An interview with Chiel Ruiter
DeFi (Decentralized Finance) and RWA (Real World Assets) are sounding narratives that have filled the crypto magazine headlines for some time now. The way they connect real-world yield & use cases and combine them with the DeFi liquidy while standing on the fundamentals of crypto: the money and finance. This is all secured by blockchain. There is no question that this movement can forge a new economic era and pioneer a new financial paradigm.
I am excited to explore the insights of a former Managing Director at Goldman Sachs, UBS & Credit Suisse, active in crypto since 2017. With a global perspective spanning London, Africa, the Middle East, and Europe, our guest brings a wealth of knowledge in global financial markets and investment banking. This expertise is invaluable in the crypto’s burgeoning world of DeFi and RWA.
The interviewer's deep understanding of risk management, regulatory frameworks, and strategic leadership in finance promises to offer unique perspectives on bridging traditional financial and economic systems with innovative DeFi solutions.
Chiel's expertise in global finance, particularly his macroeconomic perspective, is quite profound. He possesses a nuanced understanding of how financial events, such as interest rate hikes in Japan, can significantly influence liquidity in markets like the U.S. Furthermore, his awareness of how global trends and conflicts impact commodity and oil prices speaks to his deep grasp of the interconnected nature of global economics. His insights into crypto, especially his views on the evolving relationship between traditional finance (TradFi) and decentralized finance (DeFi), are greatly enriched by his previous roles at prestigious institutions like UBS and Goldman Sachs.
As we delve into this conversation, expect to uncover how this experience can foster innovation, growth, and stability in the decentralized finance landscape.
Let me introduce you to Chiel Ruiter.
Please introduce yourself to our readers.
Hello, I'm Chiel.
I come from a traditional finance background, a TradFi boomer if you will, and am a father of three. In 2015, I left banking feeling disconnected from what mattered to me.
My post-banking journey led me to work with SMEs in financial distress, offering interim executive services. I also assisted in launching the second ICO in the Netherlands for an IT hardware company, Ockel.
During the COVID pandemic, I advised Bitvavo, the largest Dutch crypto exchange, with reduced demand for my interim services. This experience led me to meet my co-founders, and together, we developed the idea of creating a Euro-denominated asset/protocol for securing crypto gains, which eventually evolved into Florence Finance in early 2021.
To start a part of this interview that is based on your knowledge, could you discuss the impact of interest rate hikes in Japan on US market liquidity?
In Japan, market movements are more influenced by expectations of future policy changes rather than actual interest rates/changes. Short rates in Japan remain negative to this day, and the 10-year yield cap has risen from 25 bps to 100 bps but currently trades just below 60 bps. The market sensitivity lies more in the Bank of Japan potentially ending its 15-year yield curve control policy, prompting thoughts about its effect on the global "carry trade." This trade, significant in global capital markets, if unwound disorderly, could disrupt capital markets and flows. However, given its size and general awareness, steps will likely be taken to manage this unwind if it is to happen.
While some "blow-up" risk of an unorderly unwind will always remain, many have positioned themselves to benefit from such events. In my humble opinion, the likelihood of them materializing is contained. Hence, this trade is known as the "widow maker" trade. That said, the size and nature of the global "carry trade" underscores the complexity and intrigue of the current global financial systems. These dynamics are always worth close observation and thoughtful consideration.
Given your understanding of global economics, could you share insights on how current global trends and conflicts influence commodity and oil prices?
I'm not a commodity or geopolitical expert, but geopolitical unrest usually impacts commodity prices and risk assets positively.
Simply put, conflict and friction are usually inflationary for assets and commodities.
However, commodity and oil markets are complex, with long-term trends and fundamentals only partially reflected in prices. Overall, there has been significant underinvestment in the resources sector, both in terms of capital expenditure and investment portfolio allocations. Due to this, many commodities and resource stocks are attractively priced, leading me to a structurally bullish and long on the sector.
Now, more towards your career. As a seasoned Managing Director, you can reflect on the many choices you made during your career. In retrospect, how do you see the process in which you started as an intern, then turned to somebody else's apprentice, later shifted to a mentor, and finally became a founder?
May I start with - what an excellent question.
Understanding motive and driving force, as opposed to the current form in which that is being expressed, allows one to form a view of whether or not you agree in principle with someone's driver/direction.
I guess as a younger person, I was somewhat naive in what really drove me, but I discovered by doing and being conscious of what that actually was…Namely, making a noticeable difference by creating/building/improving things in real life. I was much happier as a Construction Manager on a building site, being able to physically see the progress as a result of my efforts day by day, than making six figures as an Investment banking MD and having lost touch with the actual difference being made. Relying on that financial reflection (or rather mirage) of the value I was adding proved empty to me. I was much happier as an Associate in Investment Banking when contributing to analysis and advice whilst growing my knowledge base than I was as an MD, making the analysis fit the narrative to win the business. Hence, I returned to making a difference in the trenches as an interim manager.
To sum it up: very hard work, less pay, and infinitely gratifying.
Embarking on entrepreneurship, like starting Florence Finance, involves forgoing short-term rewards and the ultimate expression of believing in an impactful idea. The future success of Florence and its team's vision is something only time can validate. However, my conviction in this endeavor is unwavering. I believe in Florence Finance's potential and feel supported by my team in this pursuit. This same open and honest communication I share with the team is extended to you, the reader, today.
Have you ever experienced a professional discovery or realization that was hard to believe when it occurred to you?
Yes, I remember it vividly.
Working for Goldman Sachs in the Emerging Markets (I was an early contributor to the building of Goldman Sachs' South African office and pan-African franchise), I spent a lot of time thinking about the fate of Africa and emerging markets in general and what, if anything, could be done to alleviate their fate….I came across a report by the World Bank, the TLDR of which was that we could "solve" ALL of the world's poverty (i.e., adequate nutrition, shelter, healthcare, and even tuition) by just abolishing one agricultural subsidy (namely those on white/beet sugar) and redirecting these funds to poverty alleviation.
I was dumbstruck.
Surely, this was the mother of all no-brainers, and it was being proposed/calculated by the World Bank itself….Why, in God's name, are we not implementing such policy change?
It was at this moment that I started doubting the "system" and how it was rigged…The merits of globalization and the "rules-based" global order….this was 2004!
What was the hardest part of your professional life, the hardest challenge you needed to face in your career, and what success of yours made you most proud?
After a very successful stint with Goldman in South Africa, I wanted a position that would allow me to become a Partner at Goldman Sachs, and one of the very few seats available was Managing Director of the new Saudi Arabian office, where nobody wanted to go for love or money. My parents had spent some time in the Kingdom during my youth, so I knew that it was a hardship, but not the "death sentence" that people made it out to be.
As there were no Saudi national MDs at Goldman at the time, I got the job…I moved to Dubai to get things going from there as we had an existing office there, and we had not even gotten a license to operate in Saudi at the time….Little did I know that the global financial crisis would take a turn for the worse with the collapse of Lehman Brothers six weeks later… What looked like a sure ticket to Partnership turned into my Waterloo at Goldman Sachs, as the Saudi expansion plans were amongst the first to be ditched when the sh*t hit the proverbial fan.
Having given every waking hour and much blood, sweat, and tears to Goldman Sachs for almost a decade and made it to MD….I was unemployed for the first time in my life.
The world was awash with unemployed bankers, making any continuation of my banking career questionable at best….And I was stuck in a sandpit where I had barely landed and had no relationship network or anything else for that matter….It was a dark and lonely period/feeling.
It took six months, during which I worked hard to create a new opening, which turned out to be returning to my home country and joining the better half of the also unemployed ex-Lehman NL team to re-start Credit Suisse's Dutch office. Initially, it was hard as I had little relationship infrastructure in the Netherlands, having been abroad for over ten years, but I worked hard and made it happen.
Have you ever faced the loss of a long-known friend or colleague when they learned about your transition from the banking sector to the crypto industry?
Indeed, transitioning from traditional finance (TradFi) to the crypto world can lead to a shift in professional and personal networks. While I've lost touch with many former colleagues still immersed in the TradFi system, my closest friends have remained, and I've even brought some along into the crypto space. However, delving into crypto is like going down a rabbit hole; it changes your perspective to the point where fitting back into the traditional system becomes challenging.
I prefer to let interested individuals approach me, and when they do, I make sure to caution them about the fundamental shifts this move might bring to their belief systems.
How do you think DeFi and RWA have evolved in the last three years, and what were the major milestones?
It's a big question indeed.
Let's start with DeFi, which I view as the logical counter to a heavily leveraged and over-regulated traditional finance sector. This sector is often bogged down by large, inefficient institutions that struggle to serve both their customers and investors effectively.
DeFi, in contrast, has been built, tested at scale, and proven to work, even during banking crises, as seen with institutions like Silicon Valley, Signature, and First Republic Bank. The challenge now is about expanding the accessibility of DeFi to a wider audience and integrating it into mainstream finance, which requires regulatory clarity.
The next step in this evolution is the incorporation of Real World Assets (RWAs). With a robust DeFi infrastructure now in place, the focus shifts to tokenizing more assets. The RWA narrative is just the beginning of this process, prioritizing use cases with high on-chain utility or addressing real-world inefficiencies.
As blockchain scalability issues are resolved, we can anticipate the complete tokenization of all securities, marking a significant shift in how assets are managed and traded.
The famous decentralization, scalability, and security trilemma that has haunted the blockchain world for decades has already been solved by Kaspa, the founders of which are well-known academics from the University of Jerusalem. Dr. Yonatan Sompolinsky founded the Kaspa.
Optimizing blockchain's parameters and technology choices through a deep understanding of fundamentals and reasonable trade-offs is a focus for many teams and blockchain designs. This experimentation aims to address the Blockchain trilemma effectively. This ongoing process is expected to yield solutions acceptable to a broad audience amidst claims of superiority by different entities.
While I am agnostic to specific blockchain technologies, I strongly believe in the ethos of Digital Ledger Technology, particularly its role in reducing centralization risks and separating money from state control. Whether Kaspa will fulfill these aspirations is something we are poised to discover soon.
What motivated you to start your blog post about the finance sector? Was there a message you want to share?
When we started Florence Finance, we needed to do marketing.
As we were on a start-up budget and I am an engineer and builder at heart, I struggled with spending money/time on marketing. The only thing that came to mind was sharing knowledge and perspectives, which is the genesis of our blog. Sharing insights as they come to me and others on the team with the community for the benefit of all.
What is the most insightful lesson you've learned from your past, and how do the collective experiences of you and other founders of Florence bring unique advantages to the project?
The founding group and core team are very diverse in terms of age and background.
Some TradFi, entrepreneurs, crypto OGs, and IT buffs….So, a good mix of skills and styles. Whatever the problem at hand, we usually have someone in the group who can either help directly or knows someone who can. We rely very little on outsiders for anything that is mission-critical…. It is entirely organic & self-built.
Regarding lessons, I used to hold myself and my perspectives in pretty high regard.
As an investment banker, you advise the most important people (CEO/CFOs) at the largest companies, and they pay astronomical amounts for that advice…So it's only natural that you start to think you are very good at providing that advice. Otherwise, why would they pay so much?
In fact, if you were to doubt it for only a second, you would fail miserably in that profession.
The truth is, however, they're not paying for you. They are paying for Goldman or some other bank’s name on their "cover your ass" insurance.
So, I try to be less opinionated and/or overbearing in group discussions nowadays and give people more space to share/air their perspectives.
What are the biggest obstacles RWA and DEFI must address to become mainstream?
The UI/UX experience and the cost of doing business on-chain (the scaling problem) mean that most DeFi apps today are still for degens only. The risks inherent to self-custodial assets and interacting directly on-chain are still too great for mainstream adoption.
There must be substantial intermediation and/or improvement to the above to enable mass market adoption, like what CoinBase is doing with its Wallet and Base-related ecosystem, making it easier/safer to interact within that curated environment.
The other thing is, of course, that we need as an industry to stop the scamming and rugging,
as that is just bad for all.
How does the bank sector react to the new DeFi and RWA crypto way of doing things?
In the famous words of Mahatma Gandhi, "First they ignore you, then they laugh at you, then they fight you, then you win," we find ourselves in the 'then they fight you' stage.
Banks and regulators challenge projects like Florence, showing limited public endorsement for this emerging financial paradigm. However, conversations with major institutions reveal a different picture. Behind closed doors, there's active research into Distributed Ledger Technology (DLT). The stance of these institutions might swiftly change, much like the pivot observed with figures like Larry Fink and Jamie Dimon around the approval of the BTC ETF. This shift represents a critical moment in accepting and integrating blockchain technology into mainstream finance.
This will detract from the main topic, but I am interested in this, and I forgot to ask you at the beginning of our interview: Can silver reach 50% of the value of gold?
To many, this is a question about silver re-capturing its monetary premium.
Today, gold holds much of the monetary premium given its historical precedence, endorsement by central banks, and by many ordinary people who value it in the form of jewelry & endowments, etc.
Silver is no longer used by central banks (i.e., it was demonetized).
It would only be useful in a world where we return to hard/resource-based money, and gold coins have too high a denomination; thus, silver works better practically. However, in that case, BTC or ETH, for that matter, would be infinitely more useable, so I, for one, am not a big buyer of the re-monetization theory for silver.
I believe that because there was a large "overhang" of monetized silver (coins/bars), it suppressed silver prices. Silver has a real-world use case that is much larger than gold. I see this real-world demand for silver (i.e., batteries, electronics, medicine, photovoltaics) driving the value of silver. Thus, I believe it has quite a big upside now that physical supplies/overhand are dwindling, and mining infrastructure is structurally underinvested/undercapitalized.
What is the vision for Florence Finance (FF), and what is your vision for crypto?
Florence Finance bridges on-chain (DeFi) liquidity to existing real-world lending platforms. Thereby, we provide the real-world, sustainable, euro-denominated yield on-chain while addressing the societally important SME funding gap.
What are the biggest misconceptions about FF?
Florence Finance is not a Ponzi or a Rug.
We have worked hard on our project, a community-driven alternative to credit creation for SMEs using existing lending partners/infrastructure. If successful, it will provide an alternative funding source for these FinTechs and help alleviate their perennial funding constraints.
What are the biggest hindrances in your mind for FF's success?
Funding. Finding people who understand our cause and have the patience and stamina to help us through the next cycle to build a sustainably sized lending book (>50m).
What makes FF stand out from the crowd of strong competition? Now, they only target the same audience but use a similar web page URL pattern, such as "maple.finance", "goldfinch.finance", "clearpool.finance", and "ondo.finance".
They are all formidable competitors.
Each competitor in the DeFi lending space targets distinct market segments, making them unique in their approach. Maple focuses on on-chain lending, Goldfinch on emerging markets and microfinance, ClearPool on Southeast Asian markets, and Ondo on funding US treasuries. Florence, in contrast, specializes in lending to EU SMEs.
This diversity in the lending ecosystem is akin to many banks worldwide; this is not a winner-takes-all market but a geographically/sectorally specialized one.
The future of this sector likely includes many such specialized lending protocols and aggregators, all contributing to the decentralization of credit creation on the blockchain.
Then, can you tell us your point of view on FF competitors?
Just like Florence, they all suffer the challenges inherent to the funding and lending markets they operate. Credit creation and administration are, in their most basic form, low-margin and arduous tasks, which is why, up until quite recently, banking was not considered the most exciting career choice.
I hope we will all contribute to re-creating that “utility” function on-chain and have fun building/creating it in a manner that can only exist in crypto.
Where do you see FF two years from now?
Reaching 50m-100m of TVL running on the next iteration of our protocol (V3).
Together with vertical integration with lending platforms and CEXs, you can access the vaults/yield directly from Aave, Maker, Coinbase, and Bitvavo.
What milestones would you propose for FF, and why?
The next step has to be acquiring one or more centralized exchange listings, using the dynamics around that to build the community further and increase the liquidity of the various tokens/pools, as well as the TVL, through securing the funding necessary to realize the above ambition.
What are your beliefs about the future of other crypto projects in this bear market?
What Bear Market? The next 12-18m will be the most bullish period for crypto that we have ever witnessed.
Whatever you thought was difficult or impossible in the last cycle will become feasible as scalability, speed, and block space cost issues resolve to enable ever-more/larger use cases.
What Florence and the Medici’s were to the Renaissance, Digital Ledger Technology will be to the fourth turning.
If our readers are interested in learning more about RWA, what are some good sources to start gathering knowledge?
Our engagement with RWA.xyz has been insightful. They are true experts in their field, and we've had the privilege of featuring them more than once on our X-spaces. Their expertise has significantly contributed to our discussions and understanding, enriching our platform's perspective on real-world assets in the blockchain.
We are almost at the end of our time here. Let me finish with something more personal, if I may. How did your children shape your view on life?
My first experience with humility came from those who had neither professional nor hierarchical control over me: my kids.
This taught me the importance of respect: if I ever acted disrespectfully or inappropriately, they were quick to call me out on it. This experience underscored the value of treating everyone with the respect they deserve, regardless of their position or relationship to me.
What was the biggest lesson your kids gave you?
In life, the notion of control can be an illusion. Leadership is more about setting an example and offering sound advice than exercising control. Acknowledging this lack of control can be a profound realization, emphasizing the importance of leading by influence rather than authority.
Do you have a personal motto or motivational ideology that helps you reach new goals?
Being true to oneself is vital. While the concept of "fake it till you make it" may have its merits, its logic is debatable. Authenticity in actions and decisions often leads to more fulfilling outcomes, both personally and professionally. It's about aligning actions with true values and beliefs rather than adopting a facade to achieve success.
What kind of advice would you give to a young Chiel Ruiter now?
As a light-hearted start, "Buy more Bitcoin?" is a jest. Seriously though, as I've mentioned before, staying true to oneself is crucial. Commit to any path you choose with more than 100% effort. This dedication is key to achieving genuine success and fulfillment in any endeavor. Remember, authenticity and commitment are your strongest Real World Assets.
Thank you for your valuable responses.
To conclude this interview, I would like to ask: What advice would the younger version of yourself, Chiel Rutier, give to you now?
"Lighten up, dude" is probably the essence of what my kids, my wife, and a younger version of myself would say to me, and my response is always…" I can't change the spots on this leopard."