Cryptocurrency's Road to Resilience with Brett Royer of Fidelity Digital Assets

The Modern CFO

Crypto investors have seen their fair share of sudden market meltdowns this year. This week, all eyes were on FTX, formerly one of the world’s largest cryptocurrency derivative exchange platforms.

This latest turmoil has sent shockwaves throughout the industry. Yet historically, cryptocurrencies have rebounded following each crisis. What doesn’t wipe out the blockchain becomes a hard lesson for crypto ventures, turning them into fortified iterations of themselves.

For Brett Royer, CFO of Fidelity Digital Assets, the recent unraveling of FTX underscored hard lessons that are not unique to crypto. An expert in high-level financial planning, Brett says those lessons point to fundamental business principles that have long existed.

In this episode of The Modern CFO, Brett talks with host Andrew Seski about decentralized finance, the role of trust within the increasingly digital world of finance, how he thinks about risk, and more.

Show Links

• Explore crypto careers at Fidelity! Browse Open Positions
• Check out Fidelity Digital Assets
• Connect with Brett Royer on LinkedIn
• Check out Nth Round
• Connect with Andrew Seski on LinkedIn

Transcript

Please note that the transcript is AI-generated and may contain errors. The content in the podcast is not intended as investment advice, and is meant for informational and entertainment purposes only.
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[00:00:00] Andrew Seski: Hello everyone and welcome back to The Modern CFO Podcast. As always, I'm your host, Andrew Seski. I'm thrilled for the episode today because we are joined by Brett Royer, who's head of finance at Fidelity Digital Assets. Brett, thank you so much for being here today.

[00:00:19] Brett Royer: Andrew, thank you for having me.

[00:00:21] Andrew Seski: So, we're going to dive right in. The world of crypto and the world of digital assets has evolved in a unique way, down to literally the hour, especially this week. So, I want to kick off not just on the current event side, but we're going to have plenty of time to go through those current events, I want to start today actually with your career and then kind of the history of Fidelity Digital Assets, which I know spans back farther than most institutional groups had even considered labs themselves. So, we'd love to kick off with maybe some of your educational background, sort of the rise to this position, and then we'll segue in and out of how Fidelity Digital Assets is positioned today and what you're thinking about today. So, we have a lot to cover.

[00:01:08] Brett Royer: Yeah, sure. Great. So, I'll start with a little bit of career history. Prior to business school, I'd say one of my more substantial roles was working in the Merrill Lynch Private Banking and Investment Group. So, there I was working with a former Chicago Board of Trade trader who had sold a business, a trading business, for a substantial sum, thought he was going to retire and ride off into the sunset. I spent some time doing some personal things and then realized that he got bored. And so, went back into business as a wealth manager and he ran his own proprietary trading strategy for a lot of the clients that he served. And so, I joined his team as sort of a mini fund analyst of sorts that supported the portfolio analysis and trading decisions behind the proprietary strategy that he used on behalf of his clients. And so, that was a really great experience. I think there, I kind of developed my first set of background and skills in capital markets, gained a pretty good understanding of how the markets work, traded in some illiquid securities and got a sense for what that was like. And had a pretty interest, I was there at a relatively interesting time.

[00:02:33] So, I was probably in my second or third year, I can't remember exactly which, when things started to go wrong in Wall Street in financial services, right? So, the history is Lehman goes bankrupt and then Bear Stearns comes about as close as you can get to bankruptcy. And then I remember distinctly going into the weekend, Merrill Lynch was next up as a potential firm that was looking at having liquidity challenges and potentially could go under. And I'm sitting there as a junior analyst and just sort of watching this from an interested perspective, but also from the perspective of like, my job was on the line. But at that point in time, I didn't have as much to lose. Obviously pretty early in my career. But nonetheless, I think it was a strenuous time for everybody. And I distinctly remember sort of being glued to the TV all weekend just waiting to see what would happen. And then, sure enough, Bank of America, acquires Merrill Lynch on Sunday and I was really lucky to have a team that supported me, and I was able to maintain my role throughout then. But learned a lot of hard lessons around what bear markets feel like and look like. And I think that's in part educated some of what I've seen and felt in crypto markets as well. And I think just giving me a little bit of perspective on not getting too lost in the moment, either up or down, right, and having an understanding that these things tend to be cyclical, right? And there are going to be ups and downs and you don't want to get too over indexed on either side of the equation while you're in the moment, which is really hard.

[00:04:08] But from there, I decided I didn't want to be a financial advisor. I think that would've been the next move if I stayed there. And that group worked with $10 billion clients and above. And so particularly difficult prospecting or particularly difficult segment to prospect in a serious way if you're a 25-year-old. So decided anyway that I wanted to be on more of an analytical track and more of a CFO track anyway, so made sense to go back to business school and sort of pivot. And so, I went to the University of North Carolina, got my MBA there. And around that time, Fidelity had just started recruiting at the University of North Carolina for a financial leadership rotational program. And I'm from Massachusetts originally, so familiar with Fidelity. Really wanted the chance to get back to the Northeast and so jumped at the opportunity to join a program that is tagging itself as developing the next future CFOs of Fidelity business units.

[00:05:05] So did that. And the idea is you get broad exposure to the firm in relatively short order, right? You do six-month rotations in four different parts of the firm. And then you graduate, and you come out and Fidelity really has a sort of continuous career rotational program aspect to it, even after you're out of that traditional rotational program as well. So after I graduated, I spent the majority of my time, five years or so, in a role in our Fidelity institutional business. So, it's a really interesting business for Fidelity. They provide custody for registered investment advisors and then clearing for correspondent broker-dealers as well. And I worked on the broker-dealer side of the business. And up until 2008 or so, Fidelity was the clearing provider for a couple of large firms, JPMorgan and Bank of America. And around that time, they lost both in a year as a result of JP Morgan buying Bear Stearns and then Merrill, Bank of America buying Merrill Lynch. And so, both had self-clearing capabilities that sort of made them take away the need for a clearing pr...