All institutional demand is pushing crypto-OTC desks far beyond simple block trades. But as trading becomes truly 24-7, a massive bottleneck remains in that settlement. So while markets never sleep, capital continues to get trapped behind traditional banking cutoffs, as well as fragmented infrastructure. So solving the post-trade friction is critical. Joining us live here at the New York Stock Exchange to weigh in is Jerald David, CEO of Lynq network, and a veteran executive from the CME Group and NYMEX. Great to have you back. Thank you so much for joining me.
Hey, Remy, great to be with you again.
Well, you and I were talking about the price action we're seeing across markets today, and it is a holiday weekend right around the corner, hard to believe. But that really does tell you a lot about settlement as well as this 24-7 trading environment that we're talking about. So give us a sense of where we stand when it comes to demand versus the actual infrastructure.
Yeah, I think settlement right now is a really hot topic. I think that exchanges right now are making moves. 24-7 trading right now is a really hot topic, as you know. And I think what you're seeing is a gap between the infrastructure that exists right now and execution capabilities. So exchanges like CME Group or ICE have been making announcements talking about trading 24-7. It's creating a little bit of friction in the marketplace. And the friction that's being created right now is that dollars, traditionally, which have been used for posting marginal, let's say, derivatives markets, don't move at the same time, obviously, as digital asset markets move for 24-7 markets. So the friction that's been created, really, is the ability to go ahead and move capital to let's say an FCM or an exchange clearinghouse in order to effectuate a trade for let's say Bitcoin future, even let's say a soft or something like an oil contract, Brent or WTI on the exchanges. So I think what you're seeing right now are markets are moving, but the infrastructure itself underpinning it hasn't quite caught up just yet.
the world. crude oil, as well as some of the trades that take place over the weekends when traditional markets are closed. So given the demand as well as the institutional adoption and expectations as we move into the rest of this year, how do we get from point A to point B? Yeah, that is, I think, the heart of the problem. And I think that when you think about it on a macro perspective, when we start thinking about things like petroleum, Brent, WTI, global benchmarks, right? They far eclipse the size of, let's say, Bitcoin futures or ETH futures, right? So the example that I would give would be something like this. You've got a major oil company that wants to hedge because potentially there's a war happening in the Middle East. Well, what do they have to do now? Now they've got to go ahead and send capital directly to their clearing member sometime in the afternoon on Friday in the anticipation of having to go ahead and initiate a trade on let's say Sunday morning. And that's not capital efficiency. I think that there are ways that I know that there are ways using digital asset blockchain based technologies that one can take capital, get it to the clearing member when the actual banks are closed. It would just have to be in a digitized form.
Yeah, and speaking of which, I do want to expand on that. So what is it going to actually take to be more efficient? And we all know that there are different products, that there are different exchanges working on products which you can utilize as a trader. But what is it going to take to be actually efficient?
Yeah, I think it's two things. I think it's one, it's the adoption and it's the acceptance of digital asset based solutions and larger financial institutions. And I think what you're going to see now are going to be some of, let's say, digital asset type firms that are going to lead the way. In the world that I'm thinking about, you know, you could take something like a tokenized money market fund that might operate on a settlement platform and send that to an FCM that ultimately can accept that. And even in a world where you're accepting a digital asset solution, the fungibility into the actual underlying product, let's say a treasury, can then be used to be sent to the clearinghouse. So I think that as the institutions themselves start embracing digital asset solutions, we're going to begin to solve for some of the market friction that exists right now.
So when it comes to actually bridging this gap that you're talking about, what do you think is necessary?
Yeah, I think there are a couple things that are necessary. I think there are infrastructural additions that need to happen. A settlement layer, for example, that sits in between a client and, let's say, an exchange clearinghouse that operates 24-7, that isn't, unfortunately, adherent to, let's say, banking hours. And that is the problem right now, right? Is that market is 24-7, but you can't get your funds to the exchange to initiate what you want to do. Digital assets would solve for time and transferability are really a solve for this. And things like tokenized money market funds are coming to the forefront right now as a solution.
And finally, before I let you go, when you look beyond the end of this year and also beyond next year, how does all of this shake out and what does it mean in terms of actual products for institutional as well as retail investors?
Yeah, I think that this is a really, really important timeline right now in terms of the development of digital assets. I think over the next 12 months, you're going to start seeing massive consolidation. I think the lines are going to blur between what we look at as traditional and digital. I think you're going to start seeing more of these ventures that are happening. Folks like NYSE investing, polymarkets having a tie up now between, you know, kind of OKX and the stock exchange, the ice exchange. I think these are really important steps that we're taking that are ultimately going to go ahead and pave the way for broad adoption, not of digital assets, but of digital wrappers that ultimately are going to be wrapped around traditional assets as well.
Well, always great having you on the show. Thank you so much for joining us live here at the New York Stock Exchange. Thanks for having me. It's great to be here today. Thank you.
