're lucky, right? So it was beginning of 2015, right? So Xapa was founded in 2013, basically through the idea of,

fences he wanted to create this opportunity for people, for investors in Bitcoin to store their bitcoins in a safe way and, well, also help people around the world to have more financial freedom. But, but you know, the problem was, they built the tech, but the problem was that back then in 2015, there wasn't even bid license in New York. Like, there was literally nothing in terms of regulation. How do you deal with Bitcoin custody? Well, Nobody knew that. And I think they hit quite, you know, quite some difficulties in the US. So the idea was they will come to Switzerland and we'll try to get licensed here.

And, you know, for me it was very interesting also meeting with Vance's first time. We were sitting here on the lake, looking at the lake. He told me his Argentinian story, you know, how they were poor, just living from the ships, you know, the farm. And his story and my story was actually, you know, pretty much the same, was the only difference that it was Argentina or Ukraine. But we all suffered, you know, from this collapsing state, from defaults, from hyperinflation. And all of this experience filled both of us with a vision that now they have the technology to change this, to protect us, to protect the people.

And basically, you know, to give more empowerment and basically, you know, improve this balance of power between people and state, right, and give people something how they can say no. So that was a very visionary first meeting and that I think this changed my life pretty much. And was that actually also the reason when you were saying that you, you originally tried to understand Bitcoin after reading the economist? Was it your personal experience that finally made you understand the potential in it? Yeah. Well, before that, you know, I think my first small investment I made in 2013. I was reading and trying to understand.

And for me, the event was basically, you know, then Cyprian banks, there was, you know, some banks went bankrupt and there's a lot of banks. That was, you know, in connection to Greece crisis, crisis in Greece. So some banks stopped to pay out money and it was kind of like a little default situation there. And then you were,

you saw that Bitcoin went from 30, 40 to 70. And I thought like, wow, this is amazing. For the first time I see it, like, you know, macroeconomic indicators or what happens in one country really has correlation with this digital currency. So imagine if things will get even worse. Imagine if European Union collapse or there is a war. So obviously this thing has a chance to become. a new kind of hedge.

Right? So I bought my first Bitcoins back then. And then, of course, with Bensis and Xapo, I poured pretty much everything that I have in Bitcoin, right? So. It actually, you know, Laura helped me to start my own company, Smart Valour, right? I was the first, one of the biggest investors in Smart Valour. How?

Well, I would never earn that much money in banking, right? working for banks. But that was my Bitcoin purchases from 2013. So I think I made some good choices back then. Oh, oh, interesting. All right. We're going to have to talk about that in a little bit. But first, I wanted to ask, what was it like trying to work at a Bitcoin company in Switzerland in 2015? Like now it's known as, you know, Crypto Valley and whatever, crypto nation. But back then, what was it like? Well, you know, I was the only one here in Switzerland, and there were, I guess, like, three other companies, which all had a stuff between two to five people, right?

So the whole crypto valley was basically, you know, some 10, 20 people. And they didn't have any, you know, place to meet or any association, nothing. You would just know them. And some guys just started, you know, meet up. So we sometimes met, you know, just for a beer here in Sok, but there was nothing, you know. Well, Ethereum was there, right? Was that kind of like that? They arrived 2014.

Yes, yes, exactly. Oh, yes, you're right. You're right. Of course, Vital was here just across the street from where we sit now. He used to rent this little house and they were putting mattresses and everything on the floor. So they were sleeping and working there and everything, right? So that's true, yes, Ethereum, Bitcoin, Swiss, Monitors, and Ksapu. We were the first four companies, so to say, right?

And wait, wait, wait, wait. I thought, so earlier in the conversation, you said something like here in Zurich, but then just now you said right across the street. So are you in Zook right now? Oh, Laura, this is all so small and so close here. So now our office of Smart Valu is in Zook. Zook is kind of like has this name of Crypto Valley, because it looks like a valley. It has a lake, right?

But if you jump on the train, you're just in 20 minutes in Zurich. So for me, Zurich and Suk is the same, right? So, no, Zurich is a little bit farther down, right? So Zurich is the biggest city in Switzerland. And this is where all the banks are. They have their headquarters there. Right. Okay, so why don't you, let's talk about what you did at Zappo.

Well, my major mission was help Sapa to get licensed here in Switzerland, right? Because you see, back then, we had like the biggest, you know, risk to survival of the company was that we have no banking partners, right? And as you probably know, every relationship with the bank starts with, well, what is your status? What do you do? How are you licensed and so on. So us, you know, being not licensed at all. being basically holding in Hong Kong and having no regulatory status as a financial institution.

That was very difficult to obtain and keep banking relationships. So obviously we needed to get licensed and initially we thought, well, it doesn't matter we will go any lens. be happy to do even banking license, whatever. But then we figured out that banking license, especially here in Switzerland, comes at a great cost. You have minimal capital requirements of 10 million, plus you need to employ around 100 people.

You have super high cost to run the bank, right? And this year advanced before you even get, you know, permission to operate. So all of this actually was, you know, not appropriate for our business model. And we decided to try to get regulated as money transmitter or like, you know, payment institution, but something that is actually suitable for custodian. So our goal was actually to be able to operate as a regulated financial institution without

banking license. And exactly that was a problem. because you see, FINMA is a Swiss financial regulatory authority. Back then looked at our business. You can imagine we were basically one of the first Bitcoin businesses they ever heard about, right? And they looked at the custody solution and they said, well, look, guys, you know, if you take it conservatively, then basically you're taking money from investors, you hold it.

So it's kind of like public deposit taking activity, right? So in a very conservative case, you should still get a banking license. We were like, oh, no, like we don't want a banking license. This is too much work, too much capital, and so on and so on. And they said, well, then, you know, look for another solution. So it was kind of like at that end, you know, and that after one year of work on it, you know, all the money spent on lawyers, right, all of the work, you know, venses that they were regularly here.

it was quite frustrating, you know, that there is that end. And why is that, you know, like looking back, I actually understand because, you know, back then, this institution did not have such a broad, you know, understanding of this technology. And of course, what you know and what you hear, that, you know, this is the currency that is used, you know, for drugs, purchases in dark, net, like all of this. bad things, whereas actually Switzerland is, you know, taken way, big step away from this, you know, banking secrecy and from this money laundering, from all those bad things that happened in the past, right? And Switzerland is targeting the position itself as an absolutely clean jurisdiction with the toughest KYC and IML.

And then, you know, for them to make a step into Bitcoin. You can imagine this is, you know, quite, would be quite a change, right? Back then, right? Right. Off brand. Exactly. So, and, you know, actually, I was very disappointed. And, and Francis said, like, so this is it. We live in Switzerland.

Like, this is all waste of the time. And then I had just, I think I was just very lucky. I met some people that, you know, knew some other people and say, told me, well, look, in the Swiss Parliament, there is this group, you know, of parliamentary members that is called digital sustainability, and they kind of like, they promote innovation in, you know, technology in financial services and technology space. You should talk to them. And then I got connected to those, well, parliament members. They invited me to Bern. I went to Bern. Bern is a, you know, formal capital.

of Switzerland. And then I told them, like, look, guys, it's a great company. It's Silicon Valley company. We got 40 million seed funding from top investors, which is basically building this technology to store securely the digital currency, right? And we want to be licensed. And you guys, look, you know, banking secrecy was abandoned 2008. Wealth management, your most important industry in banking is not.

not growing, right? This is kind of like, it's not, you know, the future of financial services. You need innovation. Everybody knows this. Everybody says we need innovation. Blockchain is an innovation. This is the technology, right? And of course, you know, they're all very smart people. So they hear this and they said, well, Olga, we're going to help you. So then one of these people then submitted a motion to the parliament about the changing of the banking law that would change the definition of public deposit so that, you know, storing the private key to cryptocurrency addresses would not fall under category of public deposit taking activity, right? And I thought like, wow, that's great. So parliament is voting about it.

And it's really funny, you know, the parliament actually voted no. to this motion, so they let the motion fall down. They let the motion fall down. But on the other side, you know, all the conversations with FEMA moved forward and they kind of like, they got it, right? They got the message. Like, you know, a lot of people really want this and we should look at it. And there is also, you know, the Finema is guided by a great guy.

Mr. Branson, he's, you know, British citizen. and he is very pro-innovation. And he actually told us, guys, I want to make it happen. Yes, it takes a while, but we will get there. And yeah, so another half a year later, so in total, after one and a half year, they finally allowed us to be regulated and operated and operated out of Switzerland, not as a bank,

but just as a financial intermediary, right? So member of self-regulatory organization, not even supervised by FEMA. And you know, in Switzerland, kind of financial supervision is delegated to some other self-regulatory authorities. So we have become the first financial intermediary, you know, to provide Bitcoin custody. So that was a big news. Yeah. And was that, was the switch kind of, the rationale for the switch sort of predicated? on this idea that, like, what's different is that you're not using the deposits.

You're just sort of storing the bitcoins. Is that what the decision was? Exactly. Yeah. Yes. So there's no interest payment on it. There is no other use. You're not lending it.

We're not pledging it. You're not doing anything with it. Right. Yeah. Yeah. And I feel like did you also help Zapo kind of like, get clients to store their bitcoins in the vault? And if so, what was that like? Well, of course, Laurie, I did. I cannot provide, you know, specific details. But of course,

you know, we were targeting large financial institutions here in Switzerland. And I was responsible for, you know, establishing connection with them, bringing them to this, to other world, showing how the world works. It was pretty amazing. You know, it was basically, you know, ex-military bunker in the middle of the mountain, right, in the Scott Harz Mountain, right? It's massive. It was actually the major Air Force military station that was built during the Cold War and was massive security, could sustain 30 Hiroshima bombs. Like, you know, it's just security you cannot take.

This is kind of like what you see in James Bond movies, right? And I used to bring there all the bankers and their commissions and their internal control and all the people that try to understand is this really safe. And normally they went away with a feeling always super safe, right? And yes, we did it. We attracted some quite big clients here in Switzerland. Those banks that then later issued the first certificates on Bitcoin, right? They did not offer Bitcoin directly to their.

Certificates, yeah, on Bitcoin. Yeah. So, blanking on the news. You know, when people basically buy a note at the bank and the bank holds a Bitcoin. Yeah. Yeah. Exactly. So that was, you know, and I think I was actually very happy several weeks ago.

I heard that Ksapur, well, exactly this business institutional jointly, I guess, was a Swiss entity, was sold to Coinbase. for 50 million. Like to me personally, of course, I'm a shareholder of Xab, right? But for me personally, it was kind of like my first little, you know, exit in a way, right? Right. Yeah. Well, so speaking of kind of, I guess, investments, you mentioned earlier that your early Bitcoin purchases helped you found Smart Valor.

That's how you funded the founding of that company. you know, it's a little bit different from some of the others in the space who took their holdings into investing in ICOs. But so why don't you tell people what it is that Smart Valor does? Yes, so Smart Valor was founded, well, after I left XAPO and basically understood, oh, my goodness, wow, I can pull this off. I could, you know, make the mission impossible, follow. I received this list.

I was like, wow, now let's do something really difficult. let's do security tokens, right? And basically, you know, we founded early 2017 here in Switzerland in Suk, with the vision to build the first ever security token marketplace exchange for alternative investments. With the vision, basically, you know, to give people all around the world an easy access to exclusive investment opportunities that you would otherwise. only get access to your client of UBS and super rich, right? You remember, my background, I worked for UBS, right?

I know that world, right? You reach, you're 5 million plus, there is a red carpet for you, your assets are onboarded in Switzerland, it's super safe, you get all the exclusive offers, you can invest in private equity, your return is 15% plus. And to me, you know, Laura, I remember this life in Ukraine, where if people have bank account, well, this is great, but there is no investment opportunities. There is capital control, right?

You can't do anything without it. They devalue your currency. You can't even change it into dollar. Like, I remember this world, right? And to me, you know, there was such a huge gap between what is there for each people and what there for the rest of us. I said, like, no, we're going to change this. Our mission is to give people access to great investment.

opportunity in stable jurisdiction, you know, where there are people and organizations that are responsible for their money. And that is kind of like what's behind, you know, the vision of creating this company. Well, wait, so one question I have is for security tokens are the same, are there the same limitations on who can trade them? And if so, like, does that really expand access? Yes. So that's that's a very good question. mention, of course, security tokens are securities, and they are traded very differently from currencies. And this is also, you know, a little bit kind of what's behind our staged implementation roadmap.

So yes, we started 2017, and we said, okay, there will be two phases, phase one. We just launch an exchange, right? And this exchange, there are cryptocurrencies and utility tokens. And in the second stage, we will add security tokens. So this is actually what happened. Where do we stand right now? So we launched an exchange in July. We are licensed, as I did with Foxxap, as financial intermediary here in Switzerland.

This time, it didn't take me one in a half year. It took me just three months. And we did it ourselves. No lawyers. I'm very proud of this. And we are also licensed in Liechtenstein as an exchange for currencies. So that's first stage. Now the exchange is running.

It's amazing. I love it. People can buy currently just three cryptocurrencies. This is like the first version, but you can pay with credit card. You can pay via bank wire. We are now adding deposit function. We are adding a lot of other cryptocurrencies next week. Or soon, we are adding the advanced trading view. So it's basically, you know, the same as Krakken or Coinbase.

It's a full-blown cryptocurrency exchange. This is the first stage for us. So we got the tech done, right? And now the second stage is coming with getting licensed for distribution and trading of security tokens. This one we expect early next year, definitely prior to the summer 2020. All right. So we're going to talk more about the smart valor platform in a moment, but first a quick word

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Cracken's focus on security is utterly amazing. Their liquidity is deep and their fee structure is great, with no minimum or hidden fees. They even reward you for trading so you can make more trades for less. If you're a beginner, you will find an easy on-ramp from five Viat currency. and if you're an advanced trader, you'll love their 5x margin and futures trading. To learn more, please go to crackin.com. That's KRAK-E-N dot com. Back to my conversation with Olga Feldmeyer of SmartVeller. So we were just talking about security tokens and about how your platform will

enable the trading of them. What definition are you using? Is it one that was set up by Swiss regulators? Well, you know, Switzerland is actually a great place to be if you're in crypto company and you're in, you know, cryptocurrency business. But, you know, Switzerland is actually not our only jurisdiction. So we are regulated and present in two countries, Switzerland and Liechtenstein. And Liechtenstein is, you know, you get there just in one hour. It's the neighboring country. but Blichtenstein is a part of European Economic Zone, which gives you access to 30 European countries.

So we have in Europe this so-called passporting system. So if you get a license in one country, you can passport it into 30 other European countries. So we are regulated currently in Switzerland, but we are applying in the process of application for so-called MTF, multilateral trading facility, it's kind of equivalent to ATS in the US. We're applying for this one in Liechtenstein. So for us, all the definitions of what are security and how this works are relevant for European Union, right? So in Switzerland, there is a certain definition, and in European Union, there is very much

the same, right? So securities, everything that gives you, you know, a certain income, income stream, and represents, you know, ownership of certain financial product. And what is the demand for trading security tokens, or just any kinds of tokens representing real-world assets? So I think the problem is not so much that there is no demand for security tokens that people don't want to buy it. I think the problem is actually, you know, that we are just in the very early stage, right?

For this space to be successful, you need exchanges, a lot of them, which are easy to access. You need a lot of different assets on those exchanges, right? You need a minimal critical mass, right? And we're not yet there. But just so I understand, like for some of those security tokens that you'll be offering, will anybody be able to trade them, like, across jurisdictions? or like how are you going to implement all the rules around who can trade them? Because I would imagine they would differ for each different token.

Exactly, exactly. So it's different by investment product, right? If you start with asset classes, of course, it's very simple to tokenize gold and sell gold to everybody. Gold is even tokenized. This can be viewed as not a security, right? So that's super simple. It gets more complicated with shares of companies, right? the shares of companies actually there is nothing new it's it's basically IPOs right so IPOs are

you know selling of new shares right and it's the same for STO if it's a new security token offering it needs to you know to satisfy certain criteria the company needs to be able you know to prove that they have revenues that they have audited statements financial statements you know, that this is something that can be offered to public. And if all of those criteria are there, right, so then, yes, you can do IPO and you can offer it to public to retail investors. Whereas, you know, something that is super risky like venture capital funds or private equity funds, they are, of course, subject to certain limitations. This is something that we call, you know, accredited investors. So only people that can, you know, can handle this risk and will not be damaged by this can have access to them.

So basically, smart valor will determine kind of what types of different tokens people can trade and then just limit them based on what their status is. Okay. Sure. Yeah. So it's not even, you know, we will determine this, all of this, you know, we have here in your, so-called MIFID, MIFID 1, and now MIFID 2, this is like a super comprehensive regulatory framework, which is targeted at protecting investors in all the different jurisdictions across the Europe on the same basis. And MIFID is actually regulating which type of investment is suitable for which type of investor.

And we as a platform provider are responsible for offering the right product. to the right people, right? So yes, there will be tokens that anybody can see. So you lock in and even if you're not accredited investor or you don't have experience with, you know, dealing with derivatives or more risky assets, you will see them. For example, it can be real estate, it can be metals,

it can be a public stock of, you know, certain companies that are doing IP on our platform. But for other investments, which are like more risky, you will not see them. For this, for this other part, you will need to be qualified as a credited investor. And SmartValer is actually the first crypto exchange in Switzerland, I believe. Why do you think there hasn't been an exchange thus far? The first fully integrated exchange was custody and trading and brokerage, right? There are some other exchanges, which are just, you know, basically kind of like decentralized, you know, some kind of tax exchanges.

Yes, you can buy, but you cannot store your tokens there. The reason for that is actually that, you know, Phenema is very, very restrictive and tough in how they treat custody and how they want, you know, this custody to operate. So they were very reluctant to enable exchanges here that provide their own custody. And this is for us, actually, also the reason. that we operate from two countries, right? Because our custody solution is actually provided through our subsidiary in Liechtenstein, right? Which is, you know, was a much easier process to register and run it out of the Liechtenstein.

So we're kind of like, you know, we are licensed in both countries and certain parts of our business is provided by different, you know, companies in the holding structure, right? So we found a way how to basically make it work. But I would not say we are the first exchange in Switzerland is the first cryptocurrency exchange operated by Swiss company out of Switzerland. This is our headquarter, but we are regulated in those countries in Switzerland and in Liechtenstein. And SmartValler also uses a Swiss franc based stable coin. Why do you have that? Is there a lot of demand for trading pairs in the Swiss franc?

Yeah, well, yes, so Swiss franc, not a stable coin for now, it's just fiat currency, Swiss franc. And yes, even with this fund, there are no exchanges that offer Swiss franc trading pairs, right? It's funny, and it's a way it is. We wanted last year, we had plans to issue stable coin, and we looked at different implementation options. But basically, you know, we put this for now a little bit on hold in a view of. of, well, negative interest rates, you know. Maybe you have heard recently, even UBS said, they're going to start in November charge all clients minus 1%

for storing for basically deposit, right? So you imagine if you issue that coin, you actually already need to charge people this 1%, right? Because this is the money that you need to pay to central banks to deposit money. So it's actually, you know, we thought that the time is not right yet and the form how we will do it we will do it a little bit later so for now it's just we have four different fiat currencies on our platform euro british pounds with frank

and of course dollar and for the time being this is it we will be looking how we list more stable coins i'm very much interested in Korean one in you know Chinese yen. So stable coins for this currency, they will be hugely valuable. Yeah, Smertfeler decided to make Korea its second home. What do you mean by second home and why did you choose Korea? Well, first of all, you know, we define ourselves as a global platform for global audience of investors. And if you look, you know, like from perspective from here in Switzerland. You know, Switzerland is the largest wealth management center offshore banking

wealth management center globally, right? We have four trillion assets being booked here on the Swiss bank accounts, right? It's actually quite, quite a big amount. And if you look, you know, where the wealth is coming from. So the source countries that are growing are basically in Asia, right? So, of course, it's China. It's different countries that are different in size, but it's always this, you know, need for people to find a safe destination for their savings, right? And we were looking at Asia and thinking, well, where is this, you know, where is the wealth is going to come from on other platform?

Well, you know, it's the same as for wealth management, so it's Hong Kong, it's Indonesia, it's China, but also South Korea. The special thing about South Korea is that South Korea is also one of the biggest countries in cryptocurrencies, right? Around 20% of population, people have some kind of cryptocurrency or token. It's amazing, right? And for us, it was the question, like, where are we going to list of our own currency? Japan is super tough, you know, finance we cannot afford. And then we got in conversation with some people in Korea. And that was a very good option.

You know, they were in terms of compliance at the level where we can, you know, deal with it. So we as a fully compliant financial intermediary in Switzerland, it cannot go to any exchange, you know. So the final choice was put on Bidson for the listing of a loan token. How much would it cost to list on finance? Well, you know what? I don't even know. But I think it was like crazy. Some people were speaking about $1 million,

and then somebody came back with a reference of $400,000. But anyway, it's just, you know, to me personally, this is not the amount of money that I think as a responsible CEO you would put into listing of your token on any exchange. So actually, this is the perfect segue to my next question, was I wanted to ask you, you know, you have this extensive background in finance, as you outlined working for BCG and doing consulting for all these banks. And then you worked at Barclays and UBS. So how would you compare what's happening in the crypto space with traditional financial

markets? Well, I think, you know, if you look back like, let's say, 20 years, you know, there was this time or even 15 years where it was all around online banking and oh my goodness you don't need to go to the bank now you can do it all online and wow what a freedom is that so I think what people are experiencing

now is that you don't even need banks right you can do it all out of your wallet and we're just starting to realize what this means I think we're kind of like in that age right But with the difference, Laura, that it will have much more profound consequences for people's life and for societies, right? I think, you know, what I'm particularly excited about is that, you know, the same way as Bitcoin now established itself as a, you know, digital gold and, you know, you can wire money and there are so many payment options now with cryptocurrencies. you sent, you know, the state cannot anymore say people, well, you know, what we want

your money. So keep it home. You're not allowed to buy abroad, right? So this is, you know, it doesn't hold true anymore. People can send money wherever they want, right? And I think what happened with Bitcoin, the exciting thing, the same will happen with investments, securities, opportunities to invest in other countries. So this whole notion of decentralized exchanges.

and security tokens or any kind of tokens that represent some kind of value or participation, this is amazing, right? It's kind of like, you know, it doesn't matter if governments want it or no, there is regulation or there is no regulation. It will just happen, right? There is no way to stop this. That's kind of what I was asking you before. I mean, if the security token still carries the same restrictions with it, then how does it

kind of democratize access? I don't understand that part. Yeah, so look, I think you see it's just a huge, huge space, right? And the space of, you know, security tokens, it will have different niches, right? So we have a smart value or we are targeting this regulated, compliant, you know, being in exchange, right, in accordance with all the laws, you know, here in Europe. So this is kind of like other niche, right? But there will be other players, you know, that are completely out of the world. of nowhere. Nobody knows who run them. Nobody knows where those people are. It's decentralized exchanges,

right? I send you, Apple share, you send it back to me, and there is no way any government can stop it, right? And for people who has appetite for that, it's, look, it's like, you know, some people go to Binance, some people go to only Coinbase, some people go to some, like, super shady exchanges, right? And, you know, to some investors, it doesn't matter. To some investors, it doesn't matter, right? So there will be also with insecurity tokens, there will be their segments, right? And, you know, in countries like, there will be certainly some countries where we will not be able to offer our services officially, right? And there will be other platforms that will serve those countries, right? I'm speaking about Iran, sanctioned countries like, you know, countries with very tough security regulations.

There are all those cases, and that business will go to other platforms. Look what Abra is doing, right? They're basically replicating, you know, stocks, right? So equity in public companies and anybody can access it from so many countries, right? I love it. It's a great vision. Is it our business, no. Our business is this regulated space, right?

But even within that space, you know, even if it's security, Laura, you know, there are big, big opportunities for innovation in this. space. I'll give you an example of what I'm talking about. So if you think about actually this multilateral trading facility. So what is this? It's basically, you know, self-regulatory trading venue for securities. It was created around 10 years ago. It's relatively new license. And why? Because, you know, before that, all the exchanges, they were all local. So there is a French exchange, there is a London exchange. There's German, Deutsche, and they all pull their national securities.

So they are all very small markets, only German, only French. And the idea was to create this, you know, pan-European market. So for this, MTF was created that, you know, any shares of any companies issued in any European, 30 European countries can be traded on those exchanges. And you know what happened? Yes, then those new platform trading venues came to. to life and they become bigger than national exchanges, right? So this is great, right?

We're going to just take this regulation and apply this for, you know, shares of the companies securitized on the blockchain. Will it be better? I believe it will be much, much better. Better liquidity, cheaper infrastructure, you know, simpler handling of clearing and settlement, right? So all of those exchanges, this is one part, technical. But the other part is that there is also amazing new space of new investment opportunities.

I'm super excited about the whole passion investment space, right? Films, music, art, you know, all the stuff that was never securitized, right? Now we have a chance to tokenize it, securitize it, and sell it into fractional ownership to a lot of people and make it even tradable. It doesn't have to be tradable every day. there can be auctions, there can be weekly tree. There's so many options, you know, to do that. But for something like that, like with a physical item, like an artwork, or, oh, do you mean like a digital artwork? Because otherwise, yeah.

Well, but then who would take possession? So let's say we have fractional ownership of the Mona Lisa. I'm just making this up. Then who keeps possession of it? Museum. It's in the same place. But you just, you can own it, like one million's of it. you can give it to your daughter as a present.

And of course there will be certain value increase over time with Mona Lisa if you want it. But imagine Laura, for the first time you would be able to hold a super diversified portfolio of super different assets, even if you have just 10,000. It's not possible today. If you come to me like five years ago at UBS, I would tell you, well, bring five million. Otherwise, we're not talking about diversification. It's not possible, right? because stakes are so high. You want private equity, well, for a good one, please bring at least half a million, right?

So all of this, you know, like for average people, the access and diversification is very limited. And this is what organization is changing. You can have anything in a very small fractional ownership, and it's not so expensive. We can tokenize much cheaper than securitization is possible today. And yet another area that I'm super excited about is, you know, what is share? What do you sell? Like, is the share, it's this ordinary share that we know? And then on the other side, there is a utility token and payment token, or there is a mixture.

Or we will see the new definition of share. Like, you probably heard about this exchange. I guess it's even with you guys in U.S. I annex or something, right? The issue in the tokens, that is kind of security, it has the features of finance tokens. So it's kind of like you can pay their fees with a token, but it also pays dividends. Like, what is this? It's absolutely new instrument. And yeah, we need a trade in venues for those new instruments, right?

Do you agree? Yeah. Yeah, no, I do agree that there's kind of new financial instruments, as you said. that are being created that don't have pre-existing correlates. One other thing I want to ask you about was, so why do you think, I mean, obviously you explained your pitch to Switzerland about how this was kind of the wave of the future and this was the new technology. But do you have any other theories about why Switzerland has been so open to the crypto industry?

Well, I think those are historic reasons, right? So basically, if you look back 100 years, so during the first, second World War, because Switzerland was always a neutral, politically neutral countries, you know, not being involved in armed conflicts and wars. So all the wealth came here, you know, for safety. And even after the Second World War, you know, this country saw an incredible increase in assets pulling into this country as a safe haven, right? And then basically what happened in 2008, you know, that US crackdown on UBS and, you know, basically asking UBS to reveal all U.S. customers data and that was actually against the banking secrecy, which was part of banking law for 200 years, right? So, you know, it was a very dramatic development here in this country. they had to abandon banking secrecy. And with that, you know, the core business wealth management,

I mean, there is no growth, right? Like the gross is in Asia, here we have like 2, 3%. And the question is like, well, that was a competitive advantage, you know, this banking secrecy, this safety. And if this goes away, what is going to substitute this competitive advantage? And I think it's very obvious answer to that, Yes, it's technology. We want to establish ourselves as a, you know,

place where innovative businesses and financial services, new market, capital market infrastructure is being built. Of course, that's the only, you know, source of growth in this industry, right? Does it make sense? Yeah. And one thing that interests me is so far, a lot of people say that ZUG has been the center of all these different crypto companies and foundations.

And I mean, we see, you know, just where the foundations are based and stuff. But obviously now we have the Libra Association, which will be based in Geneva. It's a little bit far from Zoug and seems to be culturally different because Zoug is German speaking, Geneva's French speaking. You know, I'm not Swiss. I have no idea how much that stuff matters. But I just wondered, like, do you think that that means that Libra will have kind of like a different experience? Or will that have any kind of effect on the development of crypto going forward or in the

development of Libra since they're going to be kind of separated away from where Crypto Valley has historically been? I think that doesn't matter. You know, the country is so small. You get on the train and in three hours here in Geneva, right? It's everything is very small here. And, you know, Geneva has an advantage. It's been always a place for non-governmental organization, you know, for UNESCO, World Trade

Organization, all those guys are there, right? So if you want to position this project as a, you know, this global, so supranational entities, then Geneva is absolutely the right place to be. In terms of regulation, it's still FINMA. It doesn't matter, right? So they are working with FINMA. Facebook reached out to them in terms of applications. It was actually just yesterday that FINMA released the guidelines about stable coins, right?

and they dedicate the whole page to to kind of Libra the stable coin of Facebook So that's great I think it's amazing I think it's amazing It's absolutely the right place to do it Not just being a little bit

Fuzzy away from US But also you know because Switzerland still has Very solid privacy Data Protection rules which data is shared with Schum and so on and I think a lot of people will feel much better about Libra knowing that it's not it's not US supervised

or at least feelings it in that way I don't know I I cannot say how much it will be possible to move away from US supervision and from Big Brother watching all your transactions I cannot speculate about this one but I think it's a very good at least try to get away.

But one thing that was interesting was so obviously Finma did release this guidance on the stable coins and address Libra. But then the very next day, France said it was going to block Libra. So do you have a take on why that is and how, you know, why they're not kind of sort of waiting to see how things play out? Well, I think it's, you know, this is the biggest difficulty with Facebook project. you know, that there are a lot of politics, right? So this can be almost like, you know, political move.

Like, does France want to be closer to regulation and with regulators, say, in the US, like in distance itself from the whole Swiss crypto? Like, you know, there are so many things like, you know, under the water that we don't even perceive, right? But I don't think this matters, you know? Like, even look at it. It's almost the same as with Bitcoin, right? How does it matter that Chinese ban it or one country bans it?

I think the vision is so big, you know, and with those 2.5 billion on like this crazy number of what they have in users, right? And actually, people need it. People need it. People want to transact an easy, you know, efficient way outside of the banking system, right? And I think Libre is going to be super success. It's just, it will take time, right? It will take time them also to get here through the Swiss regulation, right?

But the vision is big. The users is there. The funding is there. You know, if you made it with Xapa, it was 40 million being funded, you know, with that. And also being super new. And everybody said, no, this is not going to happen. Facebook is going to make it anyway. I'm actually quite positive on this one.

Okay, well, we'll leave it on a positive note. Thanks so much for coming on the show. Where can people learn more about you and smart valor? Well, on our website, it's smartvailer.com. So smart is in smart, and valer is actually, in Switzerland, is a name for securities, right? So smartvailer.com. join our crypto exchange today and you will be the first one to get access to exciting opportunities in the space of security tokens. Great. Okay. Well, thanks so much for coming on Unchained. You're

welcome, Laura. It was nice to talk to you. Thank you so much. Thanks so much for joining us today. To learn more about Olga and SmartVellor, check out the show notes inside your podcast player. If you're not yet subscribed to my other podcast to Unconfirmed, which is shorter and a bit newsier, be sure to check that out. Also, find out what I think are the top crypto-striker. each week by sending it for my email newsletter at unchainedpodcast.com. Unchained is produced by me, Laura Shin, with help from factual recording, Anthony Yoon, Daniel Ness, Rich Stroffelino, and Josh Durham. Thanks for listening.