From Derivatives Trader to Bitcoin Regulator: The Minecraft Blockchain Mistake

What we talked about.

This episode of host Sunny Ray's show features Loretta, a former derivatives trader turned digital asset regulatory advisor. Speaking from a quarantine hotel in Sydney, she traces her path from starting as an options trader on the Sydney Futures Exchange in 1991, to running a bank's derivatives desk in Mumbai, to becoming managing director of RBS in India. A friend's tip about blockchain led her down a path that famously began with a mix up, she initially spent a weekend on Minecraft with her daughter thinking that was blockchain. After discovering Don Tapscott's Blockchain Revolution, she saw the potential for digitizing every asset class and eliminating slow settlement processes. She helped write Bermuda's first digital asset legislation, worked with the OECD, IOSCO, and multiple governments and central banks, and became a bridge between the crypto industry and regulators, arguing that better terminology could have avoided years of confusion and mistrust between policymakers and the space.

A derivatives trader who mistook blockchain for Minecraft became a global bridge between crypto and financial regulators.

The questions, and the answers.

Where did we first meet?

I think it was at Perianne's event, maybe 2017, on a panel about bitcoin regulation at Georgetown. There was a mexican wave in the auditorium and I remember being told I was the coolest old lady you'd ever seen because I just joined in. That was really my introduction to everyone in the ecosystem.

What was your background before getting into blockchain?

I started as a derivatives trader in 1991 on the Sydney Futures Exchange, given a piece of paper and pencil and told I'd be the options woman without knowing what an option even was. Over 30 years I traded every asset class, equities, commodities, futures, bonds. I also ran a global bank's derivatives desk in India and became managing director of RBS there.

How did you first get introduced to blockchain?

In 2015 a friend who ran ASIC, the Australian regulator, told me on the bus that I needed to look into blockchain because it would change the world. I misheard it as Minecraft and literally spent a weekend playing Minecraft with my nine-year-old daughter trying to figure out how it would change the world before realizing my mistake the next week.

What excited you most about blockchain once you understood it?

Not bitcoin itself at first, but how blockchain could tokenize every asset class and make clearing and settlement basically redundant. My whole career I'd been frustrated by things like T plus three settlement in equity markets, so seeing blockchain bring that down to near zero was what really hit me after reading Blockchain Revolution.

When did you first buy bitcoin and what was that experience like?

I tried to buy bitcoin around 2015 to 2016 and it was the most ridiculous process, the exchanges didn't really understand KYC or AML properly. I eventually bought bitcoin in 2017 before heading to Davos, where I met the Premier of Bermuda who invited me to help write the world's first legislation around digital assets and ICOs.

How did you get involved with the OECD?

My friend Greg, former ASIC chair, became director at the OECD and called me saying they didn't know much about blockchain and needed help. I flew out with Joseph Weinberg and Ben Yablon from Salt, and we presented to about 1200 policy staff. After that the Secretary General made blockchain and emerging tech a top priority for OECD member countries.

What terminology mistakes do you think held back regulatory acceptance of crypto?

If bitcoin had been called a zen token instead, no central bank or government would have worried, but putting coin into anything upset their mandates. ICOs should have been called initial business offerings since they're just digital crowdfunds, and crypto exchanges should have been called digital asset marketplaces. Better terms could have advanced regulatory dialogue years earlier.

How do you explain the relationship between blockchain and bitcoin to policymakers?

I tell people blockchain is the technology underpinning bitcoin, and bitcoin was the first application of it, so they can't really be separated. There are lots of pilots for blockchain in supply chains or voting, but the only use case that actually works at scale right now is the digitalization of money, which is bitcoin.