John Palmer Interview - Cboe Digital's Crypto Platform, FTX Collapse, Crypto Winter & Regulations - Transcripts

December 01, 2022

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John Palmer is the president of Cboe Digital. In this interview we discuss Cboe Digital's crypto platform and services. We also touch on institutional adoption of crypto, FTX collapse and impact on the industry, how long crypto winter will last, US...

Transcript

this content is brought to you by poll which is a great platform that makes crypto investing easy you can buy sell trade and earn crypto currencies and I pulled the up Tempelsman users over two hundred plus crypto currencies and they're available in a hundred and fifty countries I personally use this platform since twenty seventeen to one of my go to exchanges we also offer equities and precious metals that you can invest in if you'd like to learn more about a poll please visit the link in the description welcome back to the thinking crypto podcast your home for cryptocurrency news and interviews with me today is John Palmer who's the president of CBOE digital John great to have gonna show

great to be here talking thanks for having me

John I'm excited to speak with you because CBOE has such a strong brand and legacy in the financial markets and now you're dabbling in crypto so lots of questions for you and lots of talk about what the market would have T. acts and much more let's start with your background where you from where you grow up

yeah absolutely so are crucially from Ohio actually grew up in kind of farmland northeast Ohio a small town and move to to new York about fifteen years ago to get into financial markets after into my education and a couple undergraduate degrees and and jobs and and slowly found my way into the the exchange community and super

and you were at CBOE for a good amount of time and then you laugh and you came back and now you're president of C. C. Bo digital can tell us about that

yeah hundred percent I guess they could call me a a boomerang employee maybe is the right term but yeah so I I joined she both for the bass acquisition and in two thousand sixteen spent a lot of time working through the technology migration out of that the CBOE exchanges the futures and options exchanges onto what was referred to as the best technology at the time and then after that I moved into more of a business facing role in the U. S. list options side of of the business did that for about three and a half years give or take and then and then are cooked a kind of caught my eye the market structure starting to evolve certainly growing a lot of folks migrating treating repellent and I looked at it and said you know I've I've learned a tremendous amount of our continent things over my time building service based exchanges here in the US you know there's there's still a lot of maturity that I think that the crypto exchange markets landscape can can bring in and value to customers and you know one of the things that I've learned that I can do I can join the crypto racks article two native ranks maybe and and helped drive the industry you know as it continues to grow and mature yes I took a took a shot and jumped on the crypto worked worked on an international platform for just shy of a year running product strategy globally for them and and that included working with institutions and retail retail traders building applications building energy market places you know kind of all the things that are that are the hot topics amongst the amongst the the the retail Kryptonians are folks and then as you mentioned sepal acquired her sex that deal closed in may of this year and and we recently rebranded to see what digital in October but before that an opportunity presented itself for me to come back to CBOE hand in hand but due to the crypto thing that I have been doing for for the past year so it was a really great opportunity and I was really excited to say you know this this fits the mold for me really well and I love my love my time at CBOE and I love what people trust is doing and traditional markets so I can I can now come back and do the same thing but in crypto and that seemed really exciting to you so here I am

sure so on the note of you know when you first discovered crypto what what was that what was your first encounter you know everyone has a different story sometimes Hey I saw it on a forum where someone told me about a friend told me about it and what was like your aha moment like okay I get it it's not a fad it's not you know some random magic money but technology and blockchain and crypto and so forth

yeah I would I would say it was some are probably a little bit before two thousand and sixteen so as as the to cut the landscape really started developing you know I saw the same way the technology piece and I think it was just through kind of osmosis right you see in the news folks are talking about are you yes and and so you you do your own little taking and and for me it was it was the technology and the applications to modern financial markets you know I've spent my career in equities and equity derivatives and index derivatives and you know what what are things that are at our center in a crypto call it distributed ledger technology or blockchains and and how can those be leveraged maybe and and he's in a very robust resilient markets but you know how can we use that technology to make them better and so that was that was a really interested me to start and then why was that she was working on the business strategy sired arm for the futures exchange CFE okay that that we have and we were the ones to launch the first recording contract back in two thousand seventeen and so I was actually part of that initiative to bring out to the market so I was you know probably my first real foray into business even though at the time I probably didn't consider it when I when I do a retrospect Mike well I actually was in crypto lot earlier than I was really into crypto and then from there post that you know my my interest in it just kind of grew an inch so again through my own personal time or you know read about it and learned you know learned about as much as I could as the tide of presented itself until I made the jump you know into the deep end and so than that that's really where all the learning really started to happen what you're what you're doing it every day as part of your job you're kind of committed to picking it up pretty quickly if you can

so the CBOE brand and of course exchanges and the services you offer been around for a long time well established brand well known in the equities markets you know what was like the catalyst for them to say you know what we we do like this new asset class which is crypto and we want to build something that supports it that kind of what you you know alluded to in and some of the work you did there you know what was that catalyst and and I know this may be a difficult question to answer because it may be involved multiple folks but you know maybe what's the vision for CBOE and and crypto

yes Sir you know first the you know you mentioned CBOE we were our global multi asset exchange operator and so that that has been something that the company has grown into over you know called the last five five five years post acquisition of bats you know people Europe and now through cheaper Japan to Australia and then you know into different asset classes with purchase of hot spot that she bought a fax today and and then now and the digital with with Paris accident the CBOE digital acquisition and so from a simple one brawl perspective you know we want operate competitive trustworthy reliable markets in asset classes broadly so you know when you look at the global financial system and you look at all the different asset classes that are out there if there's an opportunity for us to compete and offer innovations from a technology standpoint compete on you know price and and drive value to the end investors and customers and you know we want to do that and so you know we can we can set up probably cross any asset class I want I wouldn't say cooked as any different you know so in the civil lines getting into digital especially as it starts to mature in my mind to slam dunk because we're already you know operating very regulatory mindset type markets globally and you know we believe that's the that's the value in the way to really unlock further growth in digital and the reason why I say that is is because you really want instill confidence in you really you really want all market participants to have the same experience that they're used to having a lot of the other asset classes that they operate in ten today and so when we look at saying Hey we want to operate in digital assets research let's do the same way we're doing it and all the other asset classes so that's the genesis of it really

yeah that that actually makes sense and I guess my next question is going to be because it's just so timely with the collapse of F. T. acts and we see are in within the crypto industry specifically there are some missing regulations and guardrails in place there are some so does does this collapse would have T. acts really hope sure in more of the traditional financial folks like yourself to come in and grab market share and bring to your point that pedigree of regulation and accountability and transparency and things like that

what no I think we we certainly can say that we're seeing a call to action from you know not only lawmakers and regulators but also industry participants for us to to figure out you know what the next path where there are the the next steps are in the industry right so you mentioned you know the the regulatory clarity I think it's something that a lot of folks are asking for you know you could get down to the the end result of you know a lot a lot a lot of people say we need to define you know what is a security versus what a commodity as you know that that's probably something that will ultimately solve at some point in time but I don't necessarily think that we need to solve today I think you know to original point I think providing a framework guardrails a box whatever you wanna call it but allows participants to operate and what I mean by operators you know either operate exchanged operator Pressburger division or or offer services to their customers in a way that they they can get comfortable with that they know that they can do without any sort of you know enforcement or any sort of legal action that you know it's going to take take you know take place you know regarding our services is is really important and I think what that does is it unlocks a tremendous amount of opportunity for tremendous amount of firm specifically in the US that want to do that but maybe are unsure of how they do how they get from point a to point B. because there is no kind of Mary that provides a not and so you know when we think about super digital

you know word word

we look at it the same way as you know we want to operate in exchange and clearing house in digital provide us with

you know

guard rails that allow us to do it across your tokens and and we want to do that and we want to do it in the same way that we operate all the other markets and all the other asset classes that that trustworthy transparent regulatory first kind of offering a mindset

so I John I've been talking about this and I don't know if you agree with me but it seems that this affects collapse it's kind of gonna open the door for institutions such as yourself to come in and have a bigger presence in the market and it's kind of like okay the kids have their fun but the adults are here

D.

do you feel there is a sense of some some sense of that and and I may be off base here but just for my own personal views

you know I think it's it's it's certainly one way to think about it you know I might need to put it in a different lands and in the sense that you know crypto is has grown so quickly we've seen the industry go through when you called in maybe market cycles you had a case that this is much more accelerated than what it seems types of cycles we've seen you know in in some of the more traditional financial markets you know part of that may be paired with maybe some of the you know regulatory uncertainty and and you have to think this kind of started in in a in a and R. and currency kind of world and affects almost kind of world can you have you know regulatory authorities that maybe don't have the same exposure or experience in in a full kind of equities or equity options or commodities based market place you know learning and growing just as much as retail institutions are learning and growing with courtesy of all these you know the entire world is really you know trying to keep up with the pace of crypto and so what we've seen as we've seen platforms income platforms kind of fill the gaps of services being offered to customers you say Hey I need to grow I need to go get a million customers how do I do that I'm an exchange okay well I need to I need to develop an app I need to start being a retail broker dealer any WTA and I see I need to be an intermediary and he'd be a prime broker you know whatever other services I might need to because the traditional players that offer those services and all the other assets I haven't got there yet right doctor companies they have huge road maps there are looking at it

but

maybe they're a little bit slower to move and so we've seen that happen at significant pace in the entire global picture for crypto and so I think it's put pressure on the industry right and and so you you have this kind of you know centralization of all the services that are typically separated and and separated with oversight for purpose being centralized accounting is added a tremendous amount of systematic rest are naturally to the to the system and and so the use you start to see some of the things that we've seen over the last six to eight months happened in you know these are cooked a specific things that we see them and we see them at you know in the history of financial markets time and time again the key is is is you know where we go from here what we learned you know how do we do it better you know so from my perspective I I I you know one operate the same way we operate in inequities and and options as an example and and I think we're starting to see it see what did you know that that folks are are you know getting back in and that there's value to that and so we're really excited about the next steps in the pathway you know even though those are you know coming off the back of you know really unfortunate kind of industry events sure

I'm so sick about the CBOE digital services that you offer can you tell us about the different services and products and solutions and is it mainly for institutions or also retail

yes so you know we offer a spot and derivatives platform to to trade crypto products are small platform we we have fifty one states and territories in terms of the MSP them empty L. type of licensing on to be able to to service customers really across the US and then order it is offering is is regulated by the CFTC so we operate and exchange and clearing house under under under their oversight and so we our model is it an intermediary focused model so we want to work with the retail broker dealers yes yeah the intermediary psyche that customers are accustomed to working with today having said that we we do support directly on boarding with retail customers to stay like that her country to cheaper digital we built that capability and and part of the reason was to do that was to to help prime the pump so to say as as we wait for some of the other larger intermediary partners to to get into the space but you know ideally we you know we want to service our intermediaries they're the experts that the services they provide and and we want to leverage their expertise and let them know the customer and and and you know let us be experts are running exchange and and then on the driver's front we offer the queen in ether based futures trading those features are fully funded and and then the US framework that doesn't provide any coverage and typically people used to evidence for you know especially when it comes to speculation for the purposes of leverage and so we're actually working with the CFTC right now to have approval or to gain approval to offer margin based futures trading in both the quantity for and and we were working with this year and and we believe we're in the final stages and and hopefully sometime next year hopefully early next year we'll be able to bring the laptop products such as the market as well so we're really excited about that

and you know I I remember you mentioned earlier before that up we are still waiting for open like the SEC to declare what is a security what's not theirs thousands of other coins out there but even in the top fifty there's not cloudy outside a big one Easter and some assuming like many other companies you're in a holding pattern until we get that clarity right to add more tokens

yeah we have a a very pragmatic and and I was a conservative approach to how we list tokens to trade on the platform and and as you just alluded to we we listed the coin any term we also list the current cash light goin and then U. S. T. C. but but those are the five so there's a there's a good chunk of the top ten the top fifty that that we currently don't last that you know we do hear demand from institutional investors and intermediaries in the market to say you know I want to trade our daughters along out of all the later ones a lot of the other top your C. twenty based tokens and we want to be able to offer them access to that

on our platform

but I think your point that the card reels I think are really important for us to be able to do that so so we're looking forward to working with the industry and and you know the the lawmakers and regulators on you know on that process as it has become a March forward together as an industry

any plans to throw your hat in the ring for a big one spot ETF it seems everyone's trying to get that the SEC has not approve one yet but just curious given you know an institution of your caliber has the history and and a lot of the regulation a traditional financial regulations in place

so I think what we want to make sure that we do is we want to make sure that we offer the services on the platform that allow participants that we want to offer those ETFs to have you know really the same type of financial systems available that for them to use to be able to turn to present that to that you know to the SEC in this example to say Hey you know we want to do this each up and this is how we're gonna do it and these are the partners for using at you know super digital potential could be one of those in terms of you know the exchange and the services that we provide you know so so again I think you're going back to the platform based approach you know we were were very cautious and and you know we want to remain focused on you know what our mission is and and and that's exchanging clearing but also heavily working with industry partners took to grow the ecosystem so if and where we can work with you know custodians asset managers are participants you know that I want to create a spotty TF were happy to service them in a way that we would service any customer but we believe that our you know our platform our model is just the type that that's where you want to to to trade and Andalusia custody so so we're hopeful that you know we can we can continue servicing those customers as as they drive

sure I'm on a note of custody obviously that is a big and relevant item for many exchanges and platforms and end users are now you know more hyper aware I think just because of what happened with Celsius wager and and as well as I. F. T. acts so can you tell us a bit about how you're cussing the crypt you are using an external custodian hot and cold wallets and and how that's set up

yes we actually use deco as our custom providers so we don't consider ourselves and and because a qualified custodian so you know they're they're they've been a fantastic partners of ours as well as we thought our platform and and so the important part for us again is to you know maintain that independence and that separation of duty we feel that that that has a lot of value to the customer you know we do work exclusively we work with beko you know our technologies is agnostic in terms of custody in providers so as we see you know the cost the crowd in the world you know there's there's opportunity for us to to offer additional custodian providers in the future as we grow based on demand but it but that's that's something that you know from our perspective it is not and you know necessary our our purview and and then you know every every custody and offers services a little bit different you talk about hot versus cold wallets so we you know we have both you know traditional cold is is very difficult to do and very difficult to do well and and very difficult access which is the entire intent about it and so we leverage that as much as we can we want our customer assets to be safe you know and so as we think about expansion of capacity in the future you know those are the types of things that we look at you know in in in terms of the custodians that we want to use it and I would expect those will be the types of things that matter as we get you know regulatory clarity and and an additional you know participants enter the space enter the custodian space rental a point to you know you have a great job thank you your call in a very large traditional custodian getting into the digital costly space and I'm sure they'll be more to come as the as the months and years kind of turned through

a question just came to mind because I remember following Eris acts which of course you guys acquired ND were partnered with TD Ameritrade a member TD Ameritrade had a page on our website talking about how clearing all these things are done to where every sex is that relationship still there are you guys are connected to TD Ameritrade or any other major partners you can highlight

sure absolutely and and that that's a that's a fantastic segue I think you know one of things we just announced yesterday evening there if they have press releases that the closure of our equity syndication process which is brought together fourteen industry partners as equity participants and and minority shareholders within cheaper digital and so you know there's no I won't go through the full last but it's a really fantastic cross section of industry participants that are you know maybe some folks would consider traditional finance type firms and and then obviously crypto native type terms in there as well but it also stands from intermediaries and retail broker dealers to to market makers in proprietary trading shops and you know about the purpose of this is is to to really help to provisional mission in terms of growing our regulatory first transparent and trustworthy market into July sets and I think the you know another part piece of this is you know in the light of significant industry events is still shows the convictions that very major players in the industry

have

in the future of digital

you know with this partnership with time so

you know

there's a there's there's firms and they're like Robin Hood there's there's farms and their like for it to be two C. two to name a few I want to let

you know is that there

it's

it's a fantastic group of firms

back

to your point I think

you know will continue to work with as they build out their services and and products for their customers and

and

and we service centers in exchange and clearing house

you know from your perspective as someone who's been in the financial services market for a very long time I'll be see CBOE once again just very well established and if this is a hard question but I I'm I'm just so curious you know from your perspective where do you see this asset class as market in maybe five years and another sorry price predictions but you know as far as growth in adoption and things like that do you see any commonalities with your past the traditional equities markets even though that's been around for a

longer time yeah I don't have any numbers in front of me in order and I wish I did because I am a big fan of using you know the quantitative side of the fence to kind of help Peter drive some decisions you know but if you think about the assets under management and or or you know the the type of numbers that churn through some of the modern financial markets like equities or equity derivatives you know once that that I think wrong brings out to me I I don't know what the last you know weaker so shown but in the international or in the global derivatives world for bitcoin and ether trading you know roughly eighty billion dollars a day maybe twenty four hour period before the FTX collapsing when I think about what that notional number means and comparing it to modern financial markets has a comparable to maybe the size of the S. P. ax options complex on the tree to TiVo and so you know that there's only a small amount about the treats in the US you know kind of kind of arena you know if we look at your Coinbase offers or or what but Drax offers or or what see me offers you know were were in the single billion digits or below you know so there's there's clearly a huge opportunity for US investors institutional retail buster to gain access to a printer evidence and even gain access to the spot and I think also when I think about numbers you know if only one or two percent of all asset managers in the US wanted to get into crypto for diversification reasons or or what have you there's a tremendous amount of money that would flow into the industry that currently isn't there and I think those numbers would would likely dwarf what we're seeing trait even in the global arena today and so I you know I don't necessarily look at it is you know let's let's start up exchanging grab market share from someone it's more of a startup in exchange let's grow the pie because I think if we do it the right way the pie will grow the pie will grow significantly and you know we're not really gonna be fighting over market share per se for the next couple years it's going to be more you know there there's so much growth and so much opportunity but you know what just continue trying to offer the services the right way to to customers as they as they get more involved in the space

yeah and I think you know a lot of folks are waiting to to have you know the the the relatives access because I think look at it there's a lot of people I know who use VPNs and and they go to exchanges offshore which no that should be happening in the United States you know they should should be trading as his but hopefully to regulators can get it right

yeah I mean I would never tell anyone to do that clearly there's there's reasons why you're you're not supposed to be I want to come on board with those platforms you know so clearly they're taking risk you know in terms of doing that but you know our goal is to hopefully you know bring those types of products and it to a US based platform you know that they can have confidence in trading and so that we don't have to use a VPN and and they can use you know you know whatever whatever broker dealer account they have today whether it's you know the Dolly or or you know cheater Robin Hood or interactive brokers or change the trainer you know are we able to you know whatever it is that taxes crypto

you know where

and so that's that's really I think exciting your gross this one I mean I'm only looking at my U. S. lance over the next you know hopefully twelve to twenty four months sure

I'm so on that note you know what's on the roadmap for twenty twenty three I know some things may be under wraps and DA's and so forth but any hints as to what we can potentially expect

yeah I mean first and foremost is is the market based users that we you know we talk about I think that is kind of our entry point into into derivatives offering for for you us our customers you know beyond that we'll look at other styles of derivative trading clearly there's there's very popular products internationally and so will look to see whether or not there's an opportunity for us to offer similar products or similar types of exposure to customers in the U. S. options is is a is a fair play you know that there's some platforms offer options today will you know will will likely look at that and say Hey can we compete there doesn't make sense for us all offer options and then I think as you as as I alluded to earlier it's it's you know we want to remove as much friction to to customers trading in the crypto ecosystem as much as possible one of the biggest pieces of friction is in operational efficiency and capital efficiencies and so where we can leverage our clearing house to provide services and and other sorts of offsets or collateral

type

type services that enhance those or bring efficiencies there for broke both on the operational side in the in the capital side I think are really important so example today our our current house offers you know takes in UST collateral you know we want to expand that to treasuries which is a pretty pretty normal S. of action for any clearing house based intruders under the CFTC in the U. S. and then and then beyond that it's what other types of collateral can we bring in that is going to drive efficiencies R. Popper stopper spot driven S. as we grow that pie if I ever have a customer's treating across those assets what can we do to provide them more efficiencies according back point with us and you want to trade relatives you know can't can you can you get some efficiencies there which which at the end of the day especially when you think about on a liquidity provider you know risk is risk is what they're showing on the screen and they want to get as much return on their capital wherever they have that posted as possible and so we're able to do this right all that age is deeper and tighter markets better price discovery which ultimately just benefits the end customer at the end of the day so you know we're we're really excited long list of things I want lots to do about really excited about what we have troubles

I'm I'm curious you know us outside of just crypto assets there's a lot of

the

tokenization happenings of tokenization of commodities and things like that real estate securities will be tokenized as well stocks all that and you have you know just twenty four seven trading market as global RT plans to you know expand eventually too things like that including and have teas and and and so forth

so I think you know what work will definitely take up very interested approach you know when it comes to it clearly you know we we have a market we have a clearing house especially when it comes to trim it is under the CFTC's aware there's ways for us to expand that outside of crypto you know those those are things that that we may look at you know what I would call that running maybe right now we're walking we need to walk when you don't when you did maybe we maybe need to jog a little that and that at some point we'll be able to get to run you know so if there's opportunities for us to to treat all other non crypto style derivatives reading clear other launched non crypto standardizes the things you know about that will look at you know when the time is right but but I think right now you know it's easy to say that I think our focus is is right now just on crypto currencies F. teases you mentioned that they provide a completely separate challenge in the sense of a a centralized market place given the non fungibility of the armistice is is defined little bit trickier for a lot of different reasons but you know we speci platforms out there that that that are servicing the market and and you know what will leave no stone unturned but but right now I think crypto currencies our focus

so let's talk about the crypto markets certainly were in a bear market now script a winter but it's all market cycles right we've had bull markets and bear markets and you layer on top of that the fed is fighting inflation raising rates so it's pretty painful out there you know I I know these questions are hard and you could be subjective but you know when you think crypto winter may and then maybe see spring do you think it's like twenty twenty three

I think you have to define you know the winter in the spring and I think it it depends on what land you're looking out at me clearly if you're looking at a terrific price lands were wearing a winter I'm certainly not gonna make any sort of educated guess on on where the price is going because if I if I was good at that I probably wouldn't be doing I would be sitting here talking to you about running an exchange of private training so I you know I'm not gonna make any attempts there you know that the ones that I I like to look at it there is just you know how much interest are we seeing in intraspecific again the institutional side of the community and that and I think what we're seeing there is growth so I I don't even want to say we I don't know if we've ever been in a winter you know maybe there is a small time but I think in general what we're seeing is just constant growth in terms of institutions that are interested in getting a crypto and I would say more than just insurance if not just a Hey who are you tell me what you do okay that's great you know we'll talk in a year but they're a lot more of we want to invest or we have a funder we're doing mass we love to use your platform which you know so that's it's more real interest and so with that I think you know we're already in that spring it's just you know price you know the the the the pressure on price certainly makes market volumes look small because everything is is measured notionally as an example but if you measured in terms of volume or shares or contracts like a lot of the other places near measure their volumes service specifically water water CBOE's platforms you know you it's it's very possible you might see the growth you know there might be more trading happening which is the trading of each of those contracts as is for a smaller amount so it all depends I think on how you look at the data our principal digital's perspective on that note you know we're seeing a alarm a lot of growth growth both on the notional volume traded level but then also on the contracts and the manager is a person on the platform so I think that that speaks to the again the point of the conviction we're seeing from our our partners and industry players and then also that that interest or not increasing increasing interest from institutional community

now it is a lot to go we touch a bit on it but F. T. X. earlier but you know I would love to get your thoughts on the impact this has on the industry do you think it set us back a little bit we take a couple steps backwards I love to get your thoughts on you know what took what took place there

yeah I think come it depends on what party maybe you're you're looking at when it when you when you think about whether we take a step back or not and so you know for a specifically look at retail and retail adoption of crypto retail belief and centralized exchanges or were holding back corner the value at that distance clearly angst and concern anxiety on flight to safety your bank crimes people are calling on you know so I think that's certainly you know unfortunately stepped back in and so confidence needs to be reinstalled with those investors in order to bring them back some of them lost some money some of them lost a lot of money whatever might have been whether it's either within F. T. acts or just part of what we've seen in terms of price movement since the you know since the top near seventy thousand so we need to reinstall that confidence and that's gonna take time that's not just something that's gonna happen today or tomorrow part of that is going to be them scene change and understanding why the change is good and then also down having a better experience the next time they come back and so that's it's hard to put a timeline on that but I I but I definitely think it's it's up to your point I think a few steps forward a few steps back and and I think in general will continue to push but but certainly a little bit backwards from the institutional side I think I'll go back to you know my point on the crypto spring I I don't know if it's necessarily a step backwards for institutions you know they're certainly institutions I have exposure and that and that you know that that are dealing with what we see in the last six or eight months you know but a lot of them tend to be very sophisticated in nature are you know if if they're in the US and they stood up offshore entities to build access this market they don so understanding what the risks are and and and and hopefully he'll have you know very prudent risk management policies in place so they you know maybe limited character exposure risk but but I I still think even in the midst of back D. interest outweighs the PO box I think net net it's still really growing but I think and then if you look at it from a regulatory lands that there's there's clearly yes this call to action this need for press to figure this out and I don't say that it's any one person's job it's it's it's not just the regulator's job it's not just the lawmakers job it's not just the participants job it's also as an industry we have to work together and we have to we have to do this because at the end of the day it's going to benefit those institutional customers is going to benefit those retail customers is gonna help them see that confidence and move forward so you think it's gonna be a little bit of a step back from a regulatory perspective because there's going to be a lot of questions there's gonna be more oversight there's just going to be more concerned and a lot more eyes on anyone that's operating in the crypto landscape but ultimately I think it's gonna prove to be better because I think we accident and and a much more structured much more you know maybe mature market position when it when it comes to rules rags oversight disclosures things like that better again I think I can instill confidence in the end users

yeah absolutely and I think we got the silver lining to your point after this collapse we saw a lot of exchanges rush to put out proved reserves and Merkle tree audits and all that and to highlight Hey

we're

our books are in order and it's almost like well why wasn't this out there before why wasn't the standard there before but you know you live and you learn but eight to your point it's it raise the threshold of transparency and and what maybe folks would want to expect or to see for from from exchanges

one hundred percent I think we'll see that grow I think we're you know it every platform is different every exchanges different customers in certain regions of the world or or based on their exposure might have different needs or wants or desires and so as we as we all collectively come out of you know call it you know what's what's happened over the you know over this last year it's what else can we provide to customers and help the rights we have to listen we have to understand what you know what their concerns are that we have to figure out how to develop that your preferred reserves is a perfect example of our country nothing could be more you know I think can occur for research is just a snapshot shows one view in terms of balance sheets you know are publicly traded companies such as CBOE we have third third party audits you know and and we have to disclose more financial so there's you know there's different ways to approach it depending on who you know what company you are and and and and where maybe your structure and based out of but but ultimately I just see that that transparency I think is going to grow and it's only gonna provide benefits

do you think it makes sense to have you alluded to it before it it's not just the regulators not just the lawmakers but we as industry also have to do some policing and raise our standards you think it makes sense to have some sort of association where you have these exchanges and we sell police a little bit like as a representative from on binance and Coinbase and whatever it is and someone from CBOE and it where Purcell policing and this way it's not the regulators coming down with a heavy hand saying you guys know what you're doing and you know this is what we have to do but we can collaborate better with the regulators

yeah I'm in I mean we might we might see something like that as the guard rails and that regulatory clarity comes out you know yeah that that's still TBD you know I think you see that nearly SEC registered exchanges are S. R. O. self regulatory organizations other tools that they have compliance and regulation team center market regulation teams that are better policing not only the exchange and making sure that the changes is this is doing what it's rulesets serves but also that the participants are doing what its rule sets and they're allowed to do and so to that end we also see that in the city city C. landscape under the principle based approach and so we you know as people digital given were under the city's future stiction for our futures business we already do that and we actually on up as a best practice spaces take that mindset and applied to spot right so we have a spot rule book is published you know it we make our members read and sign it and then we police for it you know so it's it's it's it's not necessarily something we have to do but we look at and say this is best practice we already have to do it for this year to see select students spot this is this is where we think the industry is going the right way to do it you know so is our way to the perfect where the right way you know I'm not gonna say it is it's it's one way and there's probably other ways that we can do the exact same thing I think your point ultimately we will get to a spot where it leased in the U. S. you'll have you know these these platforms used these exchanges and the participants that that that are interacting with them all all you know playing in that same box of of of self policing and and dumb M. A. kind of regulation you know on the international side but that's clearly are a bigger deal requires you know quite more conversation across a lot of different regulatory bodies but who's to say that that's not you know doable in association or something especially if its best efforts you know given given international regulation across multiple jurisdictions is is probably a difficult thing to think about you know the teacher meetings industry I DO arm willingly I think took took to drive that confidence and drive the industry to try to better stop

sure I'm not look tough question for you here and its own crypto regulations you know that there's a lot here you got by an executive order is you get the reports that came in from those executive orders you had different people in Congress in a recent release bills at the Leominster Lybrand bill is is kind of the the one that has the most attention right now your stable coin regulations apparently being worked on the SEC ripple lawsuit is a high profile lawsuit everybody has their eye and because it impacts all coins outside of bitcoin you know what what are your thoughts you think twenty twenty three may be the year given that there's also a huge catalysts of F. T. acts collapse that is regulators and and and the lawmakers are going to finally get this get this going

that's a that's a great question I you know I'm gonna I wanna ask you the same thing I don't I don't know if I I don't know if I can put a tie box on it generally I think that there's certainly a push you know we just wrapped up mid term election year new you know new new members entering both the house and the Senate is likely going to be some shifts in committees and and who may or may not sure different committees I think until all that kind of settles it's hard to kind of you know maybe see light at the end of the tunnel for something that actually get get through but post all that you know is is it possible that we see something in twenty twenty three sure you know do do I think that you know the events without T. acts you know maybe hi some speed or some pressure to try to do that you sure I don't know if it will it will impact you know the the ability for that to happen you know clearly there's bipartisan bills on both floors to your point that you mentioned the longer show Brandon and and some of the other ones you know but but still I think where we sit today versus you know where will be called in February or March or even beyond out of twenty twenty three you know it it it's I don't I don't think we see any sort of immediate action but sometime in twenty twenty three sure I think that's probably fair so what you know from our perspective you know we engage with all the parties you know whether it's the regulators whether it's you know folks on the hill you know to make sure that the platforms are are sensibly insufficiently regulated there and and that's that's really I think the guardrails we want the all the nitty gritty in between I think we can we can solve once we get that right think about how markets evolved over the years the market structure of the rules such that everyone operation today wasn't and ten years ago twenty years ago thirty years ago four years ago it's it's been an evolution so let's let's get something out there that allows you know experts Opry and number generate on it let's make it better

sure final question here before we had some rap a fun rapid questions every central bank around the world is working on a CBC essential bank digital currency years talks of the digital dollar here in the U. S. you know what your thoughts on that and how that may change markets given monies tokenized on the blockchain more transparency maybe for I don't have the right word is velocity of money but I will what we thought on those upcoming CBC's

yeah I like I like the way a friend of the velocity of money I mean clearly there's a lot of advantages that crypto currencies bring to the ability to move funds around and and and and and and more instantaneous if you wanna call it that manner then you can if you want to move the U. S. D. or zero or or whatever it is around so you know the clearly there's the bridging of a gap of back in and allowing folks to to have access and ease of of access and movement of of whatever currency that central bank is responsible for V. about digital dollar you know from my perspective it's it you know I'm a I'm a wait and see approach you know there there's a lot of folks that you know are heavy pros on it a lot of folks that are you know maybe against it you know I'm I'm I'm probably in the middle and and more of just the camp of I love reading about a love scene you know different sides of the fence Mr arguments and and I love to see how the you know that the governments and central banks are are thinking about it you know ultimately I I see financial markets digitizing themselves over time which markets are first to notice you know I would I would probably expect more opaque and illiquid markets to go first only because there's a lot of benefit there I think more than maybe very liquid very robust markets that are you know really really efficient today you know and so how do how how would she be she works with that I think is really interesting so yeah I'll certainly get the reading along you along with you as they do it but no strong opinion either way

hi John I got some rapid questions here for you so offers his rapid fire favorite food

ice cream

favorite musician or band

foo fighters

foo fighters favorite movie

Top Gun the first one does wonder the new order is pretty good I got to say it it was the same yeah I've been a top concern I don't know why I just love the movie starts that's cool

yeah it's a classic favorite book

I'm not taking it kind of goes in my favor band Dave Grohl's Adebayor autobiography my wife got it for me not to but just I don't I can't get enough of us to further so that maybe that's why

I got to check that out I am a foo fighters fan but I have not read that so I'm getting into get

get it get it on audible he self he self did it so how are

you nice okay I'm doing it right after this and what's your hobby when you're not you know working at CBOE

hot summer triathletes are do the swim bike run things quite a bit so that's around so besides cheap on family I still the rest of my time with with training so the cuts are

very cool and finally if you could create your own metaverse will with the theme be maybe it's something you know

yeah I can hear you know exactly where I'm gonna think about this one for for for a while yeah I think it would be yes some sort of immersive experience that lets me train anywhere in the world right you know so whatever that is and I don't mean like I'm sticking on oculus home and on my on my head and then sitting on my like indoor trainer I you know I mean like are really more immersive experience and that that that to me would be where I walk my members to go

John a pleasure chatting with you I'm excited to see the future updates at with CBOE thank you for joining me

thanks a lot for me to improvise

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