Thankfully Bitcoin went up although everything else went to… Let’s talk about everything else here. It’s far more entertaining
Check Finance
American #fintech is a rather strange creature. Things that should no longer exist in the first place often receive considerable innovation and venture funding and generate venture exits and commercial returns too (remember bill.com)? Here’s a prime example:
Bitcoin FOMO
Meanwhile at the other end of the planet, a major high street bank often cited by Chris Skinner as a model of #DigitalTransformation went all in on #Crypto. Yeah, it’s not like the baby steps from Paypal or Cash App - this is the full grown up monty - a crypto exchange.
Now that is a bit of an emotional moment for me. We’ve come a long way from bankers asking “whether #blockchain is a currency used by drug dealers” in 2015 to banks figuring out how to compete with CashApp, PayPal and Revolut who have really forced the agenda here. If Jack Dorsey isn’t Satoshi, he’s surely the next best thing to have happened to #Bitcoin ever.
Crypto Gamifies Fintech
Since literally everyone in #fintech has commented on it, I might as well. Among all the commentators out there, only two people got the joke in my view. First was Simon Taylor, who pointed out that #Crypto is shown to increase engagement in Payment apps. This is in line with the Square CFOs public statements
The other gentleman is Ron Shevlin, the king of fintech snark. Notwithstanding the title of the article, Mr Shevlin was exactly right on two counts - first, in order to compete with CashApp, Paypal had no choice but to incorporate crypto. Secondly - this is absolutely amazing for the entire space.
As for me, I am not interested at all in that $50 bn figure. For me, 345 million users paying attention to bitcoin and ethereum is monumental. This is what’s going to force the gerontocracy to open the doors to tokenised assets, blockchain infrastructure in capital markets and entirely new ways of building financial infrastructure such as… yep, #DeFi.
The third guy who got the joke was obviously you know who but that was way back in June if not earlier.
Fiat and Crypto Worlds re Converging in Fintech
Auditors, Lawyers, Priests and #DeFI
I used to work for PwC then and I knew exactly what I was talking about.
Well came 2020 and #crypto people chose to trust a piece of code written by an anonymous founder in China with just over a billion dollars. How do you think it ended?
Well how do you think? Let’s just say this glorious “innovation” by an anonymous founder failed to disrupt Monzo when a smart, trustless, programmer-trader, potentially an insider, used the vulnerabilities in the code to borrow money from another set of ethereum smart contracts, run a clever arbitrage trade that the code unfortunately seemed to allow and within seven short minutes make $24mn.
And not so differently from the Wirecard debacle, we are back to talking about accountability of auditors - this time code auditors, not the financial statement audit people. Where’s my friend Henri Arslanian of PwC when you need him?
To add to the weirdness of it all, it seems the “decentralised” team asked exchanges to bail them out. Lehman and LCH anyone?
Then it triggered age old debate about what “code is law” means.
It turns out, there’s no legal framework around who owns cryptoassets deposited in a smart contract. In plain english, if you lost your YOLO (you only live once) money in this exploit, you can go to court but the court will not know what the hell you are talking about. What’s even weirder is that there won’t be a defendant to sue (anonymous founder).
So we were left with the rather strange spectacle of people arguing about whether #defi is worse or better than centralised #crypto exchanges when it comes to losing customers’ money…
Of course, all this is clearly not weird enough so we got another gem in the same week.
Jack Ma Wants Banks to Lend Freely
Of course he does. Having lived through Lehman era, I know this - no one likes risk managers or compliance when the sun is shining. It’s a thankless, unglamorous job - a bit like dentistry. You only thank the root canal is done.
Well, the way this shiny “envy of the west fintech” thing works is, China’s banks hold the credit risk bag (a crypto term for coins that you want to sell but can’t) and Mr Ma owns the credit model and the customer relationship. This houdini trick is called externalising risks and it’s exactly what we investment banking people used to do so well until 2010. It’s also the thing that FAANG do spectacularly well right now.
Any business that can capture most of the assets and hand off most of the liabilities deserves an approximately 400 billion ICO, I mean IPO. Of course then, Mr Ma doesn’t like Basel capital charges.
300 million Euros and 12 years later
After recent debates about #blockchain, it was a little hard for me to not troll Chris and David about Target2 experiencing “total system failure”. Target 2 is critical financial infrastructure and total system failure is not the sort of thing one likes to associate with it. Maybe it wouldn’t hurt to spend the next 300 million on blockchain … as long as we make sure it’s a real, resilient blockchain like #ethereum and not some safe and pointless DLT built to retrofit how things work today
I endorse this message
Next week is Election week and we were electing a president of fintech, I’d leave my colonial cousins in America with this inspiring message.
In other words, yes get rid of that guy first and then please get your #fintech shit together, America!