[
  {
    "start": 15.98,
    "end": 16.259,
    "text": "Hello"
  },
  {
    "start": 16.46,
    "end": 25.939,
    "text": "and welcome to another episode of BFRR, our Bitcoin feared and rock-and-roll podcast that explores the intersection of traditional finance digital assets in digital currencies."
  },
  {
    "start": 26.66,
    "end": 30.74,
    "text": "And it helps you understand how Digital Money and digital assets will evolve into future."
  },
  {
    "start": 31.299,
    "end": 39.8,
    "text": "My name is Manuel and today I have a very special candidate again A guest here in this podcast Dr."
  },
  {
    "start": 39.94,
    "end": 40.54,
    "text": "Annika Patz."
  },
  {
    "start": 41.4,
    "end": 47.1,
    "text": "You are partner at WIPOC cast already a couple of times, but only in German."
  },
  {
    "start": 47.64,
    "end": 52.26,
    "text": "And yeah today finally also again back at the podcast in English."
  },
  {
    "start": 52.94,
    "end": 53.72,
    "text": "welcome Annika!"
  },
  {
    "start": 54.72,
    "end": 55.7,
    "text": "Yeah thank you Manuel."
  },
  {
    "start": 56.02,
    "end": 59.16,
    "text": "um Thank You for having me and it's great to be back on the podcast."
  },
  {
    "start": 59.54,
    "end": 68.14,
    "text": "Absolutely and For those listeners that have not listened To The episodes In German Please give A little introduction Into Yourself."
  },
  {
    "start": 68.48,
    "end": 69.399,
    "text": "Would You Do Professionally?"
  },
  {
    "start": 69.94,
    "end": 71.78,
    "text": "In The Field Of Digital Assets And Digital Money?"
  },
  {
    "start": 71.86,
    "end": 76.02,
    "text": "Because Definitely one of the key experts that we have here in Germany and this field."
  },
  {
    "start": 76.86,
    "end": 79.5,
    "text": "But yeah, please give a little overview."
  },
  {
    "start": 80.059,
    "end": 80.979,
    "text": "Yeah happy to do that."
  },
  {
    "start": 81.1,
    "end": 84.119,
    "text": "so as you already mentioned I'm partner at WIPOC."
  },
  {
    "start": 84.479,
    "end": 91.199,
    "text": "WIPOC is law firm based in Germany And four offices here in Hamburg and base in Berlin."
  },
  {
    "start": 92.24,
    "end": 95.3,
    "text": "My team has also distributed in Germany."
  },
  {
    "start": 96.619,
    "end": 108.72,
    "text": "We're focusing on everything around regulatory Topics of banking regulation and payment services regulation, we have a strong focus on blockchain and DLT-based businesses."
  },
  {
    "start": 109.5,
    "end": 117.22,
    "text": "We did some of the first licenses back in days when Coinbase entered German market with crypto custody and trading licenses."
  },
  {
    "start": 117.619,
    "end": 119.759,
    "text": "so this was then under the German regimes."
  },
  {
    "start": 120.72,
    "end": 125.539,
    "text": "We did the licenses for bullish and we also did the Mika transition."
  },
  {
    "start": 125.64,
    "end": 129.979,
    "text": "For a lot of players in the market that you see here, Germany and other European countries."
  },
  {
    "start": 130.84,
    "end": 133.66,
    "text": "And we also deal with the pilot regime."
  },
  {
    "start": 133.76,
    "end": 136.74,
    "text": "so what will be talking about today as well?"
  },
  {
    "start": 137.14,
    "end": 138.58,
    "text": "So the DLT Pilot Regime."
  },
  {
    "start": 138.78,
    "end": 151.64,
    "text": "we do first licenses for twenty one X back in day and also four three sixty X. Yeah, I would say i started in this field when there was no regulation around crypto custodians."
  },
  {
    "start": 151.859,
    "end": 158.859,
    "text": "When it was still like everyone could build anything and um started back in two thousand eighteen then."
  },
  {
    "start": 158.9,
    "end": 167.579,
    "text": "so i've seen a lot of new upcoming regulations And also a lot maybe businesses flourish but also vanish."
  },
  {
    "start": 167.859,
    "end": 177.62,
    "text": "So its quite interesting to be now at a time where we see that projects are not just a proof of concept, but they're actually live and in place."
  },
  {
    "start": 177.68,
    "end": 180.44,
    "text": "And I think it's very interesting field we're dealing here with."
  },
  {
    "start": 180.72,
    "end": 180.799,
    "text": "Yeah"
  },
  {
    "start": 180.92,
    "end": 188.4,
    "text": "vast experience in the space especially here in Germany as one of the key experts that we've invited into the podcast quite a lot today."
  },
  {
    "start": 188.519,
    "end": 195.2,
    "text": "As you said focus will be among others The DLT pilot regime which is this regulatory."
  },
  {
    "start": 195.68,
    "end": 197.019,
    "text": "It used to be a sandbox, right?"
  },
  {
    "start": 197.1,
    "end": 207.72,
    "text": "Now it's not a sandbox anymore in Europe I would say but regulatory framework that allows for the use of distributed agile technology blockchain technology and capital market settlement."
  },
  {
    "start": 208.239,
    "end": 221.76,
    "text": "And that is part of the overall market integration and supervision package MISP That Is To Be Introduced In Europe Under The One Europe One Market Agenda Until I Think End Of This Year."
  },
  {
    "start": 222.04,
    "end": 230.96,
    "text": "Could You Give Us A Little Overview What This MISP, this market integration supervision package is and how the DLT pilot regime fits in there."
  },
  {
    "start": 231.12,
    "end": 231.98,
    "text": "Thank you for that question!"
  },
  {
    "start": 232.14,
    "end": 233.48,
    "text": "So what's MISPP?"
  },
  {
    "start": 234.579,
    "end": 238.22,
    "text": "You can think of it as a big update to EU's Market Rulebook."
  },
  {
    "start": 238.98,
    "end": 253.84,
    "text": "The European Commission published back on December twenty-twenty five as part of the Savings and Investment Union Strategy which is SIU basically the plan to get Europe's capital markets working most smoothly across borders."
  },
  {
    "start": 254.48,
    "end": 259.5,
    "text": "So Capital Markets Union is something we're talking about I think like for ten, fifteen years now."
  },
  {
    "start": 260.38,
    "end": 269.02,
    "text": "And this market integration package has three main goals It wants to simplify and streamline the rules We have four capital markets."
  },
  {
    "start": 269.28,
    "end": 281.06,
    "text": "it wants to make financial markets more integrated across the EU by reducing fragmentation... ...and it wants a strength from those supervisory conversions across Europe at twenty-seven."
  },
  {
    "start": 281.68,
    "end": 289.74,
    "text": "ESMA, the European Markets and Securities and Markets Authority will become a much bigger role under this market integration package."
  },
  {
    "start": 290.3,
    "end": 293.26,
    "text": "And MISP is really a comprehensive reform package."
  },
  {
    "start": 293.32,
    "end": 295.74,
    "text": "so it has three big blocks of."
  },
  {
    "start": 295.78,
    "end": 301.48,
    "text": "first we have a master regulation that will change a plethora off existing rules."
  },
  {
    "start": 302.16,
    "end": 312.0,
    "text": "So if you want to give or read three hundred eight pages just amendments to existing european regulations which I'll tell about bit more in a second."
  },
  {
    "start": 313.04,
    "end": 331.22,
    "text": "And then we have the master directive which will change parts of the markets and financial instruments directive, which is the MIFI-II ,which was basically the framework for investment firms right now in Europe .And it would changed alternative Investment Fund Manager Directive with just the regulation."
  },
  {
    "start": 336.98,
    "end": 341.1,
    "text": "third piece we have also a new settlement finality regulation."
  },
  {
    "start": 341.44,
    "end": 346.26,
    "text": "Currently, we just have the directive maybe to give you bit of background here."
  },
  {
    "start": 346.38,
    "end": 352.34,
    "text": "The regulation is then directly applicable whereas the directive needs be implemented so they will."
  },
  {
    "start": 352.74,
    "end": 353.98,
    "text": "on settlement finalities."
  },
  {
    "start": 354.94,
    "end": 365.78,
    "text": "and And this regulation is making sure that transfers of collateral are legally watertight and also transfers of securities."
  },
  {
    "start": 366.04,
    "end": 388.02,
    "text": "I already mentioned there's a master regulation which will change a bunch of European regulations, so basically the main ones –which are relevant for our topic today–are CSDRs, which is central securities depositories' regulation which is basically the regulation for European settlement systems and clearing system."
  },
  {
    "start": 388.68,
    "end": 394.44,
    "text": "So it's one of the clear streams, which are their basic regulations."
  },
  {
    "start": 394.92,
    "end": 403.32,
    "text": "Then as you already mentioned a DLT pilot regime or the DOTR Which is the Regime for DOT based market infrastructures."
  },
  {
    "start": 403.82,
    "end": 407.32,
    "text": "They will also see huge change or amendments to it."
  },
  {
    "start": 408.8,
    "end": 415.46,
    "text": "Then there is the markets and crypto assets regulation, the MECA which will see also some changes but more on the side."
  },
  {
    "start": 415.5,
    "end": 417.54,
    "text": "who will be supervising whom."
  },
  {
    "start": 418.18,
    "end": 432.68,
    "text": "And then we have EMEA which is a European Market Infrastructure Regulation Which is basically the regulation for OTC derivatives trading derivatives clearing including collateralization of derivatives."
  },
  {
    "start": 433.6,
    "end": 437.16,
    "text": "It's framework also for central counterparties so for CCPs."
  },
  {
    "start": 437.74,
    "end": 438.76,
    "text": "Then there is me fear."
  },
  {
    "start": 439.24,
    "end": 445.2,
    "text": "I will stop then in a second, but you see the list as long which is the markets and financial instruments regulation."
  },
  {
    "start": 445.6,
    "end": 448.94,
    "text": "we would see also some changes with regard to trading venues therein."
  },
  {
    "start": 449.5,
    "end": 457.58,
    "text": "And then we have securities financing transaction regulations and CCP recovery regulation on-and-on benchmark regulation."
  },
  {
    "start": 458.04,
    "end": 463.38,
    "text": "so it's really big project that Europe has under their agenda."
  },
  {
    "start": 464.0,
    "end": 486.48,
    "text": "And given there are many regulations that will be amended, the timeline for implementation is not... It's a longer transition period so not Q one of next year but let say more like three years or so as they would be consultation phases and parliamentary Parliament will also have a say in it."
  },
  {
    "start": 486.72,
    "end": 494.94,
    "text": "And afterwards, as with every financial regulation in Europe you have the level two and level three acts coming out."
  },
  {
    "start": 495.02,
    "end": 501.18,
    "text": "so this master regulations and market integration package is level one as we said."
  },
  {
    "start": 501.24,
    "end": 518.48,
    "text": "then there would be technical standards issued by commission but also by Esma who has her opinions guidelines on how to interpret the frameworks and so it will take quite a while until we have this package live."
  },
  {
    "start": 518.939,
    "end": 525.24,
    "text": "When you say there's a long transition period, is they still an aim to finalize the legal text?"
  },
  {
    "start": 525.7,
    "end": 532.92,
    "text": "Until then It needs to be implemented And also the extensive level two or three work Will start and will be finalized."
  },
  {
    "start": 533.5,
    "end": 537.08,
    "text": "Or is the timeline for the finalization of the texts?"
  },
  {
    "start": 539.56,
    "end": 542.92,
    "text": "I guess the finalization of the text will not take that long."
  },
  {
    "start": 543.34,
    "end": 551.94,
    "text": "So we might see this then next year, but until it's done really applicable and until the market would need to adopt ,it'll take"
  },
  {
    "start": 552.0,
    "end": 552.26,
    "text": "longer.\"."
  },
  {
    "start": 565.0,
    "end": 582.86,
    "text": "also embracing blockchain-based infrastructures or implementing, including blockchain infrastructure in the existing regulations to make it technology neutral and a much stronger role of the ESMA."
  },
  {
    "start": 584.12,
    "end": 587.92,
    "text": "The focus on this podcast is clearly also the DLT impact."
  },
  {
    "start": 588.34,
    "end": 596.2,
    "text": "Could you give us an overview how the DT pilot regime so far has been developing?"
  },
  {
    "start": 596.72,
    "end": 602.24,
    "text": "I mean, it's now two years in and there hasn't been lots of uptick so far."
  },
  {
    "start": 602.7,
    "end": 606.0,
    "text": "Maybe you give us a little overview what the DLT pilot regime is?"
  },
  {
    "start": 606.44,
    "end": 609.04,
    "text": "What will change to this new regulation?"
  },
  {
    "start": 609.36,
    "end": 610.12,
    "text": "Happy to do that!"
  },
  {
    "start": 610.54,
    "end": 623.86,
    "text": "So i think it was March twenty-twenty three when we had our episode on the pilot regime maybe around like three years already in place, but I think the first licenses were she done and two thousand twenty four."
  },
  {
    "start": 623.94,
    "end": 633.0,
    "text": "So it's yeah as you said like three years now we see actually players on a market that are operating under the DLT pilot regime And you can basically thing of it."
  },
  {
    "start": 633.1,
    "end": 634.78,
    "text": "has more less real life."
  },
  {
    "start": 634.84,
    "end": 641.6,
    "text": "experiment off EU to have DL T based trading venues until t-based settlement systems in Europe?"
  },
  {
    "start": 642.44,
    "end": 651.28,
    "text": "As you already mentioned It supposed be a sandbox regime but considering a sandbox which sounds easy to enter, it's not that easy."
  },
  {
    "start": 651.34,
    "end": 654.62,
    "text": "It is actually a whole license application process you have to deal with."
  },
  {
    "start": 654.82,
    "end": 661.12,
    "text": "We did this for the lot of clients help them navigating also steering national competent authorities."
  },
  {
    "start": 661.2,
    "end": 665.24,
    "text": "so in Germany BAFIN and then European regulator with ESMA."
  },
  {
    "start": 665.94,
    "end": 674.62,
    "text": "You've got lots discussions how your setting up your infrastructures delivery versus payment process and so on."
  },
  {
    "start": 675.1,
    "end": 683.54,
    "text": "But maybe to give you the basic idea of the DLT pilot regime, it's basically we have blockchains and we have DLTE-based financial instruments."
  },
  {
    "start": 683.96,
    "end": 686.14,
    "text": "So they could be useful for capital markets."
  },
  {
    "start": 686.32,
    "end": 689.5,
    "text": "but We have existing rules as I already mentioned."
  },
  {
    "start": 689.54,
    "end": 701.64,
    "text": "We have this mythid in mythea And also the CSD regulation which are written For centralized infrastructures with several intermediaries in place accounts batch settlements involved."
  },
  {
    "start": 702.22,
    "end": 717.78,
    "text": "So the EU created a time-limited pilot framework, this DLT pilot regime which allows DLTI based market infrastructures to operate and give them targeted exemptions from current regulations they would need to apply otherwise."
  },
  {
    "start": 719.42,
    "end": 725.8,
    "text": "The idea was to give regulators but also industry a kind of framework where they could practice."
  },
  {
    "start": 730.96,
    "end": 738.8,
    "text": "So to give you a bit of an overview what we actually can trade under the pilot regime, it's quite narrow regime."
  },
  {
    "start": 739.1,
    "end": 753.56,
    "text": "You have several financial instruments that won't be able to be traded on a DLT trading venue so only shares with certain volume limit and use its funds in plain vanilla bonds."
  },
  {
    "start": 753.66,
    "end": 765.34,
    "text": "So derivatives trading is currently not possible although the market is saying we need that, because therefore it makes actually sense to have a DOT-based system for derivatives trading."
  },
  {
    "start": 766.02,
    "end": 776.56,
    "text": "So this was intentional by the regulators and then some size limits when it comes to overall trading volume as well."
  },
  {
    "start": 776.64,
    "end": 780.22,
    "text": "so its really limited in practice."
  },
  {
    "start": 781.36,
    "end": 784.94,
    "text": "getting into the regime still significant undertaking."
  },
  {
    "start": 787.36,
    "end": 790.72,
    "text": "You need robust governance systems and operating models."
  },
  {
    "start": 790.76,
    "end": 803.5,
    "text": "So you're basically a fully-fledged CST or a fully fledged trading venue, but you get some exemptions from which are then not possible because you operate on the DLT."
  },
  {
    "start": 803.74,
    "end": 815.66,
    "text": "so certain functions that would have another CSDR might be able to implement it But they may also explain why you use DLTV and cannot apply this rule."
  },
  {
    "start": 816.1,
    "end": 817.6,
    "text": "So this is how it basically works."
  },
  {
    "start": 818.16,
    "end": 841.4,
    "text": "And what's interesting as well, that you can... Another regime use also e-money tokens so digital money to settle the trades of tokenized shares or so and This was quite something new because normally You have central bank solutions That you would use in Central Bank Money In which you will settle securities and financial instruments."
  },
  {
    "start": 842.3,
    "end": 851.76,
    "text": "So this is basically what the DLT pilot regime is about and you have Basically three models that you can choose That you want to operate."
  },
  {
    "start": 851.8,
    "end": 856.46,
    "text": "You have the so-called DLTMTF, which is a trading venue for DLTE financial instruments."
  },
  {
    "start": 856.9,
    "end": 859.6,
    "text": "You have The DLTSS Which has a settlement system."
  },
  {
    "start": 860.12,
    "end": 861.3,
    "text": "And then What was really new?"
  },
  {
    "start": 862.2,
    "end": 867.96,
    "text": "Is it DLTTSS which is A Trading & Settlement System Which combines both trading and settlement?"
  },
  {
    "start": 868.9,
    "end": 869.52,
    "text": "do not see this."
  },
  {
    "start": 869.64,
    "end": 871.98,
    "text": "in normal capital markets, I would say."
  },
  {
    "start": 872.84,
    "end": 877.5,
    "text": "the trading and settlement infrastructures are always separated from each other."
  },
  {
    "start": 878.1,
    "end": 888.52,
    "text": "But this was really something which came more or less from the crypto-trading venues one needs to say like the Kraken's and Coinbase' which all combine trading and settlements infrastructure."
  },
  {
    "start": 889.02,
    "end": 892.82,
    "text": "so it is quite cool then to operate such a system."
  },
  {
    "start": 894.2,
    "end": 897.38,
    "text": "I would say this is really where the DLT pilot regime makes sense."
  },
  {
    "start": 897.92,
    "end": 900.88,
    "text": "You also asked why it didn't take off, if i record correctly?"
  },
  {
    "start": 902.74,
    "end": 902.92,
    "text": "Sorry!"
  },
  {
    "start": 903.26,
    "end": 904.24,
    "text": "I keep on rambling here."
  },
  {
    "start": 904.92,
    "end": 912.16,
    "text": "but after now yeah three or two years we can say and The Pilot Regime hasn't really taken of."
  },
  {
    "start": 912.34,
    "end": 926.2,
    "text": "so I think We have ten eleven players Also in Europe which are using This regime And a big reason Why there are not that many scale, I would say because you have these limitations."
  },
  {
    "start": 926.24,
    "end": 933.28,
    "text": "You have volume restrictions and product restrictions on the financial instruments which can actually trade in a venue."
  },
  {
    "start": 933.84,
    "end": 943.96,
    "text": "so operating market infrastructures is really network business where you need issues or investors or liquidity all at the same time."
  },
  {
    "start": 944.72,
    "end": 949.88,
    "text": "but given those tight limits the markets didn't find all of these pieces."
  },
  {
    "start": 950.7,
    "end": 982.02,
    "text": "So I would say it's then also uncertainty because this pilot regime that we have today is limited, so in time like six years from the moment you get your license and i think building such a huge infrastructure having implementation costs really upfront cost not being sure if it's quite something where a bigger players at least decided, okay we will wait and see how this turns out."
  },
  {
    "start": 982.74,
    "end": 985.48,
    "text": "So basically its like classic chicken-and-neck problem."
  },
  {
    "start": 985.9,
    "end": 988.96,
    "text": "right without liquidity trading is unattractive."
  },
  {
    "start": 989.1,
    "end": 992.7,
    "text": "with our trading issue has hesitated and without issues you don't get liquidity."
  },
  {
    "start": 992.86,
    "end": 997.54,
    "text": "And then for the market operators It's really question Okay can I make money?"
  },
  {
    "start": 997.64,
    "end": 998.42,
    "text": "With us right away?"
  },
  {
    "start": 998.58,
    "end": 1009.24,
    "text": "or Is it Like if future investments saying i want to build my infrastructure now on DLT But do I need To enter This regime Or Can I just do it without the regime and building in a background?"
  },
  {
    "start": 1009.42,
    "end": 1009.54,
    "text": "It's"
  },
  {
    "start": 1012.92,
    "end": 1023.76,
    "text": "strange because this TSS role, to my view is such an innovative setup where everything as you said that we see in the crypto space with the Krakenz and other crypto exchanges."
  },
  {
    "start": 1024.319,
    "end": 1034.54,
    "text": "That settled cash in the form of stablecoins and the crypto assets then in future also tokenized securities for example happen on same platform."
  },
  {
    "start": 1035.099,
    "end": 1037.46,
    "text": "That should attract actually all those players, right?"
  },
  {
    "start": 1038.04,
    "end": 1038.42,
    "text": "Hopefully."
  },
  {
    "start": 1038.659,
    "end": 1038.74,
    "text": "Yeah"
  },
  {
    "start": 1039.919,
    "end": 1057.28,
    "text": "definitely and maybe then what is now than or will change under Miss because this is... What I'm telling you Now people have for the market has said there's already three years ago of four years ago when the pilot regime was in a consultation process."
  },
  {
    "start": 1057.36,
    "end": 1068.1,
    "text": "so we don't need these limitations Or We Don't Want These Limitations Because It Will Lead to Nobody Entering The Regime I mean, not nobody but not that many as expected."
  },
  {
    "start": 1069.0,
    "end": 1077.159,
    "text": "And this is now where the market integration package comes in so you can really read it as a response to the market demand."
  },
  {
    "start": 1077.62,
    "end": 1084.639,
    "text": "So The pilot regime was a start But Now the Market has been asking right from the beginning for framework That Can actually scale?"
  },
  {
    "start": 1085.24,
    "end": 1086.28,
    "text": "Not just Sandbox!"
  },
  {
    "start": 1087.0,
    "end": 1088.459,
    "text": "So i think we will see."
  },
  {
    "start": 1089.0,
    "end": 1093.26,
    "text": "or what Miss proposes Is there very high volume caps."
  },
  {
    "start": 1093.919,
    "end": 1098.8,
    "text": "So not six billion, but like hundred billion that you can actually trade."
  },
  {
    "start": 1098.919,
    "end": 1103.1,
    "text": "Like an overall trading volume and You won't have product limitations."
  },
  {
    "start": 1103.179,
    "end": 1105.36,
    "text": "so we don't Have those limitations."
  },
  {
    "start": 1105.52,
    "end": 1108.179,
    "text": "what products Can be listed which is good?"
  },
  {
    "start": 1108.48,
    "end": 1113.08,
    "text": "Let the market decide What they want to trade And you Don't have time restrictions."
  },
  {
    "start": 1113.3,
    "end": 1130.659,
    "text": "Though this will be a regime you can enter DOT and the infrastructure less like a special exception, but more like normal infrastructure option that one can choose."
  },
  {
    "start": 1131.379,
    "end": 1139.459,
    "text": "And this is I think it's good start But from perspective of time i would say It comes too late."
  },
  {
    "start": 1139.52,
    "end": 1144.58,
    "text": "so as said This was already requested awhile ago when first regime started."
  },
  {
    "start": 1145.08,
    "end": 1160.219,
    "text": "So in my opinion we should now really try to carve out this whole DLT pilot regime from the market integration package to kind of have a process that is bit faster, because I think it's quite clear what will come now for the DLTE pilot regime."
  },
  {
    "start": 1160.26,
    "end": 1183.78,
    "text": "It just makes sense to have those amendments and yeah not wait another three years so-to say until we have those amendment And if its' not possible to carve out off these legislative processes Now The European Commission should really think about issuing an action letter for the time, at least when it comes to products that can be listed and maybe also to volume restrictions."
  },
  {
    "start": 1184.12,
    "end": 1187.439,
    "text": "That they won't act on or the national regulators shouldn't act."
  },
  {
    "start": 1188.52,
    "end": 1190.84,
    "text": "so really makes sense have a proper regime."
  },
  {
    "start": 1191.28,
    "end": 1192.74,
    "text": "because we need look at"
  },
  {
    "start": 1192.959,
    "end": 1193.199,
    "text": "U.S.,"
  },
  {
    "start": 1193.84,
    "end": 1202.879,
    "text": "I mean their big securities depository like TCC just got no action from SEC in December of twenty-twenty."
  },
  {
    "start": 1202.959,
    "end": 1210.0,
    "text": "five basically operate on DOT and they can custody assets which are based on DOT."
  },
  {
    "start": 1210.24,
    "end": 1217.899,
    "text": "So it's really, for them is a big change but as said its just no action data so no application involved."
  },
  {
    "start": 1218.419,
    "end": 1227.56,
    "text": "And I think to be European or in Europe we should try also attract of regime because we had this right like three years ago already."
  },
  {
    "start": 1229.199,
    "end": 1240.459,
    "text": "It not new debate that the whole DOT pilot regime is over-regulated, let's say and restrictive when it comes to especially the product definition of volume restrictions."
  },
  {
    "start": 1241.199,
    "end": 1244.76,
    "text": "When you now look at other areas as well."
  },
  {
    "start": 1244.899,
    "end": 1249.939,
    "text": "so there are the CSDR reform, there's EMEAR, MIFIR and MIKAR as we discussed."
  },
  {
    "start": 1250.54,
    "end": 1264.139,
    "text": "We also see some amendments with regards to inclusion of blockchains or DLT systems at least if they are not directly included, that there become technology neutral."
  },
  {
    "start": 1265.6,
    "end": 1269.04,
    "text": "Where do we see the new technology entering now?"
  },
  {
    "start": 1269.199,
    "end": 1274.699,
    "text": "The more traditional regulations like CSDR and EMEA and MIFIA?"
  },
  {
    "start": 1275.219,
    "end": 1275.379,
    "text": "Yeah."
  },
  {
    "start": 1276.0,
    "end": 1295.24,
    "text": "so when you look at this CSDR which is basically as already said a regulation for our central securities depositories So the ones who are keeping the system of who owns what So, you can think of them as the custodians for custodian or the custodean for banks who trade securities for their clients."
  },
  {
    "start": 1296.06,
    "end": 1300.879,
    "text": "There in this CSDR we will see that it also would include DLT-based systems."
  },
  {
    "start": 1301.219,
    "end": 1302.639,
    "text": "so its explicitly written."
  },
  {
    "start": 1302.719,
    "end": 1311.219,
    "text": "in regards to infrastructure which is really acknowledging that these infrastructures are something."
  },
  {
    "start": 1318.08,
    "end": 1325.62,
    "text": "And as you maybe also have read in the news that a big exchange, and US has mentioned every security I will issue."
  },
  {
    "start": 1325.959,
    "end": 1327.58,
    "text": "In future it'll be DLT based."
  },
  {
    "start": 1327.679,
    "end": 1331.54,
    "text": "so i think we see major shift Also here in Germany."
  },
  {
    "start": 1331.62,
    "end": 1333.06,
    "text": "i think Deutsche Börse said same."
  },
  {
    "start": 1333.54,
    "end": 1337.26,
    "text": "So its really something... It's bit of no brainer to do this."
  },
  {
    "start": 1338.0,
    "end": 1345.439,
    "text": "And I think also today we see in Germany, like the ClearStreams they already have infrastructures which are DLT based."
  },
  {
    "start": 1345.639,
    "end": 1346.76,
    "text": "Which they're using."
  },
  {
    "start": 1346.98,
    "end": 1358.58,
    "text": "so it's... I wouldn't say that was necessary in CSDR to actually include DLTE because i would read it today and say its not excluded to use DLte."
  },
  {
    "start": 1359.219,
    "end": 1362.899,
    "text": "But it gives, of course for the market infrastructures operators."
  },
  {
    "start": 1363.02,
    "end": 1370.8,
    "text": "It gives them clarity and security that they can actually leverage on DLT infrastructures which is really cool I would say."
  },
  {
    "start": 1371.26,
    "end": 1376.919,
    "text": "so basically The second issue under CSDR will be cash lag."
  },
  {
    "start": 1377.32,
    "end": 1391.719,
    "text": "So i think for tokenized securities They cannot fully deliver if you don't have to payment like covered payment rails where those securities can actually talk to or interact."
  },
  {
    "start": 1392.54,
    "end": 1402.459,
    "text": "And now the market integration package draft for a DCSDR opens up paths on how to settle payments, also in e-money tokens."
  },
  {
    "start": 1403.219,
    "end": 1407.98,
    "text": "So these are the regulated stable coins on Amica, so basically stablecoins."
  },
  {
    "start": 1408.459,
    "end": 1421.78,
    "text": "But here what gets a bit practical is that draft talks about things like pre-funding—so you need tokenized money or stablecoins that are prefunded upfront and also they have to be available at the CST level."
  },
  {
    "start": 1421.84,
    "end": 1424.26,
    "text": "then for market participants."
  },
  {
    "start": 1424.419,
    "end": 1432.219,
    "text": "use them And it will be under current drafts significant E-Money tokens."
  },
  {
    "start": 1433.219,
    "end": 1444.06,
    "text": "Under the MECA regime, we have regular stable coins and then there are significant e-money tokens which need to apply a bit of higher regimes or under more scrutiny from the regulator."
  },
  {
    "start": 1444.379,
    "end": 1445.0,
    "text": "As for today?"
  },
  {
    "start": 1445.159,
    "end": 1448.419,
    "text": "We don't have significant E-Money tokens in Europe."
  },
  {
    "start": 1449.06,
    "end": 1453.04,
    "text": "I guess this might change if it opens up on your business area."
  },
  {
    "start": 1453.36,
    "end": 1464.84,
    "text": "Or do you really want significant E money tokens but maybe they would volume or in order to be legible here under the CSDR."
  },
  {
    "start": 1465.48,
    "end": 1470.76,
    "text": "And finally, there is a question of where are the accounts?"
  },
  {
    "start": 1471.24,
    "end": 1476.3,
    "text": "So if this CSG doesn't settle and central bank money as said we can use stablecoins."
  },
  {
    "start": 1476.399,
    "end": 1478.379,
    "text": "who's then actually holding those stablecoins?"
  },
  {
    "start": 1479.04,
    "end": 1493.86,
    "text": "so because it still like maybe banking business might be you hold funds for others And so a CSD can use another current draft accredited institution or an other CSD who has the license for banking business."
  },
  {
    "start": 1494.679,
    "end": 1506.459,
    "text": "But I think there it's not strange, but where they are coming from is that as of today in order to hold stablecoins you also require a Mika-license as a custodian."
  },
  {
    "start": 1507.24,
    "end": 1517.719,
    "text": "So it might make sense to open this regime for actual custodians Such infrastructures like holding key material in a secure way."
  },
  {
    "start": 1518.439,
    "end": 1529.459,
    "text": "So there might make sense to open this regime as well for them and not just for credit institutions because I know maybe they are some credit institutions who already operate their own infrastructures."
  },
  {
    "start": 1529.52,
    "end": 1536.959,
    "text": "but i think It might be a complex business to set up then also such infrastructures and get the right players in place."
  },
  {
    "start": 1537.459,
    "end": 1544.06,
    "text": "That's the CSDR, ultimately the central securities depositories embracing now these new settlement assets."
  },
  {
    "start": 1544.719,
    "end": 1551.719,
    "text": "EMIR is another area where the ESMA shell has an enhanced role."
  },
  {
    "start": 1552.24,
    "end": 1555.82,
    "text": "And look at EMTs which actually took nice money market funds."
  },
  {
    "start": 1556.159,
    "end": 1557.28,
    "text": "What part of that package here?"
  },
  {
    "start": 1558.419,
    "end": 1564.6,
    "text": "Yeah, so maybe for the eager listeners give you a bit of background what EMEA then actually is."
  },
  {
    "start": 1564.679,
    "end": 1571.179,
    "text": "So it was after The Financial Crisis back in two thousand and eight-two thousand nine It Was the Risk Control Framework For Derivatives?"
  },
  {
    "start": 1571.82,
    "end": 1581.28,
    "text": "So it covers a derivative skeering via central counterparties And also Then Collateral Provision for OTC derivatives and Margining."
  },
  {
    "start": 1581.459,
    "end": 1588.24,
    "text": "so overarching goal our financial regulations, of course, financial stability."
  },
  {
    "start": 1589.06,
    "end": 1595.179,
    "text": "And here when it comes to tokenization I think we see in the market now a lot of developments around."
  },
  {
    "start": 1595.24,
    "end": 1606.52,
    "text": "tokenized money-market funds which are also or money market funds can be used under certain circumstances as collateral but mainly you would use cash."
  },
  {
    "start": 1607.76,
    "end": 1617.98,
    "text": "And we see under the market integration package that in other regimes like CSTR, there is explicitly mentioned that cash can also be e-money tokens."
  },
  {
    "start": 1618.32,
    "end": 1621.36,
    "text": "So stablecoins and we don't have it on an EMEA."
  },
  {
    "start": 1622.1,
    "end": 1630.58,
    "text": "so I would say just what makes sense to include cash not only like central bank money but actually also a money token."
  },
  {
    "start": 1630.879,
    "end": 1632.24,
    "text": "might they be significant or not?"
  },
  {
    "start": 1632.48,
    "end": 1639.459,
    "text": "What make sense if you really an infrastructure that is still T base where you also want to trade your derivatives."
  },
  {
    "start": 1640.0,
    "end": 1641.76,
    "text": "So this is more like a recommendation."
  },
  {
    "start": 1642.04,
    "end": 1642.12,
    "text": "I was"
  },
  {
    "start": 1642.159,
    "end": 1644.419,
    "text": "just going to ask her, This Is not what it's currently discussed?"
  },
  {
    "start": 1644.679,
    "end": 1647.32,
    "text": "No It would make sense."
  },
  {
    "start": 1647.379,
    "end": 1673.6,
    "text": "if we now have this big package and touch EMEA they should consider having consistent framework done And also include that You can actually use tokenized money market funds as collateral change maybe those between the counterparties because most of them what they're doing today is often that they exchange cash as margin, as collateral and then take this cash."
  },
  {
    "start": 1674.0,
    "end": 1678.0,
    "text": "They invested into money market funds or short-term commercial papers."
  },
  {
    "start": 1678.639,
    "end": 1683.399,
    "text": "at end day they exchanged it back in to cash and then they exchanged with their counterparty again."
  },
  {
    "start": 1683.939,
    "end": 1694.3,
    "text": "so to avoid those shortages on markets might make sense exchange directly, money market funds shares or the like."
  },
  {
    "start": 1694.879,
    "end": 1697.02,
    "text": "So I think this is something that's worth considering."
  },
  {
    "start": 1697.12,
    "end": 1704.56,
    "text": "on their email asset not currently included but it would make definitely sense and maybe should be part of the discussion as well."
  },
  {
    "start": 1705.32,
    "end": 1710.639,
    "text": "Before we jump back into today's episode, a quick word about an event close to our hearts."
  },
  {
    "start": 1710.879,
    "end": 1722.12,
    "text": "The Point Zero Forum An annual gathering of over two thousand policymakers central bankers regulators and industry leaders at the intersection of finance technology and policy."
  },
  {
    "start": 1722.86,
    "end": 1738.959,
    "text": "BFRR is proud media partner off the point zero forum And will be reporting live on site with the full co-host team organized by the Global Finance and Technology Network, and the Swiss State Secretariat of Finance."
  },
  {
    "start": 1739.0,
    "end": 1743.959,
    "text": "The Point Zero Forum takes place in Zurich from twenty-third to twenty-fifth June."
  },
  {
    "start": 1744.159,
    "end": 1762.639,
    "text": "twenty-twenty six this year's lineup includes swiss federal councillor Karin Keller Souter Tavasi or Paolo Ardeuino former crypto head of policy at Andresen Horowitz Brian Quintens Nvidia's EMEA financial technology lead Dr."
  },
  {
    "start": 1762.899,
    "end": 1772.08,
    "text": "Jochen Papenbrock, the agenda covers everything from AI in financial services and digital assets of stable coins tokenization."
  },
  {
    "start": 1779.379,
    "end": 1795.58,
    "text": "Come meet us in Zurich, register at pointzeroforum.com and as a BFRR listener you get thirty percent off the full-price industry pass with code bfrr Twenty twenty six."
  },
  {
    "start": 1797.1,
    "end": 1801.139,
    "text": "I repeat BFR R twenty twenty six."
  },
  {
    "start": 1802.48,
    "end": 1813.419,
    "text": "So CSDR has explicit recognition of DLT but EMEA and not yet at least for the settlement asset, for settling cash and money market funds."
  },
  {
    "start": 1813.919,
    "end": 1826.32,
    "text": "And then there is the MIFIR which is the Markets & Financial Instruments Regulation... ...and clearly also my car, the Market & Crypto Assets Regulation where there's also adjustments in this MISP."
  },
  {
    "start": 1826.6,
    "end": 1827.3,
    "text": "what's happening here?"
  },
  {
    "start": 1827.879,
    "end": 1844.24,
    "text": "Yeah, so basically on a MIFIA it's not that much DOT related but what they are saying for this whole capital markets integration and we need regime of trading venues throughout the EU is basically same."
  },
  {
    "start": 1844.52,
    "end": 1853.959,
    "text": "So today the regulation for trading venues is based on MIFI-II, which I said needs to be implemented by a member state."
  },
  {
    "start": 1854.179,
    "end": 1861.199,
    "text": "There might be some differences and also the regulators may see something differently than when you're setting up your training venue there."
  },
  {
    "start": 1861.639,
    "end": 1877.639,
    "text": "so that's why the regulations around trading venues move into the MIFIR, which is a regulation which has been directly applicable of trading venues, so like a cross-border trading venue."
  },
  {
    "start": 1878.639,
    "end": 1901.5,
    "text": "Like European Trading Venue you could jump under if you want to and they want to try that really... That you don't have to set up in your trading venue If You Want To Operate In Another Member State So You Can Use The One In Your National Member States If You Want To Offer Your Services Cross Border Which Is Good I Think For Avoiding That Liquidity Then Kind Of"
  },
  {
    "start": 1902.179,
    "end": 1902.699,
    "text": "Fragmented."
  },
  {
    "start": 1903.679,
    "end": 1915.939,
    "text": "Yes, and looking then to Mika which is the regulation for crypto assets there will be a bigger change of who will supervise those crypto asset service providers?"
  },
  {
    "start": 1916.58,
    "end": 1923.139,
    "text": "For the ones that only offer crypto asset services they would potentially be under the ESMA supervision."
  },
  {
    "start": 1923.439,
    "end": 1934.159,
    "text": "so European regulator which is a big shift because today it's still the national authorities, so in Germany, BAFIN or like FMA and Austria and such."
  },
  {
    "start": 1935.04,
    "end": 1942.699,
    "text": "And this is really a big ship to have done application on ongoing supervision under one roof at ESMA."
  },
  {
    "start": 1943.199,
    "end": 1944.12,
    "text": "So what will lead you?"
  },
  {
    "start": 1944.679,
    "end": 1951.02,
    "text": "basically there would be a harmonized view of how Mika needs to read interpreted."
  },
  {
    "start": 1951.699,
    "end": 1960.12,
    "text": "but I think that might also come with some dead rumours because having a good relation to your national regulator is something good."
  },
  {
    "start": 1960.28,
    "end": 1964.439,
    "text": "And if you have established it well, that's really useful I would say."
  },
  {
    "start": 1964.86,
    "end": 1975.58,
    "text": "but of course you won't have those arbitrage regulators where you could say okay If i go to Malta It might not be regarded as highly than going to the French or German regulator."
  },
  {
    "start": 1976.12,
    "end": 1976.36,
    "text": "and"
  },
  {
    "start": 1976.639,
    "end": 1983.919,
    "text": "uh...I think another piece will be offcourse that ESMA will need to significantly amp up their stuff,"
  },
  {
    "start": 1984.24,
    "end": 1984.32,
    "text": "right?"
  },
  {
    "start": 1984.36,
    "end": 1984.379,
    "text": "To"
  },
  {
    "start": 1985.959,
    "end": 1990.639,
    "text": "really find people that are willing to move to France and Paris."
  },
  {
    "start": 1990.78,
    "end": 1994.919,
    "text": "I mean not a worst city in the world but i think this will need some time."
  },
  {
    "start": 1995.08,
    "end": 1995.219,
    "text": "also."
  },
  {
    "start": 1995.3,
    "end": 1999.5,
    "text": "then build up your relationship might be quite yeah."
  },
  {
    "start": 2000.02,
    "end": 2005.3,
    "text": "it would be interesting because i think there's something that Esmer tries get more power."
  },
  {
    "start": 2006.04,
    "end": 2007.78,
    "text": "we have seen this under the MIFIID."
  },
  {
    "start": 2007.899,
    "end": 2015.98,
    "text": "so for investment firms There were talks about bringing asthma in as the main supervisor, so it will be interesting to see."
  },
  {
    "start": 2016.419,
    "end": 2020.699,
    "text": "And I guess yeah... It would go through under the market integration package."
  },
  {
    "start": 2020.78,
    "end": 2025.08,
    "text": "but let's say you never know how European regulations end up at this point."
  },
  {
    "start": 2025.12,
    "end": 2033.98,
    "text": "Does that lead also into a re-certification or reapplication of licenses granted by national supervisory authorities?"
  },
  {
    "start": 2034.12,
    "end": 2035.76,
    "text": "Or is not part?"
  },
  {
    "start": 2035.939,
    "end": 2035.939,
    "text": "I"
  },
  {
    "start": 2037.12,
    "end": 2044.74,
    "text": "think it's not really a re-application, more like than transition and handover of the regulated businesses."
  },
  {
    "start": 2044.82,
    "end": 2055.1,
    "text": "But they cannot take your license you already have but will be then a transition period from the national regulators."
  },
  {
    "start": 2056.98,
    "end": 2063.6,
    "text": "any open discussions with the national regulators than likely transitioning that into a new regulator is also comes."
  },
  {
    "start": 2063.679,
    "end": 2065.36,
    "text": "Also, with challenges right?"
  },
  {
    "start": 2065.52,
    "end": 2065.799,
    "text": "Yes"
  },
  {
    "start": 2065.92,
    "end": 2068.259,
    "text": "yes I mean it's already burdensome."
  },
  {
    "start": 2069.819,
    "end": 2071.179,
    "text": "if not your unit changes."
  },
  {
    "start": 2071.279,
    "end": 2077.839,
    "text": "but if you case handler moves to another unit and then you have a new case handlers which has started"
  },
  {
    "start": 2077.9,
    "end": 2078.44,
    "text": "fresh again"
  },
  {
    "start": 2079.46,
    "end": 2086.739,
    "text": "really building up relationships and educating them about your business model how works yeah It's quite something."
  },
  {
    "start": 2086.819,
    "end": 2101.259,
    "text": "And in this field of crypto assets and DLT-based infrastructures, I think it is really crucial to have people and staff at the regulator side as well who want to understand what actually happening there?"
  },
  {
    "start": 2102.0,
    "end": 2102.16,
    "text": "Yeah!"
  },
  {
    "start": 2103.319,
    "end": 2120.7,
    "text": "Potentially even stalling a bit their development again simply by changing the regulator and building up these new framework over take quite some time, likely until that is going to be done."
  },
  {
    "start": 2120.759,
    "end": 2120.94,
    "text": "Right?"
  },
  {
    "start": 2121.12,
    "end": 2124.92,
    "text": "It's not something that will be done this year but rather over the next years."
  },
  {
    "start": 2125.02,
    "end": 2126.4,
    "text": "there's just transition faced and"
  },
  {
    "start": 2126.819,
    "end": 2127.44,
    "text": "yes correct"
  },
  {
    "start": 2127.9,
    "end": 2128.08,
    "text": "Wow!"
  },
  {
    "start": 2128.38,
    "end": 2139.64,
    "text": "So we've covered a lot under this MISP under this overarching markets integration supervision package regulation."
  },
  {
    "start": 2140.68,
    "end": 2148.259,
    "text": "what would you say as let's say summary maybe How do you look at the MISP from your perspective as an overall assessment?"
  },
  {
    "start": 2148.339,
    "end": 2158.18,
    "text": "We've heard that it opens up chances for more harmonized regulation, but then also bringing out all these complexities with new regulations and regulators."
  },
  {
    "start": 2163.66,
    "end": 2172.96,
    "text": "It's good that we have now this package and then, We will make sure that DOT-based infrastructures really can be used."
  },
  {
    "start": 2173.08,
    "end": 2174.12,
    "text": "Can be integrated."
  },
  {
    "start": 2174.819,
    "end": 2186.339,
    "text": "And from a time perspective I would say This should come much faster to Make it applicable for the market and To have this clarity because other jurisdictions are not asleep right?"
  },
  {
    "start": 2186.42,
    "end": 2192.92,
    "text": "So you see in The US i mean You never know what Will happen In U.S.. change in some years, you don't know."
  },
  {
    "start": 2193.319,
    "end": 2199.46,
    "text": "But we see also Asian regimes coming up and so it's really to be an attractive market."
  },
  {
    "start": 2199.88,
    "end": 2208.4,
    "text": "I think is crucial that we use this momentum but overall i would say its good that we have a asset."
  },
  {
    "start": 2208.7,
    "end": 2218.22,
    "text": "Some of the frameworks might be worth carving out In order to have speed And build our markets for future."
  },
  {
    "start": 2220.22,
    "end": 2223.38,
    "text": "We really want to see some developments."
  },
  {
    "start": 2223.48,
    "end": 2229.72,
    "text": "But waiting for two or three more years, then also the six years are progressing right?"
  },
  {
    "start": 2230.2,
    "end": 2231.64,
    "text": "Yes correct!"
  },
  {
    "start": 2232.66,
    "end": 2235.12,
    "text": "Nice yeah Annika thanks a lot for this overview."
  },
  {
    "start": 2236.14,
    "end": 2242.12,
    "text": "is there anything else that you would want to give our listeners on this overall package?"
  },
  {
    "start": 2242.58,
    "end": 2243.4,
    "text": "they should know about."
  },
  {
    "start": 2244.319,
    "end": 2250.839,
    "text": "So I would say follow what's happening there and use the time for consultation if you want to change anything."
  },
  {
    "start": 2250.9,
    "end": 2261.24,
    "text": "And maybe we should have given out a trigger warning at the beginning that this is very nerdy episode on regulation, so no but thanks for listening!"
  },
  {
    "start": 2262.299,
    "end": 2263.839,
    "text": "If you have any questions keep in touch."
  },
  {
    "start": 2264.48,
    "end": 2274.04,
    "text": "Yeah i think it's an important area involved in that don't follow the regulatory frameworks of Europe."
  },
  {
    "start": 2274.14,
    "end": 2303.54,
    "text": "But clearly this has a huge impact on the business and on the adoption of this new technology within Europe where again, Europe follows a regulation path or like a dedicated regulation path And now hopefully harmonizes it Hopefully faster as currently planned to basically catch up with those jurisdictions no action letters and then allow the market participants to develop, especially what we see in the US at the moment."
  },
  {
    "start": 2304.18,
    "end": 2314.52,
    "text": "So yeah still a developing area and let's see how this new regulatory framework helps Europe provide solutions ultimately that are used."
  },
  {
    "start": 2315.2,
    "end": 2318.259,
    "text": "so I think thanks for all these insights."
  },
  {
    "start": 2322.46,
    "end": 2330.54,
    "text": "A couple of months or years to see how the progress is looking like and yeah, always a pleasure to have you in the podcast."
  },
  {
    "start": 2331.1,
    "end": 2332.2,
    "text": "I wanted to say the same."
  },
  {
    "start": 2332.279,
    "end": 2334.12,
    "text": "let's meet here maybe one year time."
  },
  {
    "start": 2335.319,
    "end": 2336.12,
    "text": "Thank you for having me."
  },
  {
    "start": 2336.24,
    "end": 2337.42,
    "text": "it was a pleasure as always."
  },
  {
    "start": 2337.96,
    "end": 2339.64,
    "text": "Yeah thanks dear listeners."
  },
  {
    "start": 2340.14,
    "end": 2344.0,
    "text": "listening in i hope this was an interesting helpful content."
  },
  {
    "start": 2346.16,
    "end": 2347.819,
    "text": "See and hear your next time bye-bye."
  },
  {
    "start": 2348.9,
    "end": 2350.04,
    "text": "The views expressed"
  },
  {
    "start": 2350.299,
    "end": 2350.38,
    "text": "are"
  },
  {
    "start": 2350.52,
    "end": 2351.94,
    "text": "solely personal opinions"
  },
  {
    "start": 2353.06,
    "end": 2354.5,
    "text": "and are provided for informational"
  },
  {
    "start": 2354.56,
    "end": 2355.24,
    "text": "purposes only."
  },
  {
    "start": 2356.1,
    "end": 2370.819,
    "text": "This podcast does not offer financial or investment advice, always conduct your own research."
  }
]