Remy: Welcome to FinTech TV. Institutional investors are rethinking how they source crypto liquidity after recent market volatility, and instead of relying solely on public exchanges, trading desks are turning to bilateral OTC execution to protect capital. Well, joining us from Money 2020 in Vegas is Paul Howard, senior director of institutional relationships at Winston. Great to have you here. Thank you so much for joining me.
Paul Howard: Thank you, Remy. Be back. Thank you.
Remy: Well, first and foremost, I do want to get your perspective on this year's Money 2020 USA here in Las Vegas. First and foremost, tell us what you're seeing on the ground and what makes this year different.
Paul Howard: It's great to be here. I was actually at the Amsterdam Money 2020 earlier this year, and that inspired me to come along to America, which seems to be the center of action for everything institutional and crypto this time. The event itself has been fantastic. A lot of big brands, uh, I'd say, uh, fewer but bigger brands than in Europe, which is an interesting dynamic. And obviously seeing folks like Bank of New York Mellon, uh, showing up, we've now got the institutions coming to the table here. So it's been a real, real great trip so far.
Remy: Yeah, and of course while I have you here, I do want to get your perspective on institutions reducing execution risk. So give us your perspective.
Paul Howard: Well, it's ironic now, we're almost a year and two weeks post October 10th, where we saw $19 billion in liquidations in crypto wipe out several $100 billion of market cap in the industry. And I think as a result of that, we saw a lot of liquidity providers and spreads blow up or, or, or widen. And there was a conversation I had with a big asset manager who was connected to 12 LPs who commented that October 10th, he, there was only two of them, one of them being Vincent, who was still making prices on that day. And so what we've seen since then, I think, is a. Convergence of institutional partners towards the regulated investment groups and companies like ourselves who are doing business and connect up with those folks rather than an exchange is one way that these folks are mitigating risk. If they were to connect up to an exchange, there's a Risk that their funds may get stuck, that they may not be able to pull orders, get bids, quotes, whatever it may be, at crucial points of the day. And so we've seen a real transition to OTC in particular folks trading API, which is obviously quite a hot topic here with all of the payment infrastructure companies coming on board and trading stablecoins.
Remy: Yeah, and Paul, I'm so glad you reminded us that it's been over a year since that October 10th date, and indeed it is hard to believe, given all of the volatility we have seen this year. But of course when it comes to risk mitigation, there is the role that governance plays. So give us your perspective on governance standards.
Paul Howard: Yeah, I think it's an interesting point. Um, obviously it comes in a couple of ways, I think. First of all is the, uh, oversights that groups like the SEC and obviously the, the US with their regulations are. Uh, trying to enforce across the industry. Um, for us as a regulated hedge fund structure, we have a dedicated compliance team which is. Crucial, I think, in how we manage counterparties and counterparty risk, where we assess who we trade with and they can have reliance on us as trading partners that we'll be there, not just through October 10th, but through the good times as well. And for us, I think that that's a critical difference in how people are now looking at risk in this space.
Remy: And while I have you here, I do want to get your perspective on fragmentation when it comes to what we're seeing across different platforms and hubs. So how do some of the connectivity platforms out there actually tap direct OTC pools efficiently and what do you think needs to be done?
Paul Howard: Yeah, I mean if you look at the equities market as an example from traditional finance where you typically have one or two exchanges in a jurisdiction. Crypto has over 200 exchanges, centralized exchanges, and probably the similar amount of what we call um uh distributed exchanges or or decentralized exchanges. Now, for an investor or a, a group, and you can name any Wall Street firm who has now got digital asset strategy, trying to connect to one exchange, two exchange, 3 exchanges, it would be a headache for their risk management team, uh. for just on boarding and compliance issues. So what we're seeing is a convergence of those people directly with liquidity providers, and obviously as part of that, trading with OTC helps mitigate the impact of going out to multiple exchanges or a single exchange, where obviously the, the top of the book depth can be quite thin, and a liquidity provider is able to provide a quote, which will involve depth and leverage of their balance sheet, which for us is, is, is a critical, um, Uh, point for people to be able to trade with us given the, the size of our order book and the size of our balance sheet, I think that that's something that stands us apart from, say, going on to an exchange then, uh, it would do speaking to a, a, a, you know, a multitude of other competitors in the industry.
Remy: Yes, and Paul, this year among some of the themes that happen. In the spotlight, of course we've been hearing a lot about artificial intelligence as well as stablecoins, but I do want to get your take on tokenized assets. So how do you think that liquid instruments out there should actually be priced and what do you make of where we are when it comes to RWAs?
Paul Howard: It's probably the big story that we've seen over the last few months, I think. If I look back over the last 12 months where prediction markets and decentralized exchanges and and perpetuals were really the talking points, we're now moving into a stage where tokenization is the main theme on Wall Street. Uh, tokenization, not just of stocks and shares, commodities, have all become viable, uh, assets to put on chain. And again, what we're seeing is a group of um crypto native companies like ourselves who are able to price those. um, and we price those using a lot of our proprietary technology and algorithms which are able to take in prices from multiple exchanges and uh group together that liquidity into, into effectively a, a, a, a, an order book or or or an offer on an OTC RFQ. And that gives liquidity to assets that wouldn't normally have liquidity. So whether you're trading a, a, a layer 2 protocol or some Altcoin or an RWA, maybe a money market fund or otherwise, working with an institutional partner, I think, is where you're gonna find that liquidity, not so much on some of the, uh, smaller partners, uh, uh, desks. But I think as we move into a place where all of this has moved on chain. You know, even talking about 24/7 trading now is gonna be a hot theme, and that's something that crypto does natively.
Remy: And finally, Paul, before I let you go, since we're here on the final day of Money 2020, I do want to get your take on what you're watching as we head into 2027, because there's so many conversations taking place on the ground here. I'm sure you've been speaking with stakeholders as well as other organizations and even some of the builders that are represented here. So what do you think we will see in 2027?
Paul Howard: Oh, look, it's gonna be another exciting. I think we're finally seeing institutions coming into the playground. We've got a talk about RWAs, we've got a lot of talk about tokenization, 24/7 trading, and I think if you look at some of the reports from, for example, Coinbase, where they're talking about a single platform for everything, a lot of these groups are now listing not just crypto, but they're starting to trade real world assets, equities, perpetuals, prediction markets, a whole plethora. of instruments that is now available through providers like ourselves and also some of the other partners, be they supply Piper Liquids or, or, or OKX or Binance exchanges of this world. And I think that thematic's gonna continue. We're gonna see a, uh, convergence of traditional finance products moving into crypto and also payments, agentic agents. You mentioned AI Remy, uh, you know, these are the type of things that Crypto can really work well with and and I think it's a great opportunity for us to just facilitate a better financial system for everybody.
Remy: Mhm. And very quickly since you mentioned agentic, of course all of our uh audience are paying attention to what's happening in artificial intelligence, but specifically in your space when it comes to agentic AI. How are you paying attention to the space and why does it matter so much?
Paul Howard: I think it's a real great use case for cryptocurrencies because if you could imagine giving an agent access to your bank account, you know. Internet banking for me 20 years ago was a scary thing that I didn't really want to get involved with. Uh, if you start to let access onto your own um bank account for whatever it may be via an agent, again, that for me is at the moment a bit of a step too far. But with a cryptocurrency account, those transactions can be signed and secured a lot more succinctly than giving access to, you know, the whole family war chest as it were. So I think we're gonna see a lot of proliferation of Agentic AI using crypto and using blockchain technology to sign payments, to send transactions, and, and really facilitate the, the, the, the movement of capital into a T0 environment, which is, you know, part of the reason that I got into financing and technology in the first place, because I think this. Whole space needs to move faster than it's been doing for the last 50 years.
Remy: Well, Paul, great to sit down with you here at Money 20/20. I appreciate your time. Thank you so much for sharing all of your insights as well as your perspective today.
Paul Howard: Thank you, Remy.
