Large-Cap Board Leadership: 

NACD Northern California gathered a select group of large-cap board leaders from a broad range of industries to discuss digital assets, a topic that is quickly moving from the margins to the mainstream of board agendas.

Directors explored the shifts underway in the digitization of money, assets, and commerce, and what questions board directors should be asking their teams to think strategically about how this digitization can affect their company's long-term business strategy and to understand the risks of standing still while others move ahead.

KEY TAKEAWAYS

The Fifth Era

• Digital assets extend digitization to transactions and value transfer, an area still constrained by legacy financial infrastructure. Blockchain technology is seen as the way to unlock this.
• The digital-asset revolution should be seen as more than an investment vehicle, but boards should understand its utility, such as enabling 24/7 transactions beyond banking hours and across borders.
• While bitcoin is seen as “digital gold,” stablecoins are emerging as “digital dollars” with real-world applications: supply-chain traceability, authenticity verification, payments, and tokenization of credit and private assets.

Momentum & Timing

• After a decade of infrastructure build-out, policy is catching up. Regulatory clarity will help drive innovation and will also help US capital markets remain attractive and competitive.
  • The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act establishes a federal framework for payment stablecoin issuers, e.g., payment stablecoin issuers must maintain 100 percent reserves in high-quality, liquid assets.
  • The Digital Asset Market Clarity Act (known as the CLARITY Act) seeks broader market-structure rules and clearer roles for the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission.
  • The SEC’s Project Crypto signals their intent to modernize securities rules for tokenization.
• US/UK taskforce coordination was recently established.
• Timelines are uncertain, but many expect meaningful transformation over the next five to 20 years.
• Gen Z’s exposure is high, with 42 percent owning crypto (four times the rate of retirement-account ownership)—see EY survey below.

Strategic Risks and Opportunities for Boards

• Counterparty risk, collateral management, and settlement processes may shift to stablecoin and tokenized systems in the future.
• Companies that lean in could gain efficiency, resilience, and new revenue pools. Companies that ignore this space risk disruption.
• Boards should consider pilot projects or innovation teams outside the core business to explore digital-asset applications.
• Boards are asking “what could go wrong?” as part of their risk-oversight responsibilities. Incremental exposure is possible—companies don’t need to make massive bets now. But boards that fail to engage with the technology and its disruptors risk being blindsided by rapid change.

Questions for the Boardroom

• How will our industry be affected by a fully digitized financial system and payments infrastructure? What will go away? What will be different or more efficient? What opportunities will arise? Where is the venture capital money going?
• At our company:
  • What will blockchain technology do to help us run the business better or ease friction points (internally)?
  • Where are the growth opportunities that digital payments could provide via new products or new ways to engage customers (externally)?
  • How will we experiment within our risk appetite?
• How might digital payments, tokenization, or stablecoins disrupt our business model?
• Which of our competitors, suppliers, or customers are already adopting these technologies, and how?
• What new risks (e.g., cybersecurity, liquidity, regulatory, reputational) must we prepare for?
• Do we have the right C-suite expertise to track and act on developments in the next three to five years?
• Who is responsible for keeping up-to-date with digital-assets regulation updates?

SPEAKERS

Director, Bitwise Asset Management, Kraken, Pacaso, SIVB, Blockchain Capital, NACD Northern California Chapter

Alison Davis

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Alison Davis is chair and managing partner of Blockchain Coinvestors and a board director of Bitwise, Kraken, Pacaso, and SIVB. She also chairs the advisory board for Blockchain Capital, is the chair of Renaissance, and a director of the NACD Northern California Chapter and Cambridge in America. Davis was…

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Partner, EY

Elliott Offit

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Elliott Offit is an audit partner who has over 18 years of experience in the banking and asset management industries, serving public and private financial institutions, including financial technology firms, payments companies, broker dealers, small-business lenders, digital-asset platforms, and merchant-banking clients…

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MODERATOR

EY Americas Center for Board Matters

Robyn Bew

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Robyn draws on fifteen years of experience in the corporate governance space to provide strategic direction for the CBM, and in her work with board members and executive teams of EY’s clients on a wide range of governance and strategy issues...

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Thank you to Phillip Mazzie and EY for hosting this dinner.