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- [00:00]
Podcast Host
Are you curious about the economic forces shaping your daily life? The Planet Money podcast from NPR makes sense of the economy in ways you'll actually understand and enjoy. Guys, you love listening to the rundowns. I get some of that information from this NPR Planet Money podcast. Especially recently with the war going on the straight of Hormuz, you're just kind of getting those updates as they come from these guys. They put out a ton of awesome content. It's a different perspective from crypto101, but still a great listen. So go over there and check out the Planet Money podcast. If stuff like current events and the finance world interest you, each story on Planet Money starts with a question. Recent episodes ask why Pokemon cards are growing faster than your retirement count. Questions about the war. Just like we talked about recently a lot on our program. From the job market to the stock market to prices at the supermarket, Planet Money explains it all. Planet Money is a different kind of world where the complex economy somehow makes sense, where human stories supersede abstract theories so you can learn, laugh, and be entertained. It's econ, but just down to earth. The hosts go to unusual lengths to explain the economy. They've published their own book to track the global supply chain. They've shot a satellite into space to understand the economics of the private space industry. They've gone inside a live book auction to show how ideas get to market. It's the kind of show where you learn something, probably laugh and walk away seeing the world a little differently. And I think if you like crypto 101, you'll enjoy planet Money. So maybe check that out. Follow NPR's Planet Money podcast and understand how money shapes the world. One thing I love about summer is everything's just getting easier. You're outside more, you're taking vacations, and it's the time where you're really not trying to overthink every outfit. You just want stuff that feels good, works, and sometimes is a little cool. That's why I keep coming back to quints. They make those pieces that you end up just wearing all season. For me, it's the 100% European linen shirt and the matching linen pants that has become one of my go to beach vacation outfits. I've gotten so many compliments on it. It's breathable, it's comfortable. It looks put together, but it still feels relaxed. You can literally wear this thing, going to the beach all day, walking by the water for a sunset, and then head straight to dinner later feeling completely comfortable and looking fashionable. And that's really what Quint does? Well, they're 100% European. Linen pants and shirts are easy to wear, perfect for summer, and the price is unbelievable. And they start at literally just 34 dol. They also have soft tees you can wear all day, plus lightweight cotton sweaters that are perfect for when the temperature drops a little at night. Everything at quince is priced 50 to 80% less than similar brands. They work directly with ethical factories and cut out the middleman. So you're paying for exceptional quality, not the brand markup. And it's not just clothing. Quince has become one of those brands people trust for home travel and everyday essentials too. You've heard me talk about their website before. It's super fun to scroll around. They literally have everything. So make your summer wardrobe easier. Go to quints.com crypto101 for free shipping on your order and 365 day returns. Now available in Canada too. That's Q U I n c e.com crypto101 for free shipping and 365 day returns. Quints.com crypto101.
- [03:20]
Interviewer
We are joined here by Hein to Bosch. He is the head of product digital assets over at Flow Traders. Hein, welcome and it's good to have you, man.
- [03:28]
Hein to Bosch
Yes, very happy to be here. Thanks.
- [03:30]
Interviewer
Yeah, this is going to be a fun conversation. I mean, you guys are a leading global liquidity provider for both the traditional and the, you know, digital markets as well here in crypto. You guys have been around for a long time, excited to get your insights and really what you're making of the markets here. You guys, I know you especially are dealing with the 247 markets. It's kind of your specialty. But also what's happening with tokenization, which I know turns a lot of heads here and the listeners are already probably getting excited is tokenization has been one of those big talking points for the better part of the last year or two now. But before we even get into that, introduce the audience to what you're doing at Flow Traders.
- [04:13]
Hein to Bosch
Yes. Well, I started at flow almost 16 years ago, so I've been around for quite some time. I was a trader most of my career. ETFs. At the beginning. I spent over a decade in New York trading in the US Markets. I traded everything from fixed income to Commodities Fix Domestic USA Global ETFs and I transitioned to digital assets four years ago in the US first from a trading side and then it was time for me to move to Amsterdam where I was at My adding our product offering currently and my main focus is like how the two worlds are converging. So you have the traditional world, you have the crypto, the digital asset space. Like what's happening there? You see, let's say, call it 10 years ago, crypto was very futuristic, speculative. I think it was a bit shady at times. But over the past 10 years it really evolved into like a full fledged industry where you see very significant players moving into the traditional space, but at the same time you see traditional players also moving into the crypto space. And then currently, I would say tokenization, everything that comes with it is really our core focus for me, but also for the firm.
- [05:35]
Interviewer
One of the interesting things is I've seen people try to put a total addressable market on this stuff and you've seen the ranges be pretty vast because I think different people have different views about how it could be used or how it is being used. What do you think about that? Like, where do you think the true value is? Because it's easy for us, right, to maybe be a little bit biased. At least I'm speaking for myself here and probably some of the listeners. It's easy for us to be biased and say we'll see the value here and there and there and there. And we probably end up overvaluing how much the total addressable market could be. But I think you have a much more grounded idea of what is practically useful for some of these more traditional players, some of these bigger players. What do you think are some of the more valuable parts and what do you think they'll actually end up using?
- [06:27]
Hein to Bosch
Well, that's a big question. I could see the whole market, just the whole financial industry move into tokenized form. So if you talk about what's the total addressable market, it could be everything, like quite bluntly, more practically speaking. Currently, I think we're still in a bit of, I think, experimentation phase. We're getting out of it. We really see use cases, especially with the large US players stepping up like a DTCC that will be tokenizing the first ETFs on the 15th of July, the first tokenized trades will be happening through DTC. At the end of the year. It will be possible for anyone to choose whether you want to have buy a stock or an ETF in tokenized form or in traditional form. And I could see that only scale up because the efficiencies are clearly there. It's. Well, it's, it's. Yeah, I don't need to explain to you how like what kind of efficiencies you can attain. This intermediation is, is one of them. So that's just efficiencies in terms of cost also in terms of like reliability trust that you can get when everything is on chain rather than somewhere like with the T +2, T +1 T +1 settlement. So I could see Blondie everything move into a tokenized form what it really brings to the people. Because I think that's always a big question. You have tokenized stocks every trading obviously for retail. If you're in a place that's less banked or you're. There's no true traditional banks in Africa and Africa or Southeast Asia. Anyone is able to buy a stock of Apple and to get like to also invest a little bit in a fractional form. But people can really, people can start become active on markets they previously couldn't, which is an obvious gain. But of course that addressable market is relatively small if you compare it to Wall Street. But at the same, and this is again I would say more retail focused products can be accessible to people that were previously not accessible. Whether it's private credit, it might be private equity. All these instruments, you cannot easily get it. But now in a tokenized form, you can also spend a thousand or five thousand, ten thousand dollars to get that exposure and to diversify your portfolio.
- [09:05]
Interviewer
So it sounds like, and let me know if I'm right on this. But it sounds like there's kind of four key takeaways about how it can be useful and why it will be impactful. And the four that I'm seeing is that it saves money, right? Or maybe it's three, but it really saves money for everyone involved. Right. If you can get cheaper, especially for the institutions, the bigger players, if they can save money by doing this stuff, better for them, right? That's kind of what they're all about. The other parts would be that this would be 24,7. I think people yearn for that, right. The more time that the market's trading, you could theoretically say that, you know, there's, there's more money to be involved. And obviously again companies kind of like that. Us as retail, we really like that. Right. We're able to trade more frequently because what people don't understand is that the market is moving even while it's closed. Right. In the traditional sense, just because the market is closed doesn't mean that things aren't being priced in and the market isn't technically moving. That's why you see gaps so often, right? You come back and it's like, oh, well, something was happening in some other market and that was being priced in. And there's algorithms to kind of calculate how that would impact different assets while they're maybe not trading actively in the traditional sense. So I think that's really useful as well. And then the other big one here is liquidity, right? If you can have stuff that is cheaper, if it can be 247 and you can essentially kind of increase liquidity, then I think that that matters in the way that it increases liquidity. And this is something that we've talked about before, but I don't think a lot of people understand is just because an asset or a stock, right, let's just be blunt. Just because like a stock or something trades in the US doesn't mean that everyone in the world can just open up a brokerage account and trade that. What's. What's very frequently looked over is that there's all these tradable assets, you know, especially inside the United States and a lot of other countries, but there's also a lot of countries that just cannot get access to those in the same way that we might. And so you'd be opening up the market to a lot more people. Is that all accurate or did I miss anything?
- [11:03]
Hein to Bosch
Yes.
- [11:04]
Podcast Host
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- [13:57]
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- [14:34]
Hein to Bosch
I think it's all accurate. I think the the access to more advanced Ways to invest, I think in a lot of different shapes and forms. I will come back to that. I think that's a very important consideration. Why I think it's already taking off. What I heard before is that stablecoins basically are banking the unbanked and tokenization is sort of brokering the unbroken. I think that's sort of the narrative we're moving towards. To give an example, what I just said about like how can you be more savvy with your, with your money? How can it bring new investment opportunities? If you think about your dollars, they're just sitting in a bank account. You always might have some still dollars on your brokerage account. It's not always, it's not always invested and it's just sitting there and it's just not gaining you any yield. It's, it's, it's gaining yield for like your brokerage firm or for your bank. Like one of the, I think the most, the best examples, right, a tokenized product that's taking over tokenized money market funds. Where if parties are open to accept these and I think right now the appetite might be a bit low because it's sort of a competitive threat that a product offers you a yield that you cannot get on your dollars. If you put your money in tokenized money market fund, which is basically you could compare it as almost a one on one versus US dollars. That way you can get some yield also on the money that's sitting still in your account. And I think the more people will realize these possibilities and the more players, like especially the more advanced players that will offer this to their clients, they will get market share and they will also force traditional players to move into offering these kinds of products because they will simply be losing, they will simply be losing market share. It's the same comparison as right now. A lot of banks are getting active in crypto. I think if you talk about in the US just offering bitcoin to your customers a few years back it was impossible. Basically right now it is possible. You see, I would say every major financial institution already offers it to clients or is in a process of offering this to clients. One of the reasons is simply because they, over the last 10 years they've seen money flow out at a pretty consistent pace outside of their traditional firms to the more to the coinbase of this world that better able to access this. And I would say for example tokenized money market funds. I could see the same, I could see the same flow happen basically where it moved from a digital player to more Advanced players that are offering this to their customers. And then if you take it one notch further, and this might sound futuristic, but if it's possible, if you do everything on chain, also tokenized stocks, everything will just sit in a digital wallet. So you don't need a, like the custody will be done at the same places where you hold the tokenized money market funds, where you hold your stable coins if you, if you have a need for these. So everything is sitting in, in a is on chain environment rather than a traditional environment where you have a way of a clearinghouse, where you have a pro, where you have a brokerage like all of that. So I think that's, that's a direction where for sure the crypto native players, they would want the market to move into these. That's why I think super apps, it's often mentioned by some of the more crypto native players that that's what they want to become. A tokenization enables this and then the traditional players will also adopt it because otherwise they could see more assets flow into these players.
- [18:26]
Interviewer
Yeah, yeah, I think you're right about that. And one of the things I've seen you be vocal on is about how infrastructure and some of these operating models either need to improve or change to kind of fit the mold moving forward. Can you walk us through a little bit more on that and what the impact maybe would be?
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Hein to Bosch
Yeah, I think one of the challenges is of a tokenized assets also as a market maker in the traditional space, you settle at the end of the day, meaning you can trade all day in and out with a prime brokerage where you get leverage, meaning that you don't need to put all the money up front in order to trade it. When you talk about in a tokenized space, you basically you really need to hold either tokenized asset or you need to hold the stable coins to trade in these. And so we need some kind of prime brokerage firm or like prime brokerage function. Not firm but function where yeah these kind of inefficiencies capital wise. Because if we would be after, if we would have to quote like a thousand stocks in the weekends at five different venues, it means like as a market maker we need to put up a lot of capital. So this is a challenge which I know is also actively worked on by quite some parties to play a role to be innovative in this space. Because the on, like the on chain business, like the on chain model is great. But this is, yeah, this is a challenge that needs to be fixed. But and I'm pretty confident on the conversation I've had over the last six months that yeah, models will be, will be introduced to solve for this.
- [20:12]
Interviewer
Yeah, yeah, it has. I know one of the big things that shocked me is I really like the idea of being able to tokenize different parts of, of the gaming space and video games and creating like these other economies. And I was like, man, you know, even if we don't build the games on blockchain, I think having the economies run through blockchain just makes so much sense. I'm an avid Steam user for the gaming community and I've seen, you know, different games kind of utilize this stuff like Counter Strike. And I was like, man, that just seems like it would kind of be the direction that we would move. You know, here we are a couple of years later. Turns out the traditional financial world and banking and the whole finance space, there's a lot more money in that than probably in gaming. And so that was the direction that we moved. But I think it has been shocking to see how open they have become to this. And I think you made a good point there because now it's like, well, there's all these different tokenized funds from different asset managers out there, right? Blackrock and Templeton and some of these other ones are just so, so open to it and adding more. And then the other part of that is I think the overall direction that they're just moving with this. Again, they're so open to the idea now. And we talk to a lot of these asset managers and these banks and I think what has happened is that some of these more, I don't want to call them defi protocols, but some of these more like digital asset based companies like Hyperliquid for example, I think are applying pressure because what they're seeing is that they're saying, hey, you can trade just about anything 247 through us. You want to trade metals, you want to trade energy, you want to trade equities, you want to trade crypto, you can do it through us 24.7and hyper liquid among other players. You know, X Stocks has been another one. They've been really successful. And I think that what you have is the traditional financial world looking at that and saying, hey, they're kind of taking market share and there's no real reason why they can't do that. Right. If they truly wanted to, they could. And I think that they're looking at that and I think it's applying pressure, which is I think a win for most of us.
- [22:21]
Hein to Bosch
Yeah, I think what you're bringing up, I think that's what excites me most. And also like flow traders as a company is what you should know. Like both crypto and our traditional equities and ETFs, we're all trading it under the same roof. So we are. For us, it's, well, I would say almost as easy to trade something on chain as doing it over a traditional. Whatever it is, a Nasdaq or like a European or Asian. Asian exchange. We can plug in everywhere and we can just trade whether it's on chain or just traditional space. And now how these worlds are coming together. And I think hyperliquid is a great example also in terms of, I think perpetuals. The concept existed way before Bitcoin came to life, but the concept is really the proof of concept is done in the crypto space. Now, you see on a 24.7basis, the weekend volumes on Hyper Liquid, they get pretty significant and then it's still a defi protocol, which is pretty hard, if not impossible to access by any traditional player. Or whether it's a hedge fund or whether it's a macro fund, I could see both players like Hyper Liquid move more to see how they can get more of the market shares also during regular hours. And logical extension is the weekends. But at the same time, of course, Styximi also just came out. They're also having more like 247 offerings. And that is a very exciting development for us because it's sort of. You're in crypto, it's a proven concept, 24 7, the traditional markets, it's happening now. And of course, a traditional bank, when you're an asset manager, your timing, whether you do it on a Friday, Saturday or Sunday for your conviction trade, it doesn't matter that much. But if you're, if you're a pot shop, if you're a hedge fund, all of these players, they will want to access these 24. 7 markets. And that's what we're really gearing up for to, to make sure we can serve also these kind of counterparties.
- [24:31]
Interviewer
Yeah, well, I, I'm right on board with you, man. There's a lot of stuff happening. We really appreciate what you're doing. You're talking with these players, you're working, working with them. You guys are building it out. If people want to get involved, they want to follow what you're doing, where can they find you at?
- [24:48]
Hein to Bosch
So floatraders.com is probably the easiest spot, but otherwise like LinkedIn, obviously. And you can always move to Telegram if it's if it's more crypto native, but let's start there.
- [24:59]
Interviewer
Awesome. Well, Hein, we appreciate your time man. Thank you so much for joining us.
- [25:03]
Hein to Bosch
Yes, thank you.
- [25:17]
Podcast Host
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