Crypto, Corridors, and the Case for Europe: The LHoFT’s CEO on the Future of Token Finance and Global Partnerships | The CXO Conversations

Guest:

• Nasir Zubairi, Chief Executive Officer, The LHoFT Foundation

Host: 

• Pat Patel, Executive Director, Global Finance Technology Network (GFTN)

Full Transcript 

[00:00:00] Pat Patel: Hello and welcome to The CXO conversation. This is gonna be the best CXO conversation we've had to date . I know I always say that, but I really mean it this time. I've got Nasir from Luxembourg. How are you doing today?

[00:00:18] Nasir Zubairi: I've had better days. A little tired from a big night out, which ended in quite a karaoke rave with the rest of the team from Luxembourg.

[00:00:28] Pat Patel: Fantastic! It's all about networking.

[00:00:29] Nasir Zubairi: Of course.

[00:00:30] Pat Patel: Yes. And in terms of just a quick look on the last few days. How has it been for this amazing delegation you brought across from Luxembourg? You've had... the finance minister [ H.E. Gilles Roth]. By the way, I think he's a really nice individual. Just seems so humble.

[00:00:45] Nasir Zubairi: Genuinely very nice. This is the third finance minister I've had in my team.

[00:00:49] Pat Patel: What'd you do with them? Yeah, it's all my fault. I mean, all of them have been great, always been very supportive. He's now been in his role since the new government took office at the beginning of this year. But what you, what you say is exactly right.

[00:01:01] Nasir Zubairi: Very humble chap. Showing strong determination to learn, to be prepared and to really make a difference, which I think is special. You know, Europe has lacked a little bit of motivation and vision and I think that trickles down to a lot of the governments themselves, but this one's different. I really feel a positive sense. With what's going on at the moment.

[00:01:21] Pat Patel: You have a way with words. I'm just gonna throw this one liner. I think this is about three, four, actually five years ago, probably now. We were in a taxi from a networking business activity and you were in the car with somebody and I can't remember that person's name, who just wouldn't stop talking. I could feel a migraine coming on. This person had talked so much and I just said, "Stop! Is the next thing you're gonna say, improve upon silence." And I think she stopped. She absolutely stopped. So the bit there is silence is golden. What's the most important conversations you've been hearing this week that has hopefully excited you?

[00:01:57] Nasir Zubairi: Well, a couple of strong things, I think. The renewed interest as a whole, which I've seen actually most of this year, but particularly here from very large scale payment firms and technology companies looking at cross-border development and particularly looking at Europe. I think there was a massive slowdown in expansion and growth, particularly from the US after COVID, where there was a lot of internalization and focusing on local domestic markets to reestablish in , after the disaster that happened in 2020. This year we've seen a huge pickup of interest. And of course, we're very proud that a lot of these firms are choosing Luxembourg. One very simple thing helps, we speak English and we are in the center of Europe, right? I feel very embarrassed that the only language I speak is English, yet I sit in Luxembourg and everyone tolerates me there. But it is very useful in the world of finance and in the world of tech. And we've had some great conversations here with a lot of the large payment institutions and technology companies that are very keen on looking at setting up subsidiaries in Luxembourg, which is very positive.

[00:03:11] Pat Patel: No, I think I've heard you speak other languages late at night.

[00:03:13] Nasir Zubairi: Gibberish is the one usually.

[00:03:14] Pat Patel: It's a great language. Let's look at the year coming up now. So, I've spoken to many people, I think this week. People have either been surprised or been shocked, but others were like, "yes!" Crypto guys have been, this is their moment coming up again but what, what do you see in 2025? And give us the low down on what you see for 2025 and ideally in the context of Luxembourg as well, because you guys are strategically positioned.

[00:03:41] Nasir Zubairi: So because of a lot of the changes that have occurred, as I said, in government and in a couple of other key positions within Luxembourg. What I see particularly for Luxembourg is a real embracing of the token ecosystem. Luxembourg is already the leader in terms of implementing new legislation for blockchain. So all the big tokenized bond issues have occurred in Luxembourg, World Bank, EIB, et cetera. And we've been further strengthening those rules. We're up to blockchain law four now. Nice. And we are seeing a push from all quarters, including the minister. You may have heard him when he spoke today. And most speeches he's giving, he is talking about pushing forward on the token ecosystem.

Franklin Templeton just launched the $500 million fund in Luxembourg- tokenized assets. And we see massive growth potential in that area within Luxembourg and therefore hopefully driving a lot of growth within Europe. I think with that obviously comes crypto. I think we've gotten to a point where regardless of looser legislation that may come in the US or what the market seem to be celebrating at the moment. That really doesn't matter to me because Europe ultimately is putting in place MiCA So regulation is coming for the European Union regardless which I think is being welcomed by most crypto players in the market. And I think alongside what looking and building that token infrastructure for securities and the asset management world.

So for wealth, it is almost impossible to ignore crypto. So we are genuinely, I think seeing the maturity now and crypto coming into the mainstay where we will see as we are seeing large fund managers, the traditional fund managers, big ones from the US and from the UK launching sub crypto funds and the traditional industry is gonna have to deal with that.

They'll have to provide the custody services, the administration services, all of that. Plus, obviously the brokerage services. So this is becoming mainstay. So that's where I see a big growth area. But then critically, cybersecurity is always important. But in this world of AI now as well, with all the external threats that are posed by AI, we're spending so much time looking at AI regulation and worrying about how firms use AI, which I find non sequitur 20 years ago. You know, most of the liquidity on the big markets in the world, 70% plus is driven by algorithms and has been for 20 years.

[00:06:11] Pat Patel: Mm-hmm.

[00:06:11] Nasir Zubairi: And now we're suddenly worrying about AI and people are talking about collusion and bias and all these things. Models by definition have to be biased, otherwise they're not creating a decision. That's the whole point of a model.

[00:06:21] Pat Patel: Yeah.

[00:06:21] Nasir Zubairi: But people are worried about how firms will use it. My worry is the impact of how people can use AI to attack the financial system. Deep fakes, fraud, and critically the large scale increase in phishing attacks that, I don't know if you've noticed it, I'm getting a lot more stuff coming into my inbox now recently because you can mass produce it now with AI and that worries me a great deal. And the financial industry, worryingly does not have the best talent in that area, and that's very scary.

[00:06:51] Pat Patel: It's that middle management in a bank. So let's move on now to this MOU signing. I'm not a big fan of MOUs but I think this one is different. I really do. This is a conversation that probably stemmed from earlier this year, just before Point Zero Conference, just before the Euros.

We had an exchange, a WhatsApp exchange where I said, 'Hey, you know, is there something we could do together?' I think I went silent for a bit because there was a lot going on at the time. And obviously, you now know why - GFTN.

[00:07:21] Nasir Zubairi: Yep.

[00:07:21] Pat Patel: Has been all encompassing over the last six months. But, you know, Sopnendu mentioned earlier today that this is something he has wanted to have done in a meaningful way, for the last seven years since he met you. Maybe share some thoughts on, maybe tell, everyone listening a little bit about LHoFT and where you think this partnership could go. And then, I'll share my thoughts on where I think it could go as well.

[00:07:44] Nasir Zubairi: Firstly, congratulations on GFTN. I think this is really exciting and I'm sure you guys are very excited. It'll mean a lot more work for all of you guys. You're gonna be even more knackered. We need more people. So you're gonna have an army. It's something that excited me.

I don't like signing MOUs either. I'd only sign pieces of paper where there is a purpose to that piece of paper. The discussion we had. Yes. I think there's something interesting to be done here. Luxembourg and Singapore share a lot of similarities. Small countries that have moved forward from a more traditional path with Singapore, obviously with shipping and logistics.

Luxembourg was the heart of the steel industry in Europe. ArcelorMittal is headquartered in Luxembourg because of the historical steel industry. And we've both gone to become financial powerhouses. So there is a similarity there. Small countries, very multicultural, multilingual, with an ability and an agility to want to do better.

So there's good harmony there to move forward. The driving force of finance fundamentally is technology that is shown by Luxembourg in the setup of the LHoFT, which happened seven, eight years ago now, because it's largely driven by the then Minister of Finance who said, "I'm worried going around the world that everyone's talking about FinTech. What is Luxembourg doing in this area? We need to do something, we need a strategy." So we developed a strategy and then set up the LHoFT. So the LHoFT is a public private foundation, not for profit, which is supported by the government, but critically by the private sector as well. So my board, the chairman is the Minister of Finance. I have various other people from government on my board. Alongside, the CEOs and MDs of a lot of the private institutions, big institutions in Luxembourg. And the real goal and mission of it is to drive the future of financial services and its competitiveness in Luxembourg. And increasingly now, EU, we take a bit of a leadership role in the EU because of our structure with a focus on digitalization. And it's been a really interesting ride. We've always focused on sort of three core pillars because when you're doing a presentation, showing three fingers always looks the most powerful, right?

[00:09:48] Pat Patel: It is, yeah.

[00:09:49] Nasir Zubairi: So it was ecosystem, innovation and knowledge. But the focus over the years has really shifted. So at the beginning, most of it was around ecosystem development. So building that ecosystem, connecting that ecosystem locally, internationally, partly why we come here (to SFF) as well, and building those bridges.

The innovation piece is where we are looking to drive various initiatives and projects. We don't develop anything ourselves. Strategically, we're in discussions to see if maybe something else should be done there, but to drive certain projects for the good of Luxembourg where maybe FinTech isn't coming in, which is often large scale infrastructure projects. Fintechs aren't going into that area. There's not real money in there. But we've been looking at building at the moment, say we, we have a program on developing mutualized utilities for the Luxembourg Center. We'll be launching a call for applications actually at the end of this year for a large scale interconnected data and document exchange to really essentially allow for the free flow secure exchange of data and documents between all financial actors which clearly the first use case and most applicable use case is KYC documentation. So that become quite a big priority and a big program. But where we are putting most of our focus is the knowledge piece and training programs.

Massive shift in focus, talent and recruitment. We have a big talent fair in two weeks time in Luxembourg. About two and a half thousand students have signed up. So we are targeting, Master's, PhD students from across Europe. We have about 50 companies that will exhibit from Luxembourg there.

So looking at younger talent, bringing them in. Getting them excited about finance again. We do our large scale programs. We've just actually about to signed a new deal with the department for Development and Trade in Luxembourg, the Ministry of Foreign Affairs, a multi-year deal to run our Catapult financial inclusion programs, which we've done for seven years for Africa.

Started this year in Asia and we'll expand that to LATAM as well, as of 2026. And that's also about leveraging the knowhow of Luxembourg to help developing markets and fintechs to increase. That shift has been very noiseless. So much of our work is around training programs now. We do something we call FinTech Campus, which is a one day, half day immersive training program, which we deliver to universities, to schools, and to corporates in Luxembourg as well.

So that's been a massive shift. The ecosystem side is almost business as usual beause we've built a strong brand. People know us. That connectivity just keeps going, and moving forward. And I think what we wanna do with GFTN is obviously your brand and reach, not just in Singapore, but across the world, is incredibly powerful.

And we wanna combine the best bits, combine and see where we can create some value for Singapore. Having already had some conversations with one of your colleagues earlier today after the signing, talking about how we can leverage Luxembourg's token infrastructure and rules to potentially create some sort of fast track for Singapore, right?

[00:12:58] Pat Patel: Yeah, yeah.

[00:12:58] Nasir Zubairi: For the token economy. But then critically what I think, with the focus of the Luxembourg finance sector really broadly being around. Wealth and money with the asset management sector, life insurance, private banking, I think that's also an area which is interesting to GFTN 'cause it's not something with some of your forums where you've had a particular focus.

And I think we can join forces there to do something really interesting. Maybe an Insights Forum in Luxembourg, bring in the right players and actors and so yeah, exciting things.

[00:13:27] Pat Patel: That's great to hear and congratulations. It's been an amazing journey. It's good that you touched upon the Insights Forum, which we ran earlier this week.

For the first time I started to think about the possibilities of what we could do with that. And I definitely share your view there on an insights forum in Luxembourg with a defined set of topics that can try and provide a bridge to other corridors as well. And you guys are building a number of corridors, we add that to the corridors that we're building and that could be something that's quite interesting, quite distinct, I think from some of the other programs that are around.

I think that's something, that gives us a good start to pick up on. As you know, for GFTN over the next kind of month or two, Ravi Menon is gonna spend a bit more time (at GFTN). He has been in the last few months, but that will start to define other areas that we can engage with you guys on.

So when are you flying? Are you staying in Singapore for much longer or is it?

[00:14:22] Nasir Zubairi: No, I'm flying tomorrow evening because our Catapult Africa program runs next week, so it's back straight into the action. No rest. I really need a holiday.

[00:14:30] Pat Patel: I don't blame you. Thank you so much for joining us and I hope everyone's enjoyed this conversation and looking forward to and stay tuned to what GFTN and LHoFT are gonna do in 2025 and beyond.