I hope you enjoy this slightly delayed and massively jetlagged edition of the weekly read. I have just returned from a very enjoyable week in Singapore, highlighted by my participation in the SKBI Conference on Digital Banking, Financial Inclusion and Impact Investing. Many thanks to Professor David Lee for being such a gracious host. I also had the opportunity to spend time with local startups (Tembusu, itBit, CoinHako, Paywise) and banks (DBS, Standard Chartered, Barclays, Fidor) and hear their varied approaches to unlocking the potential of distributed ledgers and blockchains.
My overall impression is that the theme of digital banking is much stronger outside of the US than within. The capacity (and need) for experimentation is greater, with trade and cross border payments the main focus (when you live in a city-state like Singapore, almost everything is cross border). The conference itself was eye opening (especially the presentation on p2p credit in China...talk about a house of cards! Enjoy the upcoming credit cycle...) with the highlight an entertaining presentation by Fidor Bank CEO Mattias Kroner on their aggressive approach to build a digital (and API-first?) bank. This article gives a good overview of the day.
1. Blockchain in bloom
The Economist features a special report on fintech, with a feature on the blockchain as (potentially) the Next Big Thing:
"All large banks already have teams poring over blockchain. Many of their back-office settlement platforms seem destined for a move to decentralised ledgers. One barrier is the difficulty of finding staff who can get them up to speed on the technology. “The sort of people who understand blockchains don’t usually want to put on a suit and go work for a bank,” says Gideon Greenspan of CoinSpark."
Alex Marquez, managing director of corporate development at USAA, said in an interview this week that the company and its banking, insurance, and investment management subsidiaries hoped the "blockchain" technology could help decentralize its operations such as the back office. He said USAA had a large team researching the potential of the blockchain [snip] "We have serious interest in the blockchain and we think the technology would have an impact on the organization," said Marquez. "The fact that we have such a large group of people working on this shows how serious we are about the potential of this technology."
2. Company news
Congrats to the itBit team on their raise and New York State Trust Company charter:
“The trust allows itBit to be a custodian for its client’s funds, which is a much higher duty of care than any other bitcoin company is regulated under right now,” said itBit chief executive and co-founder Charles Cascarilla. “It took us 15 months and a well over a thousand page application. It is extremely in-depth, extremely time-consuming and not easy to do.”
While the enforcement action against Ripple Labs was a first, it is unlikely to be the last as Fincen ramps up its oversight of the evolving industry. Ripple Labs' O'Gorman said Fincen's action "definitely makes a statement to other entities in this space that they need to be aware of compliance obligations going forward. We're the first example of many more to come, potentially."