Trading Tomorrow - Navigating Trends in Capital Markets

Trust, Regulation, and the Rise of Crypto Banking

• Numerix • Season 4 • Episode 41

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As crypto continues to evolve beyond speculation and into regulated finance, a new class of institutions is emerging. In this episode of Trading Tomorrow - Navigating Trends in Capital Markets, host Jim Jockle is joined by Pavel Jakovlev, Head of Product Innovation & Growth at AMINA, one of the world’s only fully regulated crypto-native banks.

From custody and trading to lending and staking, AMINA is building financial infrastructure for the digital economy all under the watchful eye of global regulators. Pavel shares how Switzerland, Hong Kong, and Abu Dhabi are shaping the regulatory landscape, why trust and transparency are non-negotiable, and how the "Wall Streetification" of crypto is shifting the entire narrative.

If you’re wondering what the future of finance looks like, this conversation is a window into that world.


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Jim:

Welcome to Trading Tomorrow Navigating Trends in Capital Markets the podcast where we deep dive into technologies reshaping the world of capital markets. I'm your host, jim Jockle, a veteran of the finance industry with a passion for the complexities of financial technologies and market trends. In each episode, we'll explore the cutting-edge trends, tools and strategies driving today's financial landscapes and paving the way for the future. With the finance industry at a pivotal point, influenced by groundbreaking innovations, it's more crucial than ever to understand how these technological advancements interact with market dynamics. The world of finance is undergoing a transformation, and at the center is the convergence of traditional banking and digital assets. As crypto gains institutional traction, regulated entities are stepping in to bring trust, structure and scale.

Jim:

In this episode, we're exploring how regulated banks like Amina are bridging the gap between traditional finance and the digital economy. What are the implications of this shift for the financial institutions, regulators, investors around the world, and what can we learn from leading crypto finance jurisdictions? Joining us today is Pavel Yakovlev, head of product innovation and growth at Amina Bank, a pioneer in regulated crypto banking. Pavel has a decade of experience in tech and Web3, helping startups and institutions alike navigate innovation and scale in this evolving space. At Amina, he plays a key role in shaping the bank's forward-thinking strategies, delivering crypto-integrated solutions from everything from custody and trading to lending and digital asset banking. Pavel, thank you so much for joining us today.

Pavel:

Thank you so much, Jim. It's an absolute pleasure being here.

Jim:

So let's just start right at the top. What is Amina Bank and how would you describe the role, its role today, in the evolving digital ecosystem?

Pavel:

Let's unpack. So Amina Bank is a Swiss bank. Well, now we can say truly that we're international. We have multiple offices. We're the main offices in Zug, switzerland, the heart of the crypto valley that got established about almost a decade ago in Switzerland. So it all started back in 2013, 2014. And we're just almost like one piece in a sequence of events that has transpired. So we've seen a phenomenal inflow of different companies into the Valley. So, starting from the Ethereum Foundation, cardano, tezos and the likes, and I'd say around 2017, 2018, the original founders started thinking about well, what would it look like if we would set up a truly digital asset-first bank in Switzerland? They've raised capital, they've applied for a license, and that license was granted in 2018. There are only two licenses of this sort that exist in the whole world. The other company is called Signum, so let's call us like sister banks, so to say. Our offering is very similar.

Pavel:

And then if we zoom in onto Amina and what we offer is, I'd say, we're right on the cusp of digital assets and traditional assets. So for us, everything begins with custody. So we custodize our clients' assets. We work with either high net worth individuals or professional investors or companies, and the companies can range from foundations, trading firms, application developers, with the tie-in obviously to digital assets. And then, on top of custody, we then go into either fiat or digital products.

Pavel:

On the digital products, you obviously have trading, you have staking. We also do loan-backed lending, so if you bring in your Bitcoin, we can issue a loan against that, and then on the fiat is your usual off-ramps and on-ramps. We also have term deposit accounts and we do also, on the crypto side, yielding accounts with USDC, and then we also have a trading desk. So we trade both traditional instruments and crypto instruments and crypto coins 247365. We don't stop and for us the way that I describe it to people is, if you think about what the ultimate crypto-friendly bank is in the way that you're imagining it, this is exactly who we are.

Jim:

So why was it so important to be a regulated entity from day one, and what does that mean around trust and adoption?

Pavel:

Right. Regulation is at the heart of everything that we do. It's pretty much impossible for us to do any of the activities that we did combined in one's service provision, so to say, without being regulated. We're custodying clients' funds, we have mandates, we do staking, we offer all sorts of different products and services, and then just doing these things without regulation is pretty much impossible and most likely illegal. So for us, again, these are the things that we now finally see coming to life across the industry. Right. Regulation is a big topic in 24 and now in 25.

Pavel:

We see a lot of TradFi players entering the scene of digital assets and likewise, on the other side, we also see more and more companies that are providing any type of digital asset services are also getting regulated right, whether it's via MICA or some of the upcoming regulations that are happening in the US. But there's also a whole spectrum of regulatory provisions FASPs, setups, casps, etc. Digital assets licenses in different jurisdictions. So, for example, we also have a license. We hold a license in Hong Kong. We can handle digital assets there. We also hold a license in AVGM, which is the Abu Dhabi Global Markets, an offshore jurisdiction out in Abu Dhabi, and then we're looking to get a Mika however you want to call it license in Europe to be able to serve our clients, even, you know, in newer jurisdictions.

Jim:

So you mentioned, you know, obviously, Switzerland, the home base, but Abu Dhabi, Hong Kong. How are these jurisdictions different in terms of their approach to crypto banking?

Pavel:

So I'd say the Swiss regulation was the first of its kind, right, and there haven't been similar licenses issued since. We and Signum have obtained it. And that is, it's a Swiss banking license. It's as robust as it gets, and we are, again, the only ones who are able to do things in the banking space, serving both digital assets and traditional assets. When it comes to other jurisdictions, in Hong Kong, for example, we're able to do certain things with digital assets, we're able to trade digital assets, but then, when it comes to custodying funds, when it comes to really servicing our clients with a whole spectrum of services, then you have to come to Switzerland for these things. And same thing with ADGM. We're there because we believe that the MENA market is expanding at a rapid pace, not just looking at Emirates, which Dubai and Abu Dhabi have emerged as interesting markets in the past few years, but we're looking beyond that right. The region is pretty diverse and very interesting from our perspective. You obviously have the big brother, saudi Arabia. You have some of the other countries opening up. You have a certain licensing regime when it comes to digital assets as well in Bahrain. So for us, we go where our clients are and whenever we enter a market. We want to make sure that we obtain the highest level of regulatory scrutiny there, just to make sure that clients and as you pointed out correctly, jim, it's all about trust and if we are in the good books with the regulator and there's rigorous checks from the regulator quite constantly, we want to make sure that we pass those checks and we serve our clients most efficiently and they can trust us again.

Pavel:

Everybody thinks banking is all about numbers and financial instruments. In my honest opinion, banking is, is, it's a, it's an emotional decision, right, especially in our industry, right and then in our industry, right and then by our industry. I refer to digital assets. There's a common expression not your keys, not your coins. When we started in 18, 19, and 20, there was this whole vision of banking the unbanked, creating alternatives to the traditional banking sector via DeFi and some of the other instruments, self-custody. But at the same time, again and again, we're proven that once people or companies attain a certain level of wealth, whether they have made an exit or they've raised capital on the company side they do want to move into a custodian type environment, which this is exactly what we provide.

Jim:

Well, I could say for certain my financial advisor knows all about my emotions over the last couple of months with what's been going on across the globe. You know, as we've had. You know you mentioned the US. Obviously, with the new administration, they want to become much more crypto friendly. I think there's guidelines that are that are in the process of being announced from the US SEC. Other countries, jurisdictions obviously the big move in the Middle East. Jurisdictions obviously the big move in the Middle East In terms of their evolution. What can they learn from Switzerland, abu Dhabi, hong Kong in terms of how they have approached regulation and how could they evolve some of that thinking into these other markets?

Pavel:

I think a lot has been done from the regulatory perspective in terms of identifying whether a token is a security or utility. I think that's pretty much the first step. Then understanding what chains actually do, the interoperability of chains, what type of applications are built on top of chains. So we do this quite extensively. So we have our own proprietary analytics where we scrutinize source of funds. We really try to understand what type of wallets the clients are bringing their assets from, where are the funds originating. So it's a proper on-chain due diligence source of funds. And I think if the regulator understands that everything can be analyzed and scrutinized and untangled properly, then there is no difference when it comes to traditional assets as well. If the regulator understands the trading venues, liquidity provisions, what exactly customers are doing, where are they trading, where they are custodying their assets, I think that paves the way, then, for a robust regulatory framework. And then, at the same time, I think Switzerland is pretty unique in their approach when it comes to digital assets.

Pavel:

So it was quite common to receive what was known at the time a no action letter. So a project would go or a company would go to the regulator, explain the case and say this is what we're trying to do. This is the utility. For example, when it comes to the token that we're issuing, do you what? Do you think the regulator and the regulator would issue what is known a non-action letter, which basically says you know what, if you keep doing what you said you're going to be doing, we don't have a problem with it, but we'll be checking in, making sure that everything is running as you have promised, uh, to do, in a way, and I think that's that's that's a very good approach.

Pavel:

And then also, the regulator constantly talks to the industry here as well, and I think that's incredibly important just to see how we can, also within the space, continue to innovate. We have a tremendous amount of discussions with the regulator around an asset, a staked ETH asset right, how do we make sure that there's a demand from our clients to custodize and trade and restate potentially staked ETH? So how do we make sure that whatever we're doing here, it's done in a regulated environment and then there's no commingling of funds? We understand who the counterparties are, that the counterparties are identified and KYC'd, and then everything is done with the protection of the customer in mind.

Jim:

How tightly coupled is regulatory evolution with tax code evolution?

Pavel:

That's a great question, right? I? Um, we will definitely see. Um our approach between the two. I think from the perspective of I would assume right now that the tax authorities are pretty fluent in terms of what is going on with different wallets. Um, you know, we issue, for example, tax statements, uh, to our clients from the bank saying these are the different flows, this is how much the customer is holding, how much profits they've made over the year, and that's on a disclosure type basis, very similar to the IRS. This common joke is does IRS know how much we owe them? Yes, they know, but we also need to declare. So it's in the same fashion, and I think both the regulator and the tax authority is more understanding of digital assets in 2025 than they were, let's say, in 2021. So there's a definite kind of spillover.

Jim:

One of the buzzwords going around for quite some time now is institutional crypto. You know how have you seen institutional demand evolve over the past few years, especially now that we do have a little bit more of regulatory clarity?

Pavel:

It's tremendous, to be honest, and I just got back from Token 2049 in Dubai and I have this stark contrast between Token 2049 a year ago and this year In 24, it was all about different applications token launching initiatives, influencer engagement, seeing which exchange to list the token on. Now the whole buzz was about regulatory scrutiny one. So there's a clear path for regulation, like Mika right, making sure that tokens are being issued within that regulation and that, effectively, the potential investors or token holders are protected in the European Union and beyond, in the European Union and beyond. And then the big topic is how do we make sure that we build applications with TradFi, so to say, traditional finance players, in mind? If they're coming in, do they have all the necessary features? Are they able to tap on-chain liquidity, so to speak, properly?

Pavel:

And then we also see this massive move from the likes of Franklin Templeton that are entering the space. Well, have entered the space now with their on-chain money markets. There's obviously a lot of work that's been done by Securitize and Athena Again. 21x is another example they've launched, I think yesterday or the day before yesterday, bringing traditional instruments on chain. So there's a lot of initiatives that are happening and in the end we will see. I would say again the merge of the two asset classes. In a way, the traditional fiat instruments and the on-chain capital will be one effectively.

Jim:

Well, from your perspective, the narrative has always been crypto versus traditional finance. Are we seeing more signs of integration at this point? Is that narrative dead?

Pavel:

100% and I think the second that you interact with Fiat, you have to KYC right, and I think where we will see true again, this is me as the head of product growth and innovation talking I think where we will see true merger between the two is when the users or customers would have some type of digital identification.

Pavel:

That digital identification would be, in my humble opinion, proved by zero knowledge.

Pavel:

That would give both the regulators or the counterparties assurances that whatever is in that proof is safe and secure and regulated, and KYC and AML, yet at the same time allowing users to participate in liquidity instances, whether in a centralized exchange or a decentralized opportunity, so to say. So that's where I think there's still a bit of work to do on technology side, on the integration side as well, because a lot of banks or a lot of financial institutions still run legacy systems. So we at the bank spend a lot of time integrating different protocols and staking providers, custodians, into the legacy tech right, the core banking systems. But that's continuously evolving, so that's going to get better. And then the last bit is obviously the regulators are going to get more comfortable with understanding what blockchain brings. You know the benefits Everything's on chain, everything is traceable and trackable and, in the end, if you have that digital identification issued in the same way like we have a traditional ID, it should be recognized for things that you're doing, you know, on chain or off chain.

Jim:

Just out of curiosity, you know, given let's call it the Wall Streetification of crypto, at this point are the crypto days of the crypto bros over.

Pavel:

That's a statement that I would like to unpack, depending on what you think you know crypto bros are. Are we as entrepreneurial as we were, say, five years ago? I would say yes. Do we see more money flowing into blockchain as an industry? I think this year's funding rates, vc capital, are higher than 2024. So there's definitely a lot of stuff happening there. Do we see an industry growing up and becoming more responsible?

Pavel:

I would want to say yes, and I also feel like the regulatory aspect is. Let's be honest, it's a regulatory squeeze, right? If you don't abide by the regulation, you are slowly being squeezed out and then, in the end, what you'll end up having is the pumpfund type instances where people can launch their own tokens and then that token pumps and then it just dies off and then everybody's you know, whoever made money made money, and then, as you go into a situation where you have to off-ramp that money right that you made or from profits that you made from those tokens, you will be scrutinized. So if you have that vision in mind, then most probably you'd rather act accordingly, so to say, got it.

Jim:

So you know, in your role in terms of product development, how are you balancing innovation with compliance right? Especially, this space is moving so fast, so many people are still getting their head around it. You know what does that balance look like?

Pavel:

So we look at things beyond compliance as well. So compliance is just one of the stakeholders inside the company. So, in addition to compliance, we also have legal aspects that we need to balance. We also have technology that we need to balance. We also have technology. We have trading finance.

Pavel:

So pretty much every coin that we list or make available to our customers, every product feature, every new initiative, everything has to go through governance.

Pavel:

And this is we go above and beyond from what the regulator has mandated us and the regulator said you need to have some type of governance whenever you're pushing certain things through on the product side.

Pavel:

We have made it so. There's a stakeholder, a wide stakeholder engagement process, and it's a two-step process as well, where we go from notifying the stakeholders and having the discussion, taking a decision of whether or not to proceed or kill the initiative or go back to the drawing board and then analyze it further, and then, if it's a yes, then we do what is known as operational readiness, and then after that, there's another set of governance where we basically say you know what, done the research, done the integration, done everything. We have all the necessary components for this thing to go live, and only if everybody's in agreement and there's no veto. So all the six, seven stakeholders within the bank are in agreement. Then that item whether it's a coin or a product or a service it goes live. So we're incredibly rigorous, maybe at times a little bit slow, but it's slow with a very specific purpose that we want to make sure that it passes all the governance checks internally.

Jim:

And that brings back that core statement of trust. The regulatory nod, if you will, is an overlying blanket, you know. But you know from what you're saying you view the role of trust very, very as a very high bar. I mean, how do you approach that communication or ongoing communication of trust, you, of trust with your clients?

Pavel:

I think for us, our retention rates, I would say, speak for themselves. Clients usually come to us. It's again also very rigorous in the onboarding stage. So it's quite common for us to take our time to onboard the client, whether it's a private individual or an entity. Usually I say we're very good at dealing with highly complex cases and I think in crypto every case is fairly complex.

Pavel:

If it's a company, let's say you've done a token issuance, so most probably you're not looking at one company, you're looking at three companies. There's a foundation, there's an operating company, there's a development company. It's all wrapped in some type of a structure and that structure is where some bits and pieces of those structures are onshore. Other bits are offshore. So we do extreme due diligence and we get to know our client pretty well. Sometimes our clients are not particularly happy with the amount of due diligence that we carry out on them, with the amount of due diligence that we carry out on them, but we always maintain the conversation with them, making sure that we explain the rationale behind our questions. It sometimes happens that we're in the process of almost onboarding all sorts of different entities with them, but we're really thorough in our approach and once that is done, the experience is quite seamless. The client is able to have access to pretty much our whole product and service suite.

Pavel:

Our relationship managers stay in touch with all of our clients. We have both low touch and high touch clients. The second that you hit a certain limit, you start getting the premium desk service. If it's below that limit, you still get a dedicated RM. You have constant touch points. We notify our clients if there's any issues in the process. We make sure that if they put forward a trade, for example, that trade is executed in a timely manner. And then it's also fairly easy, whether you're a small client or a large client, to have access to our executive committee. So there's also a relationship with the chief client officer, with the CFO, with the CEO, that some of our clients have and that also helps to instill trust. And we don't necessarily shy away. You're not speaking to, you know to, to, to uh, an automated call center, right. So everything is is fairly it's, it's, it's, yeah, it's, it's, it's humanized. We haven't replaced our people with ai just yet well, that, that is refreshing.

Jim:

That is refreshing. I tried to order something on my uh the other day and the dog started barking and it was responding and it was a nightmare. Um, but you know, let's just talk about risk for a second. You know how are you thinking about concentration risk.

Pavel:

You know, potentially within the crypto banking model I mean for us, the way that we see concentration risk is everything. All of our crypto is off our balance sheet. It's with the custodians. So if, in the unfortunate event, we would have to close shop, let's say that the worst thing would happen. Then all of the funds of our clients are safe. So we don't trade with our clients' funds, we don't do any activity around that.

Pavel:

So everything our clients have with us, everything is only mandated. We only operate upon their mandate. From that perspective. And then, if you think of it from the perspective of, hey, most of our AOM is actually in crypto. You think of it from the perspective of, hey, most of our AOM is actually in crypto. We have measures in place where we have continuous liquidity access. So in case somebody wants to liquidate things very fast, we're always available to do that within minutes since that order is received. So I would say again, quite robust we also understand the risks associated with digital assets pretty well and we make sure that there are enough process and governance around this to mitigate it as much as possible.

Jim:

When we say mainstream, what would you say the final hurdles are. I mean, I go back last year. We saw the first bitcoin etf. Um, you know, obviously you know. Is it um a robust options market, futures market? Well, you know, at what point do you just sit here and all this conversation just says, nah, it's just, you know, you have bonds, fx equities, crypto, blah blah blah, and it's just part of the system I think we're still far off from a seamless user experience.

Pavel:

If you want to hold not everybody's going to hold actual Bitcoin, not everybody's going to hold actual ETH, not everybody's going to stake it. Some people would want to have access through some type of wrapper whether it's an ETF, etp, etn, however you want to access that of you know wrapper. Whether it's an ETF, etp, etn, however you want to access that and these instruments have to be available Ideally. I think, long-term, we're going to go away from self-custody wallets. I think everything is going to be integrated into one app, most probably. My take is we're going to see more and more user experiences within some type of social media apps like whatsapp or telegram, with obviously proper access credentials, but then people would be executing things through bots, through conversations, through voice, and then that's all falls under user experience. What's happening behind, on the back end? Then there's a lot of integration work that needs to be done and a lot of let's call it red tape and disclaimers for people to sign before being able to truly have used these user experiences, so to say. But that's the ultimate not-north-north.

Jim:

So the click-through is not available yet.

Pavel:

No, I think long-term it's going to be. You know, I really appreciate the user experience of some of the trading bots that have emerged on Telegram two, three years ago. Right, you can, you can give commands to the bot and it's it's. It's fairly easy. You don't necessarily need to have access to your wallet. The bot has the access. So I think, if we think from the same perspective, in in in how the the future of of the banking experience looks like, it's exactly that hey, buy some ETH, stake it, or I want to put my ETH into a yielding account, however we want to, and then the bot should be able to execute these orders seamlessly, and whether you're doing that with fiat or with crypto, it wouldn't really matter.

Jim:

So, pavel, unfortunately we've made it to the final question of the podcast and we call it the trend drop. It's like a desert island question. So if you could only watch or track one trend, whether it be regulatory, institutional, crypto, crypto itself, what would that trend be?

Pavel:

I think it transcends all the other technological and financial trends. I think we are at the cusp of something truly marvelous and I think, on an emotional level, again going back to that, I think we're not ready to accept what's coming towards us, to accept what's coming towards us, and I think it's truly going to redefine the way that we interact with the world of finance, with the world of crypto. All of this buzz around agents let's see a bit of time that we need to spend there but in reality, for us, true automation, decision-taking, pattern recognition, ability to predict certain customer behavior that is, again, beautiful user experience that is powered by AI.

Jim:

Well, pavel, I want to thank you so much for your time, your insight, great discussion and really I think everybody's going to take away a lot from this. So thank you, thank you so much.

Pavel:

Jim, this has been an absolute pleasure.

Jim:

Thanks so much for listening to today's episode and if you're enjoying Trading Tomorrow, navigating trends and capital markets, be sure to like, subscribe and share, and we'll see you next time.