Gunnar Jaerv on First Digital Trust launching Asia’s settlement network

0:01i'm ashton addison from eventchain for investmentpitch media and fintech news network and today on blockchain interviews we have gunner giroff the ceo of first digital trust gunner welcome to the show and thanks for being here today thanks for having me very nice to be here you're very welcome i'd love to start off with a bit of your background in finance and digital assets and

0:21then we'll jump into your work at first digital trust so um yeah i've been with uh first digital trust uh for more than a year before that i was uh working seven plus years with a company called legacy trust uh which is actually um the uh origin story of first digital trust so first digital trust is a spin-off company from from legacy trust previously my background i was focusing

0:47on what we called private label and special purpose trusts which were basically all non-standard trust arrangements and that's how we really got into digital asset space um when we had a lot of clients coming to us and asking for these sort of new kinds of arrangements involving digital assets cryptocurrencies and all of that so that's pretty much how i got into it

1:09very cool and i know that first digital trust actually provides a wide variety of services in digital assets but can you start with explaining what is the main focus right now with the trust and where are you growing the most so we are we're sort of trying to bridge the gap between the traditional and uh sort of the digital world uh there is a lot of cryptocustodians

1:32and digital asset custodians out there uh first digital trust uh is definitely the only multi-asset custodian in asia which means we can hold traditional assets you know your investment types uh you know like stocks bonds we hold fiat and we also hold uh uh cryptocurrencies digital assets and our main focus is really on bridging and uh sort of blending those two sides

1:56together that's great that you're able to have both of those and i know that your team has also implemented an instant settlement network for institutional investors to trade digital assets throughout asia you know how big of a step was this for the industry and are you seeing a lot of institutional interest throughout asia right now well yeah we already work with with

2:21numerous providers in the digital asset space like otc desks and exchanges and the issue we really had in asia was that we're sort of operating in the industry that's borderless but in asia you know it's very fragmented in terms of countries uh since we can hold all kinds of different assets we can take clients from all of these different jurisdictions uh

2:43it was it was a huge step in a way that it allows these companies and institutions from different countries to settle assets and you know their investments instantaneously within a single platform without having to you know wait t plus one t plus two and this is very different from let's say from us where you have um some of the equivalent sort of systems

3:06provided by the local banks where you you're operating in the same jurisdiction so i would say it's it's quite interesting it brought in some interesting benefits for a lot of industry players that's great and i read that bank to the future which is one of the largest online investment communities you know they've invested in most of the unicorns in the space they

3:27have moved all of their clients uh assets from traditional banking infrastructure over to first digital trust so that i think that's a huge move so congratulations on that um can you elaborate on the differences that that makes for you know a large investment platform and how they benefit from moving over to first digital trust so um i i think the um the benefit and

3:52the sort of the match there is more of a philosophical match so if you know the story of bank to the future and if you you know read the book and if you know their sort of a long story back you know 10 years um there's a very sort of strong belief that the today's fractional reserve banking is inherently dangerous uh and that there are risks associated

4:11with that um and i think they were very sort of um attracted to the idea of using a trust because trusts work very differently uh in any kind of a fiduciary arrangement you know we don't lend all client money we don't pledge it we don't we don't you know if you put a money in a bank a hundred dollars into the bank the bank will lend out ninety dollars and you know

4:33they have to hold the reserves but uh trusts work very differently so i think on on their part there was a philosophical match and also we are sort of strong believers in in in that and uh for the end users or in clients it it eventually makes it more safer because they can know that uh you know it's a proper trust or fiduciary arrangement that's that's in

4:54place instead of funds just sitting somewhere in a bank where those could be land out definitely and now in the states it's not even 90 now it's all a hundred dollars they can just lend out and there's not even any money there at all so i could see why the benefits of why that would be a benefit and to touch on on security a little bit further i know that first digital trust is also

5:15working with ledger which is one of the most popular hardware wallets and i'm curious on how exactly you guys are working with ledger you know it seems like it's already one of the most secure wallets um but is there a security you know discussion that you're having with them moving forward as well so i think well it's worth mentioning how and when it got started so it was

5:39about three years ago and uh ledger was building back then they were building a product called ledger vault which is the institutional equivalent of uh their sort of legend nano which is a retail device where you know everybody can hold their assets but back then there was no really no proper solution for institutions and we were one of the first ones to partner up

6:00with ledger and roll it out in in asia and the main sort of um rationale for us was you know we were really faced with the question because we were already operating in the space we were you know using propriety technology all that so the main question was are we gonna build our own you know like technology all of that or are we gonna you know build or buy essentially and we

6:23really like what ledger was doing they had a really good reputation you know back then they had 200 more 200 plus people working they have their own supply chains they manufactured their own devices in france so that was very appealing to us and yeah we decided to partner up with that um their security and their reputation is i think is you know um probably the best out

6:44there um so we have really benefited from that where our focus right now is is not so much in the security we believe the security issue has been largely solved if the technology is used correctly where we're trying to improve now is internal controls and operational controls and that's also it's also a good match because ledger is focusing on that and

7:05they you know on the ledger world platform they have different ways of creating different operation rules uh and it allows us to bring in the traditional sort of banking or financial level internal controls into this industry so i think that's where really the security aspect and um you know the focus is right now yeah that's really interesting and i'm

7:28curious if your team is also doing anything similar with exchanges as well because there have been a lot of you know hacks even recently there's still hacks with exchanges and although some of the funds seem to be you know stored away safely the hot wallets are being hacked and even the cold wallets seem to be vulnerable at times are is first digital trust trying to work

7:49with security of exchanges moving forward so where we're really pushing is again we're pushing on internal controls because any kind of cold wallet or hot wallet the weakest point is always the human link and procedures and policies so you can have the most secures you know vault under a mountain in switzerland but you know if you don't have proper security and you know if

8:09there is a vulnerability in terms of human error there then it's still vulnerable um exchanges um i think they're not at that level yet where you know they're really actively thinking about these things it really comes from more from the traditional side but we're very happy to sort of uh lend our knowledge and help uh anybody that's sort of um interested in improving you

8:34know improving their security there's ways to have multiple controls where you know our client could um let's say you could initiate transactions we could be the additional approvers you know there's so many ways you could be configured um yeah but the main thing is it really revolves around internal controls and policies and procedures i think these days that's

8:54what exchanges odc desks need to focus on to improve their security well said and you mentioned traditional banks and the traditional banking infrastructure uh they um the the asian banking infrastructure seems like it's doing fairly well at least compared to the american uh infrastructure but the american banks did just say that they're now allowing to you know have

9:18custody of users cryptocurrency and digital assets so i'm guessing that they're going to need more compliance to and more knowledge to understand the security and protocols needed to safely store these assets you know are you working with any of those partners to to get them up to speed so i think this you know this topic you know there could be a whole another

9:42interview about this because there's so many moving pieces there i think um the the announcement itself was very great news um it sort of made this um i would say that's a new asset class or digital assets more acceptable to the banks i think banks will be less afraid to deal with companies that deal with visual assets but you know if you ask me whether the

10:05banks are going to be holding digital assets um i just really quickly want to jump back to that reserve question and i've asked this you know some of my friends in the banking industry and you know some of some of the companies that we work with and nobody really has been able to explain it to me so imagine if you hold if you're a bank and you hold bitcoin

10:23or you hold ethereum and if you take in the volatility of the cryptocurrency market and if your central government has put in or central bank has put in a you know 10 reserve requirement how do you manage your reserves if you have an asset that goes up or down 25 you know 30 could go up or down in a day so it is very difficult for them to manage those reserves and i think

10:47um security of course you know safekeeping assets is one part i believe there is technology for that but i think the bigger question is how do they manage the reserves and that's uh that's a big open question so i don't think we will see like you know you won't be able to walk into a major bank in you know in new york or somewhere and make a bitcoin deposit or a borrow ethereum or

11:08something like that that's way in the future and i think specialized companies like lenders and you know different platforms like trading platforms will still dominate this space um and in the future maybe the banks the better route would be maybe to sort of acquire some of those companies and then bring it into the traditional system yeah that makes sense and i could see

11:31how the banks would want people to store their digital assets with them so that they could leverage those too you know to to make more money because they are looking for new revenue models uh all the time so that would make sense and you know as banks continue to get more involved there's also the security risks um and and overall i know that first digital trust is

11:52you've been working with a microsoft backed part partner on fido to help with you know fraud can you talk about your relationship there and how does that help overall all of your customers and clients so our relationship with on fido actually goes years back as well we started using them way back for um identity verification um and back then they were just a startup

12:17obviously they've grown tremendously they've you know just this year they've won so many awards in europe and they the the reason why we really like working with them is even way back then they were focusing on building the technology and they were heavily investing in ai um so for us when we're dealing with clients around the world it's quite important that we know who our clients

12:39are and that doesn't mean that you know okay we know where you work what's your name and what's your passport number but we also need to know that you know that they're a real person uh that um we have a you know high degree of uh assurance that we know who we're dealing with this goes back to kosc and aml rules and all of that and they were they were sort of

12:59um innovating back then in that space they were doing the selfie and passport photo system that you know we could integrate into our systems and most recently they have been working on ai technology and this is like super interesting again like uh could be another whole topic but there is actually been studies where the um they've proven that ai is actually

13:21better at recognizing people's faces now like on in the imported checkpoints than people so they've done a study and the computers are better recognizing it so we're very much very bullish on this and it helps us to generate this sort of um provides us additional confidence and generate this sort of assured identity concept even if we're not meeting people face to

13:43face or you know they're not coming into our office and you know in today's world where we have travel restrictions lockdowns all of that how do you deal with your global client base i think this is the you know stuff for the future and it's yeah they're working on very uh very interesting stuff yeah that's super interesting and that that ai note that's

14:01that's really cool and i i it seems that's the the trend across you know multiple industries is it's the human error that is usually where there's you know the flaws and once you introduce ai then that's taken away so we'll we're running out of time gunner but my last question is how is first digital trust continuing to grow uh are you also looking for other

14:22partnerships or just more clients as you grow uh so our focus right now is uh building products and sort of um pushing the industry forward we were very much focused in custody before but now we see custody as an infrastructure piece um the same thing for like settlement we were trying to solve some of these bigger problems um our focus really is going to be on

14:44you know specific products we're very bullish about tokenization there's been positive regulatory news from hong kong uh from u.s different jurisdictions i think um sort of in private equity private placement space this is uh gaining speed right now it's not there yet in a big sense but uh when it comes to organization uh again it's something where um because

15:07whenever you have traditional assets you need uh let's say traditional custodians traditional trustees to hold that to provide that independent um assurance so that's that's pretty much where our focus is and we're we're very keen to work with uh with different companies that are active in that space i think that's our main focus great and if the viewers are looking to learn

15:28more on first digital trust what's the best way to learn more uh you can always um check out our website you can google us you know we're mostly online we do a lot of conferences yeah great well thank you so much for your time gunner it's been a pleasure speaking with you uh all the best with first digital trust and let's follow up in the near future

15:50thank you very much you