Digital assets: The board questions that matter now

Intro : Welcome to the Corporate Director Podcast, where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech-fueled world. Here, you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance, strategy, board culture, risk management, digital transformation, and more.

Dottie Schindlinger: Hi, everybody, and welcome back to the Corporate Director Podcast, the voice of modern governance. My name is Dottie Schindler, executive director of the Diligent Institute, and I'm joined once again by my two amazing co-hosts, Megan Day, strategy leader here at Diligent, and Kira Ciccarelli, head of research for Diligent Institute.

Kira, Megan, how are you both doing today?

Meghan Day: Good, good, Dottie. Pretty good.

Dottie Schindlinger: Awesome.

Meghan Day: Well, I have a new topic to discuss today. Ooh. And no, it is not AI. But you could argue it's similar to AI. It's moving incredibly fast, it's creating some real strategic opportunity for organizations, and it's raising new questions for boards around oversight, risk, and governance.

What is this topic?

Dottie Schindlinger: Do tell.

Meghan Day: How about everybody's favorite subject of crypto? Woo-hoo. Or maybe more broadly- ... digital assets and, and that world.

Dottie Schindlinger: It is funny. You know, Megan, we, we talked about crypto years ago, and then we really haven't talked about it much since. And Kira, you just reminded me, we actually did a report on this back in 2022, I think you said.

Kira Ciccarelli: Yes. So nearly four years ago, which I can't believe I'm saying out loud. But we did do a survey of directors in partnership with the Silicon Valley Directors Exchange. Topic was their idea. They kind of brought it to us. At the time, it definitely felt a little bit niche. It was super interesting, of course.

But you got the sense even just asking directors some questions about it back then that they weren't super sure about it. They only rated their understanding, um, we called it blockchain digital assets, so just kind of all-encompassing, and they rated their understanding of blockchain digital assets o- only a 4 out of 10 on average.

Pretty low.

Meghan Day: My answer has changed in, in those four years, by the way.

Dottie Schindlinger: No, but al- but also gi- given that directors tend to grade themselves on a curve, like, felt very, um, introspective and honest.

Kira Ciccarelli: Yeah, absolutely. And it... That is kind of lower than... We've asked similar questions over the years on, like, how good of a handle do you feel you have on cybersecurity or AI or, you know, you name it.

Typically, they're in the, like, 5 to 7 range. So 4 was telling. Another finding from the survey, uh, 74% expected regulators such as the SEC to materially tighten regulation of crypto and related assets over the next one to two years. So I don't know if it happened quite that quickly, but maybe we're getting there now.

Meghan Day: Yeah. It's, it's really interesting to see, and there's actually been some action there. The US and the UK are working together to align some rules, uh, for tokenized finance, and that's really across the world's two largest financial markets. And so that to me suggests that these digital assets are starting to not live on the margins anymore.

And there's, you know, policymakers are s- showing those signals to start treating stable coins, tokenized assets, you know, all of these things that could belong in the mainstream financial system. And so for directors, that means this is becoming less of a sort of speculative sideshow and more of a strategic and operational issue worth watching.

Dottie Schindlinger: My guess would be there are boards that talk about this all the time because they're heavily invested, and they're doing a ton in this space. And I would think probably if you're in financial services, you know- Mm-hmm ... that's, that's probably you. And then there's probably a whole lot more that never talk about this topic.

And so if like me, right now you're thinking, "I don't know anything about this topic," don't worry, we got you. We brought the perfect guest on the show today. So I'm excited to share with you a really fascinating conversation I got to have with Susan Holiday, who's a corporate director on a bunch of boards, both in the UK and the US, but she spent 30-plus years in financial services and insurance, and she's deep into the digital asset crypto space from a strategic perspective.

And, and so I think you're gonna really enjoy this conversation. I learned a ton, so I'll be eager to come back and, and talk with the two of you after we give it a listen.

Joining us on the Corporate Director podcast today is Susan Holiday. Susan is an experienced global insurance expert and financial services board director and advisor. She currently sits on the boards of PensionBee UK, Hippo Insurance, and she's an advisory board member at Ziyent Services. She's also the president of SH Advisers.

Susan, welcome to the podcast.

Susan Holliday: Thank you. Thank you for having me

Dottie Schindlinger: So to get us started, I wondered if you could introduce yourself a little bit better than I just did. Maybe share a couple of highlights about your career background and some of your current roles.

Susan Holliday: Yes. So I don't know if I'm proud or embarrassed to say that my career has been more than 35 years in global financial services, comprising mainly insurance, banking, asset management, and fintech.

As you can probably hear from my accent, I am British. I'm originally from London. But now I live in Philadelphia, um, so our, um, our hometowns are, are quite close, I think. My focus now really is on board service, and as you mentioned, um, I'm an independent director at Hippo. And Hippo, for those that don't know the company, is a technology-driven insurer which is listed on the New York Stock Exchange and incidentally a customer of Diligent, um, and also PensionBee, which is a UK-listed company which operates in both the UK and the US, and what they do is help people consolidate and manage their retirement savings, so 401s and IRAs and the UK equivalent.

Dottie Schindlinger: So Susan, one of the reasons I was so excited to have you as a guest on the show is we had the opportunity to have a conversation recently about advising boards on crypto. And you know, it's one of these topics that I feel kind of came in and out of vogue a couple years ago, and we haven't really been spending that much time talking about it with directors recently.

And I, and I feel like that's a bit of a missed opportunity because there's so much happening in this space. And so I wondered if you could just give us from a very high level what's your current take on the crypto landscape as it exists today?

Susan Holliday: Yeah, absolutely. And as you say, I'm gonna focus here on what boards of directors need to be thinking about rather than individuals.

And before I start, um, there's always a, a debate about kind of what to call it and how we're defining it, right? So I, I've kind of moved in my thinking from talking about crypto to talking more about digital assets in general because I think we started off when we... Years ago when we were talking about, we were talking about crypto and blockchain, and I kind of define cryptocurrencies as being things like Bitcoin and, and similar things, but there are a lot of other developments going on which are nothing to do with Bitcoin or any of those types of assets that I really think board members need to be focused on.

So I've kind of taken my own medicine, and now I'm gonna refer to it as, as digital assets. To really answer your question, I would kind of categorize the current environment as exciting but uncertain So the reason why I think this is important and board members need to be paying attention is that digital assets are now impacting companies which don't have anything to do with traditional crypto.

So we saw the whole crypto thing, you know, starting as a very kind of niche interest, you know, some extreme speculation, some not very helpful news coverage about kind of meme coins and scams and all this kind of thing. And you can imagine that a lot of people thought, you know, this has nothing to do...

probably has nothing to do with me full stop, and certainly has nothing to do with me as a board member. But now we're starting to see digital assets really become much more mainstream. So even the cryptocurrencies themselves, um, you know, now you can buy an ETF. That's not that radical. We're seeing, um, stable coins, um, becoming much more mainstream, and we're also in the very early stages of tokenization of what we call real world assets.

And just as a little aside here, as you know, I'm a risk-focused person, so when I first heard RWAs, I thought it was risk-weighted assets. But in this context, it's real world assets. But it can be, um, it can be a little bit confusing. But all this means that the way money moves and the way assets trade is changing.

So companies could be thinking about things like stable coins for payments, particularly internationally. They could be thinking about whether they want to have tokenized equities. They could be, well, not just thinking, they won't have much choice. Um, one of the things that's come from the kind of crypto world, which is really very 24/7 into the mainstream, is longer trading hours.

So traditionally, crypto wallets can trade twenty four/seven. It's completely global. Now we're seeing venues like Nasdaq, um, and the New York Stock Exchange trading longer hours, and there's a new development in London, um, LSE, um, London Stock Exchange twenty-four, which actually is twenty-three hours a day, five days a week, not seven.

Um, but this is something they've, um, they've launched. Um, there's also a pilot going on in the EU on chain trading. So this can change the way that your company's stock Moves, and you need to think about that. So for example, are there going to be times when trading's really thin that adds to volatility?

That could be bad. On the other hand, perhaps if you're trying to execute a buyback program, you know, it m- it may, might be quite good, right? Another consideration is that tokenizing shares probably makes it easier to use them as collateral for other things because there's a lot of on-chain borrowing and lending.

So if your company's shares are owned by people who are kind of deeply into this space, uh, maybe hedge funds or other similar, um, investors who are likely to do this, it could impact the share price and it's nothing directly to do with your company. And it might be quite hard for the board of directors, for the investor relations, the CFO and so on to know what's going on.

So I would say that this is no longer a really niche topic or kind of a hobby. It's impacting day-to-day company decisions and areas that board members care about. So strategy, oversight, risk management that need to be discussed in the boardroom. Now, having said that, there is still a lot of uncertainty.

Uh, it's early in this discussion. I'm sure when we look back in 10 or 20 years' time, we'll be like, "Oh, you know, we were babies," right? Uh, but everything's gonna be tokenized and, and trading, um, you know, at least maybe, um, to 23/7 or something like that. Um, but this is an emerging risk topic for boards. Mm.

And when I say that, I mean in the 360-degree sense of risk. I.e., there's uncertainty, but I'm not necessarily talking about downside. I think there's some, there's some upside here. Part of the uncertainty is legislation, 'cause we've seen legislation passing, um, for example MiCA in the EU and then the Genius Act for stable coins in the US, but not all of the legislation is fully implemented yet, and so there's still room for kind of, um, rulemaking and implementation guidance and so on, and we're expecting to hear from various regulators in the US about this.

Now, the timing of this conversation is a bit M- ironic, um, because there's a huge amount of uncertainty regarding another piece of legislation that listeners might have heard of, which is the CLARITY Act, um, in the US, probably well-named because it aims to provide clarity for digital asset markets more broadly, not only stablecoins.

GENIUS was only about stablecoins. And as we speak, this is live, and there may be developments before this podcast is published because the legislation has actually passed the House. It's sitting in the Senate, where it's got out of its two committees, which believe it or not, are Banking and Agriculture.

But it's not yet clear if it's going to get a vote on the floor, and if it does, it needs 60 votes to pass, and it's not clear that it would get 60 votes. And a- as a little aside, one of the things that's holding it up is there's a debate going on about ethics and who is allowed to do what in the digital asset space, including the president, um, the president's spouse, the vice president, various members of Congress.

And I find this quite interesting because to me it's kind of analogous to discussions that you have in the boardroom, right, about what kind of constitutes ethical behavior by board members and, and executives. But even if the CLARITY Act isn't passed, I don't think the digital asset train is stopping.

Um, I think it'll continue. There'll just be a higher level of uncertainty. So overall for board members, the challenge is that there are a lot of opportunities and the world is changing, but regulation's moving more slowly and kind of still in a state of flux. And in some ways I think this is a similar situation to where we find ourselves with AI, right?

You can't ignore it, but there are definitely, you know, going to be... There are definitely a lot of uncertainties, and there's definitely going to be new, um, rules and regulations that, you know, we don't know about.

Dottie Schindlinger: So that was incredibly helpful, Susan, because I think I don't, I don't even think I sort of had a sensitivity for how even if we as a company are not investing in digital assets, this still very much impacts what happens with our, with our stock and with our future.

So I think that's extremely helpful. I, I'd love to have you share a little bit more... You, you started to answer this, but I'd love to hear a little bit more from your perspective about what you really see as the biggest ways that crypto and digital assets are influencing investment decisions broadly today that board members need to be aware of.

Susan Holliday: Yeah. No, this is a really interesting one because it's changed a lot in the last year or two. So if we'd been having this discussion as- then, there were-- the big topic in boardrooms, to the extent that it was a topic in boardrooms at all, was often about, you know, should we be in, as a company, investing in Bitcoin or in other cryptocurrencies, and I mean in the traditional sense of cryptocurrencies like Ether or Solana or something.

And this was taking place in a few different forms. So one was allocating some of your balance sheet assets. So you hold treasuries, you own corporate bonds, you hold shares, and m- maybe you own, you know, some Bitcoin or whatever. The other topic that was very hot at the time was becoming what's called a digital asset treasury.

And I agree that doesn't really make sense in English, but it's commonly known as a DAT. Um, I, I still call them digital asset treasury companies. But anyway, so what happened h- here was that people took either a very small company or a shell company that didn't do anything and made it principally a holding company for a digital currency.

And at the time, the rationale was that, well, people were bullish on cryptocurrencies, and it was also, in those days, hard for investors to easily own crypto in other ways. You could open a wallet and self-custody your crypto, but that, that's difficult for people who are not often in this space. Uh, people were very worried about losing the pass keys and getting hacked and all this kind of stuff.

Also, the idea was that these companies, you know, they have sophisticated treasury operations, they can use leverage and so on. And in some countries, such as Japan, there were tax-driven reasons why you wanted to have these digital asset- Treasury companies. And at one time, this was all the rage, and they were trading at significant premiums to the actual value of the cryptocurrencies they were owning.

Well, surprise, surprise, that didn't last very long 'cause markets are generally quite efficient. So now the landscape's changed because if you want to invest in crypto as a company or as a person for that matter, it's much easier to find a custodian who really knows what they're doing. A lot of well-known banks and fintechs now can help you custody your crypto, and you can buy either one or a basket of all the major currencies in different types of ETFs.

So you... The rationale behind these digital asset treasuries has kind of gone away, and there were lots of copycats and in many cases very highly leveraged, and they didn't perform very well. So that whole topic about should we become a DAT, I think, is pretty much off the table un- unless you're a board member of something that's already a DAT

which is a different, a different conversation. Ironically though, um, as the price of some of these assets has gone down, maybe there is still a valid discussion about allocating, you know, a small perce- one, 2% of, uh, of assets, um, to Bitcoin or other cryptocurrencies, um, just as, you know, this is becoming fairly mainstream, um, for individuals in the, in the wealth management space.

But I think the real discussion now is much less about investing in, in cryptocurrencies, but really it's about strategy and operations. So, you know, do we want to use stable coins for payments? Do we need to be able to accept stable coins for payments? You know, would it help us to tokenize our deposits with a bank and make it easier to move those around twenty four/seven on chain, you know, rather than having to do it in, in banking hours and things like that?

Do we have large amounts of cash on the balance sheet for short periods of time that we would like to lend out? Because, um, on chain, you can lend out your money for a few hours at a time. It doesn't have to be overnight, which was really the shortest period, um, before. So these are all discussions that are really about operations, about the treasury function, about return on investments.

And if the answer to any of this is yes, what do we need to invest in in terms of our systems and infrastructure in order to be able to do this? You know, what do we want to do in-house? What do we want to do with a partner? And if we're gonna get a partner, who are we going to partner with? 'Cause there are all sorts of fintechs operating pretty successfully in this space.

And then to refer back to the earlier conversation, you know, what about our shares? And it's not quite as simple as, you know, would we like our shares to be tokenized or not? What happens if somebody else tries to tokenize them in some way? We've seen different types of tokenization of shares. We've seen companies directly kind of offering their shares on, on chain, and in fact, a company that actually IPO'd like that recently, um, the first one.

And then we've also seen almost like digital twin-type situations. But there have been some attempts to tokenize private company shares with some kind of wrapper, and some of the companies involved with this got pretty annoyed about it. So if you are, you know, a private company, maybe in a fairly kind of like hot sector, who is thinking of IPO'ing, you need to have a look at, um, you know, what do your articles of association and so on say about all this.

Do you have a plan to go after people if they're trying or purporting to offer, um, tokenized, uh, shares in your company? And if you're thinking of IPO'ing, you know, i- is, is this an opportunity, right? Um, to, to issue shares directly on chain So I believe that over time, a lot more assets will be tokenized.

We're seeing it now for o- obviously shares, but also, um, US Treasuries. We're seeing a, a, a few ETFs get tokenized, but why not corporate bonds and municipal bonds and all that kind of thing, right? I think it's, it's happening. Interestingly enough, the area I thought w- this was gonna be a big hit for, if you'd asked me five or 10 years ago, was things like real estate, and that's proved to be quite hard.

People have tried to tokenize very illiquid assets, and it didn't really help. Um, and it didn't go, it didn't go very well. But then I think there are some other types of use cases, for example, um, tokenized assets as collateral. Again, awesome. You can move them immediately, 24/7. You know where it is, all this kind of thing.

And then I couldn't go too long without mentioning AI again. There's a big debate, as you know, about kind of, um, AI agents doing tasks on their own, right? And if they're gonna do tasks on their own, they need to be able to pay for things. And most of these payments are frequent, but very small, um, amounts, you know, to access an article or something like that.

Um, you know, definitely less than a dollar, may just be a few cents. And we don't know yet, but the one theory is that stable coins, because they're already programmed and fairly cheap and 24/7, may be a good way for AI agents to, to make payments. Um, and then the final thing I'll mention just for fun a little bit, which is getting a lot of attention in the news are two related areas, perps, which are perpetual futures, and prediction markets, some of which, as you know, are on chain.

And there are some really crazy stories about, um, you know, the kind of things that you can effectively bet on. But on a more serious note, these could potentially be hedging instruments, or even if you don't actually want to play in these markets, they could be interesting information sources for boards and management teams to kind of gauge sentiment because people are putting kind of real money down, and it's proven to be more accurate than, for example, polling.

So I think that's something that, you know, may find its way into the boardroom before too long.

Dottie Schindlinger: So Susan, you've just provided an impressive list of different investment decisions that are being influenced by digital assets that I'd, I'd be willing to bet not nearly enough boards are talking about. So, uh, wh- what would you put on your list of the most important questions boards should be asking management right now about digital assets and crypto?

Susan Holliday: Yeah, well look, board meetings are short, and you never have enough time , right?

Dottie Schindlinger: Never.

Susan Holliday: Um, but I think you're right. The key thing is let's think about this and have it on the, at least have it on the agenda, um, you know, have it in people's minds. So I would say just step back and think about how are digital assets, broadly defined, going to impact our strategy and operations?

And do we have an idea of what the upside opportunities could be and also the downside risks? And do we know what our competitors are doing? I think that's pretty important. You know, like all new technologies, um, you know, do you want to be the first mover? Do you want to be early, kind of, you know, s- smart follower, or do you see this as kind of immaterial and, and a distraction, right?

Um, for many companies, you know, doing short-term intraday lending is not gonna make any difference at all. For a few, it, it might be, um, uh, highly material. So it's back to the age-old question about what's our risk appetite, and do we want to disrupt ourselves or maybe get disrupted, um, you know, by, by outsiders?

And then I'd also wanna have a look at, you know, do our policies and controls adequately cover digital assets, and are we ready for, you know, maybe in reality it's not really 24/7 trading, but certainly longer, longer trading hours than most of us, um, have been used to. What about the various corporate insurance programs?

You know, do we have the right coverage? Because often some of these things have been excluded, and you might need to buy, um, you know, a different type of insurance. Then if you are going to put your toes in the water, who's actually responsible for this and, you know, do they have the right expertise? And that goes obviously with, you know, if we need to partner, who are the right partners?

Do we need external advisors? That kind of thing. And then, you know, I made a joke before about prediction markets and so on, but how are we keeping up to speed with developments, right? This area's moving quite quickly, so, you know, you can have a board session on it, but you can't really leave it for a year or two to have another one.

I do think a debate about tokenizing equities, at least for some companies, is valid. And the last point on that I would say is that, you know, if you don't think about the tokenization of equities and people are purporting to offer, um, your shares or vehicles linked to your shares on chain and something goes wrong, you know, there's a potential reputational risk for the company, even if it was nothing to do with you.

There's a real example around the SpaceX IPO, which is that, um, in some places, supposedly SpaceX shares were being offered, but those particular exchanges didn't get enough allocation of SpaceX shares, and so they couldn't cover all the people who bought these vehicles that, um, you know, where they thought they were gonna get exposure to, to SpaceX.

So events outside of the company's control can, you know, actually have an impact that board members need to be thinking about.

Dottie Schindlinger: That's really, really important. So given, given that broad remit, you know, how, how should boards kind of think about the, the difference or even the balance between strategic opportunity and risk when it comes to crypto, blockchain, tokenization, and other, you know, related financial innovations?

How do they think about that balance?

Susan Holliday: Yeah, I mean, look, this is an emerging area and, you know, as I say, in a way it's like AI. AI is even... You can even less afford to, to ignore. But to me, it comes back to what's our risk appetite, and is everyone on the same page here? And by that I mean, you know, the, the executive committee versus the board versus maybe the actual shareholders or the, or the customers or, or, or whatever.

Then I also think companies need to be talking about how they, they could be impacted and how quickly. Is this something we just need to keep an eye on 'cause it's not gonna happen for years, or is it something where a competitor could come in and, you know, wipe out half of our business? And how do we know, right?

How do we know what's going on in the market? How do we know what our competitors are, are, are doing? I mean, a lot of things that were considered not long ago to be extremely kind of out there and risky are now very mainstream. You know, organizations that we've mentioned, New York Stock Exchange, NASDAQ, DTCC, are adopting digital and asset and crypto solutions.

So I'd also look potentially at ways to get involved and kind of experiment a bit without taking huge risks or making massive investments. Because I do think we're seeing a change in how money moves and how financial markets work. And for the people listening who are kind of like, "This is crazy," you know, "This is the 22nd century.

We're gonna be living on Mars before any of this happens," let's think back to, you know, other, uh, sources of innovation in the financial markets, right? And like money market funds or ETFs. At the beginning, everyone thought this was really radical and it's risky and all the rest of it, and now it's part of every day and nobody takes any notice.

That said, I, I do think this change is more kind of radical and- fundamental because we're talking about how the markets work and the kind of plumbing underneath, not just, you know, what kind of things you can invest in. But it's not happening overnight. And people talk all the time about 24/7, but in reality, that will probably never happen because you do need time t- when the markets are closed to do things like computer upgrades, um, you know, and settlement and sort out disputes and so on.

So the concept's very exciting, but the boring plumbing underneath is actually quite complicated. And, you know, this shouldn't be the Wild West, which is why, you know, I think it would be good to have some legislation because there are still disclosure requirements and insider trading rules and all this kind of, um, thing, and so it takes a, a lot of time to embed those.

So my final point would be it depends a lot which sector your board is in and also which geography. So financial services, if you're not talking about it now, honestly, you, you should be certainly, um, in the banking and payment space. International companies because of, you know, international payments, moving money around a lot also.

And I also think companies in emerging markets, there are actually some really good kind of opportunities there. They're gonna be impacted much more quickly than a purely domestic company in a market, um, you know, if you're purely domestic in the UK, for example, where payments are already very easy, then, you know, it's not gonna impact your company as much.

Dottie Schindlinger: So Susan, I wanna finish by just asking you, if we're looking ahead, what, what's the advice that you would give to boards and specifically to directors on the best way to stay informed? There's so much changing. It's changing so quickly. How can they make sure that they're gonna make sound decisions on the crypto landscape as it just continues to evolve and explode?

Susan Holliday: Yeah, so look, I don't think you need to be a- an expert on crypto or digital assets or, or even technology in general. But what you do need to do is understand how it can impact the company's strategic model and also the operations, and be equipped to ask insightful questions. So I think the first thing is kind of get it on the board agenda, um, and make sure that both management and the board do have access to experts if they need it.

Um, and then there are actually a tremendous amount of really good podcasts in this space. So if you're a person who likes listening to podcasts when you're driving your car, walking the dog, working out, et cetera, it's actually a really good way to kind of get ideas and keep up to date. So I... Since I started working more heavily in this space, I've definitely listened to far more podcasts than I ever did before.

Dottie Schindlinger: That's great. Well, Susan, thank you so much for joining us. This has been an absolutely fascinating conversation. I, I know I learned a ton. So thank you so much for taking the time to speak with us today.

Susan Holliday: Oh, my pleasure. Thank you for having me.

Dottie Schindlinger: We've been joined today by Susan Holiday, who's an experienced global insurance expert and financial services board director on the boards of PensionBee UK, Hippo Insurance, and an advisory board for Ziyent Services.

Susan, thank you so much for joining the show.

Susan Holliday: Thank you.

Meghan Day: All right, Dottie, I learned a ton in that conversation. But what stood out to me is, is really that Susan's not arguing that every company needs a crypto strategy. She's really just saying that boards need to understand how digital assets may start changing the environment around us, and that's through payments, liquidity, regulation, risk, all of those things.

And so it, it lines up nicely with so many of these other emerging issues we've been talking about.

Kira Ciccarelli: That's what stood out to me as well when she laid out just a framework for thinking about decisions around new emerging innovation and stuff like that. And again, this kind of connects back into probably similar conversations that your board should be having around AI.

But she kind of broke it down into three paths. Do you wanna be a leader, a smart follower, or have you decided that this is just kind of immaterial for you? And you can make your decisions from there, but you kind of have to start with that one.

Dottie Schindlinger: I agree with you. I mean, I agree with both of you. I think that's such a useful framework for almost any decision like this.

But o- one of the things that really stood out to me that hadn't, um, connected in my brain until she said it was, first of all, this isn't just something impacting public companies, but also private companies, which I thought was really interesting. And then also the comment that you made, Megan, that this is gonna change the way markets move with or without your involvement.

Yeah. Um, and so that seems important for boards to pay attention to. You know, if exchanges are investing heavily in stablecoin and they're setting rules around that, that's gonna be a way that your stock may be traded. And if you're not paying attention, and if you're not, you know, kind of coming up with your own strategy around this, it's something that could happen to you as opposed to something that you lead.

And that feels like a, an alarm bell, like maybe a yellow flag to me that directors need to pay attention to and just maybe ask some questions about. And she gave you some really good ones. Yeah. So I'm... Well, listen, I'm super glad we got a chance to talk to her, and, uh, thank you both for your comments. I think really interesting stuff.

And maybe, Kira, we can surface that blockchain digital assets report from 2022 just to give people sort of a reference point. And that wraps up another episode of the Corporate Director podcast, the voice of modern governance. Like to say a few special thank yous, first and foremost to our digital assets expert, Susan Holiday, to podcast producers Kira Ciccarelli, Terry Terry, and Steve Clayton, our sponsors for the show, KPMG, Wilson Sonsini, and Meridian Compensation Partners.

And most especially, thank you to Diligent for continuing to sponsor this show. Thank you so much for listening.

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Thank you so much for listening. Until next time.

Welcome to the Corporate Director Podcast, where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech-fueled world. Here, you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance, strategy, board culture, risk management, digital transformation, and more.

Dottie Schindlinger: Hi, everybody, and welcome back to the Corporate Director Podcast, the voice of modern governance. My name is Dottie Schindler, executive director of the Diligent Institute, and I'm joined once again by my two amazing co-hosts, Megan Day, strategy leader here at Diligent, and Kira Ciccarelli, head of research for Diligent Institute.

Kira, Megan, how are you both doing today? Good, good, Dottie. Pretty good. Awesome. Well, I have a new topic to discuss today. Ooh. And no, it is not AI. But you could argue it's similar to AI. It's moving incredibly fast, it's creating some real strategic opportunity for organizations, and it's raising new questions for boards around oversight, risk, and governance.

Meghan Day: What is this topic? Do tell. How about everybody's favorite subject of crypto? Woo-hoo. Or maybe more broadly- ... digital assets and, and that world. It is funny. You know, Megan, we, we talked about crypto years ago, and then we really haven't talked about it much since. And Kira, you just reminded me, we actually did a report on this back in 2022, I think you said.

Kira Ciccarelli: Yes. So nearly four years ago, which I can't believe I'm saying out loud. But we did do a survey of directors in partnership with the Silicon Valley Directors Exchange. Topic was their idea. They kind of brought it to us. At the time, it definitely felt a little bit niche. It was super interesting, of course.

But you got the sense even just asking directors some questions about it back then that they weren't super sure about it. They only rated their understanding, um, we called it blockchain digital assets, so just kind of all-encompassing, and they rated their understanding of blockchain digital assets o- only a 4 out of 10 on average.

Pretty low. My answer has changed in, in those four years, by the way. No, but al- but also gi- given that directors tend to grade themselves on a curve, like, felt very, um, introspective and honest. Yeah, absolutely. And it... That is kind of lower than... We've asked similar questions over the years on, like, how good of a handle do you feel you have on cybersecurity or AI or, you know, you name it.

Typically, they're in the, like, 5 to 7 range. So 4 was telling. Another finding from the survey, uh, 74% expected regulators such as the SEC to materially tighten regulation of crypto and related assets over the next one to two years. So I don't know if it happened quite that quickly, but maybe we're getting there now.

Meghan Day: Yeah. It's, it's really interesting to see, and there's actually been some action there. The US and the UK are working together to align some rules, uh, for tokenized finance, and that's really across the world's two largest financial markets. And so that to me suggests that these digital assets are starting to not live on the margins anymore.

And there's, you know, policymakers are s- showing those signals to start treating stable coins, tokenized assets, you know, all of these things that could belong in the mainstream financial system. And so for directors, that means this is becoming less of a sort of speculative sideshow and more of a strategic and operational issue worth watching.

Dottie Schindlinger: My guess would be there are boards that talk about this all the time because they're heavily invested, and they're doing a ton in this space. And I would think probably if you're in financial services, you know- Mm-hmm ... that's, that's probably you. And then there's probably a whole lot more that never talk about this topic.

And so if like me, right now you're thinking, "I don't know anything about this topic," don't worry, we got you. We brought the perfect guest on the show today. So I'm excited to share with you a really fascinating conversation I got to have with Susan Holiday, who's a corporate director on a bunch of boards, both in the UK and the US, but she spent 30-plus years in financial services and insurance, and she's deep into the digital asset crypto space from a strategic perspective.

And, and so I think you're gonna really enjoy this conversation. I learned a ton, so I'll be eager to come back and, and talk with the two of you after we give it a listen.

Joining us on the Corporate Director podcast today is Susan Holiday. Susan is an experienced global insurance expert and financial services board director and advisor. She currently sits on the boards of PensionBee UK, Hippo Insurance, and she's an advisory board member at Ziyent Services. She's also the president of SH Advisors.

Susan, welcome to the podcast. Thank you. Thank you for having me So to get us started, I wondered if you could introduce yourself a little bit better than I just did. Maybe share a couple of highlights about your career background and some of your current roles. Yes. So I don't know if I'm proud or embarrassed to say that my career has been more than 35 years in global financial services, comprising mainly insurance, banking, asset management, and fintech.

Susan Holliday: As you can probably hear from my accent, I am British. I'm originally from London. But now I live in Philadelphia, um, so our, um, our hometowns are, are quite close, I think. My focus now really is on board service, and as you mentioned, um, I'm an independent director at Hippo. And Hippo, for those that don't know the company, is a technology-driven insurer which is listed on the New York Stock Exchange and incidentally a customer of Diligent, um, and also PensionBee, which is a UK-listed company which operates in both the UK and the US, and what they do is help people consolidate and manage their retirement savings, so 401s and IRAs and the UK equivalent.

Dottie Schindlinger: So Susan, one of the reasons I was so excited to have you as a guest on the show is we had the opportunity to have a conversation recently about advising boards on crypto. And you know, it's one of these topics that I feel kind of came in and out of vogue a couple years ago, and we haven't really been spending that much time talking about it with directors recently.

And I, and I feel like that's a bit of a missed opportunity because there's so much happening in this space. And so I wondered if you could just give us from a very high level what's your current take on the crypto landscape as it exists today? Yeah, absolutely. And as you say, I'm gonna focus here on what boards of directors need to be thinking about rather than individuals.

Susan Holliday: And before I start, um, there's always a, a debate about kind of what to call it and how we're defining it, right? So I, I've kind of moved in my thinking from talking about crypto to talking more about digital assets in general because I think we started off when we... Years ago when we were talking about, we were talking about crypto and blockchain, and I kind of define cryptocurrencies as being things like Bitcoin and, and similar things, but there are a lot of other developments going on which are nothing to do with Bitcoin or any of those types of assets that I really think board members need to be focused on.

So I've kind of taken my own medicine, and now I'm gonna refer to it as, as digital assets. To really answer your question, I would kind of categorize the current environment as exciting but uncertain So the reason why I think this is important and board members need to be paying attention is that digital assets are now impacting companies which don't have anything to do with traditional crypto.

So we saw the whole crypto thing, you know, starting as a very kind of niche interest, you know, some extreme speculation, some not very helpful news coverage about kind of meme coins and scams and all this kind of thing. And you can imagine that a lot of people thought, you know, this has nothing to do...

probably has nothing to do with me full stop, and certainly has nothing to do with me as a board member. But now we're starting to see digital assets really become much more mainstream. So even the cryptocurrencies themselves, um, you know, now you can buy an ETF. That's not that radical. We're seeing, um, stable coins, um, becoming much more mainstream, and we're also in the very early stages of tokenization of what we call real world assets.

And just as a little aside here, as you know, I'm a risk-focused person, so when I first heard RWAs, I thought it was risk-weighted assets. But in this context, it's real world assets. But it can be, um, it can be a little bit confusing. But all this means that the way money moves and the way assets trade is changing.

So companies could be thinking about things like stable coins for payments, particularly internationally. They could be thinking about whether they want to have tokenized equities. They could be, well, not just thinking, they won't have much choice. Um, one of the things that's come from the kind of crypto world, which is really very 24/7 into the mainstream, is longer trading hours.

So traditionally, crypto wallets can trade twenty four/seven. It's completely global. Now we're seeing venues like Nasdaq, um, and the New York Stock Exchange trading longer hours, and there's a new development in London, um, LSE, um, London Stock Exchange twenty-four, which actually is twenty-three hours a day, five days a week, not seven.

Um, but this is something they've, um, they've launched. Um, there's also a pilot going on in the EU on chain trading. So this can change the way that your company's stock Moves, and you need to think about that. So for example, are there going to be times when trading's really thin that adds to volatility?

That could be bad. On the other hand, perhaps if you're trying to execute a buyback program, you know, it m- it may, might be quite good, right? Another consideration is that tokenizing shares probably makes it easier to use them as collateral for other things because there's a lot of on-chain borrowing and lending.

So if your company's shares are owned by people who are kind of deeply into this space, uh, maybe hedge funds or other similar, um, investors who are likely to do this, it could impact the share price and it's nothing directly to do with your company. And it might be quite hard for the board of directors, for the investor relations, the CFO and so on to know what's going on.

So I would say that this is no longer a really niche topic or kind of a hobby. It's impacting day-to-day company decisions and areas that board members care about. So strategy, oversight, risk management that need to be discussed in the boardroom. Now, having said that, there is still a lot of uncertainty.

Uh, it's early in this discussion. I'm sure when we look back in 10 or 20 years' time, we'll be like, "Oh, you know, we were babies," right? Uh, but everything's gonna be tokenized and, and trading, um, you know, at least maybe, um, to 23/7 or something like that. Um, but this is an emerging risk topic for boards. Mm.

And when I say that, I mean in the 360-degree sense of risk. I.e., there's uncertainty, but I'm not necessarily talking about downside. I think there's some, there's some upside here. Part of the uncertainty is legislation, 'cause we've seen legislation passing, um, for example MiCA in the EU and then the Genius Act for stable coins in the US, but not all of the legislation is fully implemented yet, and so there's still room for kind of, um, rulemaking and implementation guidance and so on, and we're expecting to hear from various regulators in the US about this.

Now, the timing of this conversation is a bit M- ironic, um, because there's a huge amount of uncertainty regarding another piece of legislation that listeners might have heard of, which is the CLARITY Act, um, in the US, probably well-named because it aims to provide clarity for digital asset markets more broadly, not only stablecoins.

GENIUS was only about stablecoins. And as we speak, this is live, and there may be developments before this podcast is published because the legislation has actually passed the House. It's sitting in the Senate, where it's got out of its two committees, which believe it or not, are Banking and Agriculture.

But it's not yet clear if it's going to get a vote on the floor, and if it does, it needs 60 votes to pass, and it's not clear that it would get 60 votes. And a- as a little aside, one of the things that's holding it up is there's a debate going on about ethics and who is allowed to do what in the digital asset space, including the president, um, the president's spouse, the vice president, various members of Congress.

And I find this quite interesting because to me it's kind of analogous to discussions that you have in the boardroom, right, about what kind of constitutes ethical behavior by board members and, and executives. But even if the CLARITY Act isn't passed, I don't think the digital asset train is stopping.

Um, I think it'll continue. There'll just be a higher level of uncertainty. So overall for board members, the challenge is that there are a lot of opportunities and the world is changing, but regulation's moving more slowly and kind of still in a state of flux. And in some ways I think this is a similar situation to where we find ourselves with AI, right?

You can't ignore it, but there are definitely, you know, going to be... There are definitely a lot of uncertainties, and there's definitely going to be new, um, rules and regulations that, you know, we don't know about. So that was incredibly helpful, Susan, because I think I don't, I don't even think I sort of had a sensitivity for how even if we as a company are not investing in digital assets, this still very much impacts what happens with our, with our stock and with our future.

Dottie Schindlinger: So I think that's extremely helpful. I, I'd love to have you share a little bit more... You, you started to answer this, but I'd love to hear a little bit more from your perspective about what you really see as the biggest ways that crypto and digital assets are influencing investment decisions broadly today that board members need to be aware of.

Susan Holliday: Yeah. No, this is a really interesting one because it's changed a lot in the last year or two. So if we'd been having this discussion as- then, there were-- the big topic in boardrooms, to the extent that it was a topic in boardrooms at all, was often about, you know, should we be in, as a company, investing in Bitcoin or in other cryptocurrencies, and I mean in the traditional sense of cryptocurrencies like Ether or Solana or something.

And this was taking place in a few different forms. So one was allocating some of your balance sheet assets. So you hold treasuries, you own corporate bonds, you hold shares, and m- maybe you own, you know, some Bitcoin or whatever. The other topic that was very hot at the time was becoming what's called a digital asset treasury.

And I agree that doesn't really make sense in English, but it's commonly known as a DAT. Um, I, I still call them digital asset treasury companies. But anyway, so what happened h- here was that people took either a very small company or a shell company that didn't do anything and made it principally a holding company for a digital currency.

And at the time, the rationale was that, well, people were bullish on cryptocurrencies, and it was also, in those days, hard for investors to easily own crypto in other ways. You could open a wallet and self-custody your crypto, but that, that's difficult for people who are not often in this space. Uh, people were very worried about losing the pass keys and getting hacked and all this kind of stuff.

Also, the idea was that these companies, you know, they have sophisticated treasury operations, they can use leverage and so on. And in some countries, such as Japan, there were tax-driven reasons why you wanted to have these digital asset- Treasury companies. And at one time, this was all the rage, and they were trading at significant premiums to the actual value of the cryptocurrencies they were owning.

Well, surprise, surprise, that didn't last very long 'cause markets are generally quite efficient. So now the landscape's changed because if you want to invest in crypto as a company or as a person for that matter, it's much easier to find a custodian who really knows what they're doing. A lot of well-known banks and fintechs now can help you custody your crypto, and you can buy either one or a basket of all the major currencies in different types of ETFs.

So you... The rationale behind these digital asset treasuries has kind of gone away, and there were lots of copycats and in many cases very highly leveraged, and they didn't perform very well. So that whole topic about should we become a DAT, I think, is pretty much off the table un- unless you're a board member of something that's already a DAT

which is a different, a different conversation. Ironically though, um, as the price of some of these assets has gone down, maybe there is still a valid discussion about allocating, you know, a small perce- one, 2% of, uh, of assets, um, to Bitcoin or other cryptocurrencies, um, just as, you know, this is becoming fairly mainstream, um, for individuals in the, in the wealth management space.

But I think the real discussion now is much less about investing in, in cryptocurrencies, but really it's about strategy and operations. So, you know, do we want to use stable coins for payments? Do we need to be able to accept stable coins for payments? You know, would it help us to tokenize our deposits with a bank and make it easier to move those around twenty four/seven on chain, you know, rather than having to do it in, in banking hours and things like that?

Do we have large amounts of cash on the balance sheet for short periods of time that we would like to lend out? Because, um, on chain, you can lend out your money for a few hours at a time. It doesn't have to be overnight, which was really the shortest period, um, before. So these are all discussions that are really about operations, about the treasury function, about return on investments.

And if the answer to any of this is yes, what do we need to invest in in terms of our systems and infrastructure in order to be able to do this? You know, what do we want to do in-house? What do we want to do with a partner? And if we're gonna get a partner, who are we going to partner with? 'Cause there are all sorts of fintechs operating pretty successfully in this space.

And then to refer back to the earlier conversation, you know, what about our shares? And it's not quite as simple as, you know, would we like our shares to be tokenized or not? What happens if somebody else tries to tokenize them in some way? We've seen different types of tokenization of shares. We've seen companies directly kind of offering their shares on, on chain, and in fact, a company that actually IPO'd like that recently, um, the first one.

And then we've also seen almost like digital twin-type situations. But there have been some attempts to tokenize private company shares with some kind of wrapper, and some of the companies involved with this got pretty annoyed about it. So if you are, you know, a private company, maybe in a fairly kind of like hot sector, who is thinking of IPO'ing, you need to have a look at, um, you know, what do your articles of association and so on say about all this.

Do you have a plan to go after people if they're trying or purporting to offer, um, tokenized, uh, shares in your company? And if you're thinking of IPO'ing, you know, i- is, is this an opportunity, right? Um, to, to issue shares directly on chain So I believe that over time, a lot more assets will be tokenized.

We're seeing it now for o- obviously shares, but also, um, US Treasuries. We're seeing a, a, a few ETFs get tokenized, but why not corporate bonds and municipal bonds and all that kind of thing, right? I think it's, it's happening. Interestingly enough, the area I thought w- this was gonna be a big hit for, if you'd asked me five or 10 years ago, was things like real estate, and that's proved to be quite hard.

People have tried to tokenize very illiquid assets, and it didn't really help. Um, and it didn't go, it didn't go very well. But then I think there are some other types of use cases, for example, um, tokenized assets as collateral. Again, awesome. You can move them immediately, 24/7. You know where it is, all this kind of thing.

And then I couldn't go too long without mentioning AI again. There's a big debate, as you know, about kind of, um, AI agents doing tasks on their own, right? And if they're gonna do tasks on their own, they need to be able to pay for things. And most of these payments are frequent, but very small, um, amounts, you know, to access an article or something like that.

Um, you know, definitely less than a dollar, may just be a few cents. And we don't know yet, but the one theory is that stable coins, because they're already programmed and fairly cheap and 24/7, may be a good way for AI agents to, to make payments. Um, and then the final thing I'll mention just for fun a little bit, which is getting a lot of attention in the news are two related areas, perps, which are perpetual futures, and prediction markets, some of which, as you know, are on chain.

And there are some really crazy stories about, um, you know, the kind of things that you can effectively bet on. But on a more serious note, these could potentially be hedging instruments, or even if you don't actually want to play in these markets, they could be interesting information sources for boards and management teams to kind of gauge sentiment because people are putting kind of real money down, and it's proven to be more accurate than, for example, polling.

So I think that's something that, you know, may find its way into the boardroom before too long. So Susan, you've just provided an impressive list of different investment decisions that are being influenced by digital assets that I'd, I'd be willing to bet not nearly enough boards are talking about. So, uh, wh- what would you put on your list of the most important questions boards should be asking management right now about digital assets and crypto?

Yeah, well look, board meetings are short, and you never have enough time , right? Never. Um, but I think you're right. The key thing is let's think about this and have it on the, at least have it on the agenda, um, you know, have it in people's minds. So I would say just step back and think about how are digital assets, broadly defined, going to impact our strategy and operations?

And do we have an idea of what the upside opportunities could be and also the downside risks? And do we know what our competitors are doing? I think that's pretty important. You know, like all new technologies, um, you know, do you want to be the first mover? Do you want to be early, kind of, you know, s- smart follower, or do you see this as kind of immaterial and, and a distraction, right?

Um, for many companies, you know, doing short-term intraday lending is not gonna make any difference at all. For a few, it, it might be, um, uh, highly material. So it's back to the age-old question about what's our risk appetite, and do we want to disrupt ourselves or maybe get disrupted, um, you know, by, by outsiders?

And then I'd also wanna have a look at, you know, do our policies and controls adequately cover digital assets, and are we ready for, you know, maybe in reality it's not really 24/7 trading, but certainly longer, longer trading hours than most of us, um, have been used to. What about the various corporate insurance programs?

You know, do we have the right coverage? Because often some of these things have been excluded, and you might need to buy, um, you know, a different type of insurance. Then if you are going to put your toes in the water, who's actually responsible for this and, you know, do they have the right expertise? And that goes obviously with, you know, if we need to partner, who are the right partners?

Do we need external advisors? That kind of thing. And then, you know, I made a joke before about prediction markets and so on, but how are we keeping up to speed with developments, right? This area's moving quite quickly, so, you know, you can have a board session on it, but you can't really leave it for a year or two to have another one.

I do think a debate about tokenizing equities, at least for some companies, is valid. And the last point on that I would say is that, you know, if you don't think about the tokenization of equities and people are purporting to offer, um, your shares or vehicles linked to your shares on chain and something goes wrong, you know, there's a potential reputational risk for the company, even if it was nothing to do with you.

There's a real example around the SpaceX IPO, which is that, um, in some places, supposedly SpaceX shares were being offered, but those particular exchanges didn't get enough allocation of SpaceX shares, and so they couldn't cover all the people who bought these vehicles that, um, you know, where they thought they were gonna get exposure to, to SpaceX.

So events outside of the company's control can, you know, actually have an impact that board members need to be thinking about. That's really, really important. So given, given that broad remit, you know, how, how should boards kind of think about the, the difference or even the balance between strategic opportunity and risk when it comes to crypto, blockchain, tokenization, and other, you know, related financial innovations?

Dottie Schindlinger: How do they think about that balance? Yeah, I mean, look, this is an emerging area and, you know, as I say, in a way it's like AI. AI is even... You can even less afford to, to ignore. But to me, it comes back to what's our risk appetite, and is everyone on the same page here? And by that I mean, you know, the, the executive committee versus the board versus maybe the actual shareholders or the, or the customers or, or, or whatever.

Susan Holliday: Then I also think companies need to be talking about how they, they could be impacted and how quickly. Is this something we just need to keep an eye on 'cause it's not gonna happen for years, or is it something where a competitor could come in and, you know, wipe out half of our business? And how do we know, right?

How do we know what's going on in the market? How do we know what our competitors are, are, are doing? I mean, a lot of things that were considered not long ago to be extremely kind of out there and risky are now very mainstream. You know, organizations that we've mentioned, New York Stock Exchange, NASDAQ, DTCC, are adopting digital and asset and crypto solutions.

So I'd also look potentially at ways to get involved and kind of experiment a bit without taking huge risks or making massive investments. Because I do think we're seeing a change in how money moves and how financial markets work. And for the people listening who are kind of like, "This is crazy," you know, "This is the 22nd century.

We're gonna be living on Mars before any of this happens," let's think back to, you know, other, uh, sources of innovation in the financial markets, right? And like money market funds or ETFs. At the beginning, everyone thought this was really radical and it's risky and all the rest of it, and now it's part of every day and nobody takes any notice.

That said, I, I do think this change is more kind of radical and- fundamental because we're talking about how the markets work and the kind of plumbing underneath, not just, you know, what kind of things you can invest in. But it's not happening overnight. And people talk all the time about 24/7, but in reality, that will probably never happen because you do need time t- when the markets are closed to do things like computer upgrades, um, you know, and settlement and sort out disputes and so on.

So the concept's very exciting, but the boring plumbing underneath is actually quite complicated. And, you know, this shouldn't be the Wild West, which is why, you know, I think it would be good to have some legislation because there are still disclosure requirements and insider trading rules and all this kind of, um, thing, and so it takes a, a lot of time to embed those.

So my final point would be it depends a lot which sector your board is in and also which geography. So financial services, if you're not talking about it now, honestly, you, you should be certainly, um, in the banking and payment space. International companies because of, you know, international payments, moving money around a lot also.

And I also think companies in emerging markets, there are actually some really good kind of opportunities there. They're gonna be impacted much more quickly than a purely domestic company in a market, um, you know, if you're purely domestic in the UK, for example, where payments are already very easy, then, you know, it's not gonna impact your company as much.

Dottie Schindlinger: So Susan, I wanna finish by just asking you, if we're looking ahead, what, what's the advice that you would give to boards and specifically to directors on the best way to stay informed? There's so much changing. It's changing so quickly. How can they make sure that they're gonna make sound decisions on the crypto landscape as it just continues to evolve and explode?

Susan Holliday: Yeah, so look, I don't think you need to be a- an expert on crypto or digital assets or, or even technology in general. But what you do need to do is understand how it can impact the company's strategic model and also the operations, and be equipped to ask insightful questions. So I think the first thing is kind of get it on the board agenda, um, and make sure that both management and the board do have access to experts if they need it.

Um, and then there are actually a tremendous amount of really good podcasts in this space. So if you're a person who likes listening to podcasts when you're driving your car, walking the dog, working out, et cetera, it's actually a really good way to kind of get ideas and keep up to date. So I... Since I started working more heavily in this space, I've definitely listened to far more podcasts than I ever did before.

Dottie Schindlinger: That's great. Well, Susan, thank you so much for joining us. This has been an absolutely fascinating conversation. I, I know I learned a ton. So thank you so much for taking the time to speak with us today. Oh, my pleasure. Thank you for having me. We've been joined today by Susan Holiday, who's an experienced global insurance expert and financial services board director on the boards of PensionBee UK, Hippo Insurance, and an advisory board for Ziyent Services.

Susan, thank you so much for joining the show. Thank you.

Meghan Day: All right, Dottie, I learned a ton in that conversation. But what stood out to me is, is really that Susan's not arguing that every company needs a crypto strategy. She's really just saying that boards need to understand how digital assets may start changing the environment around us, and that's through payments, liquidity, regulation, risk, all of those things.

And so it, it lines up nicely with so many of these other emerging issues we've been talking about. That's what stood out to me as well when she laid out just a framework for thinking about decisions around new emerging innovation and stuff like that. And again, this kind of connects back into probably similar conversations that your board should be having around AI.

Kira Ciccarelli: But she kind of broke it down into three paths. Do you wanna be a leader, a smart follower, or have you decided that this is just kind of immaterial for you? And you can make your decisions from there, but you kind of have to start with that one. I agree with you. I mean, I agree with both of you. I think that's such a useful framework for almost any decision like this.

Dottie Schindlinger: But o- one of the things that really stood out to me that hadn't, um, connected in my brain until she said it was, first of all, this isn't just something impacting public companies, but also private companies, which I thought was really interesting. And then also the comment that you made, Megan, that this is gonna change the way markets move with or without your involvement.

Yeah. Um, and so that seems important for boards to pay attention to. You know, if exchanges are investing heavily in stablecoin and they're setting rules around that, that's gonna be a way that your stock may be traded. And if you're not paying attention, and if you're not, you know, kind of coming up with your own strategy around this, it's something that could happen to you as opposed to something that you lead.

And that feels like a, an alarm bell, like maybe a yellow flag to me that directors need to pay attention to and just maybe ask some questions about. And she gave you some really good ones. Yeah. So I'm... Well, listen, I'm super glad we got a chance to talk to her, and, uh, thank you both for your comments. I think really interesting stuff.

And maybe, Kira, we can surface that blockchain digital assets report from 2022 just to give people sort of a reference point. And that wraps up another episode of the Corporate Director podcast, the voice of modern governance. Like to say a few special thank yous, first and foremost to our digital assets expert, Susan Holiday, to podcast producers Kira Ciccarelli, Terry Terry, and Steve Clayton, our sponsors for the show, KPMG, Wilson Sonsini, and Meridian Compensation Partners.

And most especially, thank you to Diligent for continuing to sponsor this show. Thank you so much for listening. You've been listening to the Corporate Director podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about corporate governance and tools to help directors do their job better, visit www.diligent.com.

Outro : Thank you so much for listening. Until next time.