Zane Suren on Pre-Funding, DAMA, and Why Abu Dhabi Moved First

Let's kick off with what BridgePort does exactly, if you wouldn't mind explaining what's the big problem in crypto markets that you guys are solving. So in traditional markets, trading firms keep their assets in custody. They would then trade on an exchange of their choice and then settle, and that happens like magic. Now in crypto markets, the norm seems to be to pre-fund an exchange, which means it's a very inefficient way to operate that capital.

And so BridgePort connects custodians to exchanges, so an institutional trading firm can choose any custodian of choice, store their digital assets securely with that custodian and then trade on any venue of their choice, exchange, OTC desk, etc. So we perform two functions, a credit allocation function and post-trade, the settlement netting function as well, purely as an API layer.

I mean, it's a really big problem, right? So I think the number was 60 billion worth of funds that are sort of captured and the inefficiency that's built into the system. So you're effectively unlocking that 60 billion and letting it flow far, far, far faster, right? Yes, we actually think it's a significantly higher number because this is trapped capital.

And what that means is, let's say a trading firm trades on eight venues, they would pre-fund each of those eight venues. Most of the time that capital isn't being put to work. So 60 billion is probably on the lower side. And we can really, once we unlock the connectivity between the various players in the market, it should be allowing capital to flow a lot more efficiently.

…about this DAMA, D-A-M-A, really an ISDA for digital assets. So that's pretty revolutionary, I would say, because it's very needed in crypto markets to have these traditional finance sort of standards and guidelines. And ISDA, as we all know from the GFC in 2008, is an incredibly long, comprehensive set of rules and guidelines.

So tell us more about DAMA. Yeah, one of the biggest challenges, I think, in this space right now, the digital asset spaces, even if the technology is there connecting custodians, exchanges, and trading firms to be able to trade, even if the regulatory approval is there, they still need to have legal triparty agreements which allow them to put in place things like dispute resolution, settlement frequency, and so on.

And we noticed that all different client types were having the same issues. They would take two to six months to negotiate these terms, and it would be very painful. And then when they brought on clients, aside from the trading exchanges and the custodians, they would renegotiate. And so even though we're not in the legal agreement, the Digital Assets Master Agreement, DAMA, is a set of frameworks which uses the ISDAs as a base to help standardize across the industry.

And we hope that, as part of the industry's growth, we hope that the participants would support that. Now, we've actually seen today a lot of support by a working group. So if you are a trading firm, we'd love to have you join in. A shout out for those that contribute. Yeah, I mean, it takes a village, right, to come up with these things.

But great initiative from BridgePort, and I guess sort of seeing that gap. And there's just many problems that's still to be worked on in crypto to really close that gap between traditional finance and the crypto markets.

So, let's talk about digital asset growth in the MENA region. You guys obviously have a front row seat in what's going on here, all the trading activity. Tell us about what's happening in ADGM, the trading of crypto, the trading of digital assets. What's your take on it all? So I think ADGM has been one of the few regulators globally that has demonstrated from a very early period in the digital assets ecosystem a forward-thinking attitude, stance, and actual action with regards to the frameworks around digital assets.

I think 2018 was the first framework set out, and that's effectively providing clarity for firms. Entrepreneurs, especially in a new tech era, want clarity. They want settled rules around how they can build, because this is a 10, 20, 50-year infrastructure bet. So, that bet has now recently paid off with a lot of firms coming to the region to set up hubs here.

We obviously saw Coinbase's news earlier this week, and it demonstrates that the collaborative attitude that the FSRA has always demonstrated for the last years has been one that the market has received very well. We're very, very bullish on the region, and Abu Dhabi and the UAE as well as a whole will be the hub for digital assets ecosystem growth on the institutional side, certainly in this region.

I think when we have a name like Coinbase setting up their international tokenization hub right here in ADGM, I mean, it's giving a very strong signal to the market. Do you see that sort of kicking off a chain reaction of activity? Is that really sort of a flag in the sand and we're going to see a lot more players and maybe US players actually come and set up shop for tokenization purposes, infrastructure purposes?

Absolutely. So regulation of an asset is the first step. The approval is the first step. The infrastructure, being able to enable capital to flow effortlessly is the second. And I think the fact that Coinbase has planted resources, commitments here to the region, to Abu Dhabi in particular, demonstrates a proof point that the regulator was correct in their bet.

Now, naturally, what happens then is the plumbing catches up and that's what we're looking to support the ecosystem with. I think definitely we're going to see more folks come here and utilize the regulatory clarity that we have here.