What is the problem with Money being a claim on an Institution? Reflections from the AxessThinkTank event

axessThe first full day event focused on what is now `Alternative finance` was of high quality and non-tribal. Organized by the Geneva based, Axess Think Tank, with four themes

  • The future of money
  • The Regulatory landscape
  • ICO-STO and Capital markets
  • Blockchain and the Token economy

I had the great pleasure of moderating the last two topics.

Watch Alpha Point the US based leader in digital Exchange software white label solutions and DLT software. Both team members were extremely upbeat about the growth prospects of their market sector. The CME group and the Royal Mint of England are already their customers and Novogratz invested in them last summer.  I felt that they are out there for a mass distribution of Crypto Exchanges that will allow for the tokenization of all kind of illiquid Assets. While selling exchange software, they are disintermediating the oligopolistic conventional exchange software business.

Cryptofinance is a Swiss quality business that offers asset management services, brokerage and custody. Lewin Boehnke CTO of Crypto Storage AG and head of research and shared insights from their journey, seemed to have a card up his sleeve when he repeatedly stated that

`there are a few major players that will join the digital asset class soon`[1].  Stay tuned on their news.

SCX is the new fully regulated Swiss Crypto exchange live since last summer. The Chairman of the board Christian Katz joined our panel. He is the former head of the SIX exchange and is now devoted to building an institutional grade business. A secure and transparent crypto exchange is undoubtedly needed and C. Katz knows the inside outs of the exchange business.

Taurus is a new Swiss player offering brokerage and trading services. Recently also added storage solutions.

LakeDiamond & Monart, were the two specific tokenization use cases that participated. One in tokenizing the industrial production of diamonds and the other in the contemporary art space.

Capco shared lots of insights from their clients and the projects that they have working on.Romal Almazo, Capco’s UK DLT & Crypto Lead continuously emphasized that we need to go back to the core issue

`What is the problem we are trying to solve?`. Five words please. Then we see whether blockchain can do the magic and solve it.

He was also assertive, in his belief that only what is FCA approved will be the dominant tech that will scale. He announced a CAPCO pilot project that is by invitation only, in which CAPCO will use its global network of SMEs to participate in a solution around digital assets that will be led by CAPCO. The aim is to develop a blueprint in solving market problems via digital assets.

CVVC and Amazix, participated in the panels, sharing their experiences from the growth and pivoting of the startup ecosystem.

e-Money, CBDC, and BTC

When you have a board member of the SNB Andrea Maechler, a senior research advisor to the BOE Michael Kumhof, a research fellow of the Fed St. Louis & Professor at univ. of Basel Aleksander Berentsen, a research fellow of the UCL Center for Blockchain Technology Daniel Heller; there is a lot to absorb from their talks and panel discussions. Add to that the moderator Michel Girardin, from the Univ of Geneva and Jean-Pierre Roth, the ex Governor of SNB, in the audience.

They agreed that payments are the very heart of any economy and that we live in a world that customers expect payments to be like WhatsApp messages.

The SNB is actually following the innovations around payments, whether Fintech or Bitcoin originated. Andrea Maechler, emphasized that the SNB`s mandate is to support and promote cashless payments and this done through SIX. Fintechs that hold a FINMA payment license will be granted access to the SIX system.

Regarding CBDC[2]`s they have concluded that it is not a tech issue but rather a policy issue. The SNB believes that while there are advantages, the main disadvantages, make CBDCs a no-no fort he SNB. They see that a CBDC would increase the risk of a bank run and would make monetary policy ineffective when it is actually mostly needed.

This is where Aleksander Bernesten actually stepped up and provoked the thinking. He firmly believes that Central Bank electronic money would increase financial stability.

Give access directly to the CB to all.

His motto is that

the Censorship resistant attribute of Bitcoin, is priceless!

He makes things simple by focusing on this attribute. Since there is no free lunch, we have to choose between

A Censorship resistant database which is inefficient and slow

Or

An efficient and fast centralized database which is not censorship resistant

 

He thinks that a central bank decentralized currency has no meaning at all. Forget about a Fedcoin type of idea. However, he proposes that Central banks issue electronic money for all! So instead of having the authorized commercial banks exclusively access directly the CB, we should all have direct access to the CB. Forget about the RTGS system.

censorship-610101_960_720

For those that want to understand more details read The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies

Note: This post is not comprehensive coverage of the event. By joining the Axess think tank you can access the video recordings and more. Check it out here.

Don’t forget that currently

MONEY is a claim on the Central Bank or a commercial bank!

Will this change? How and when? The Why has been answered: For a Censorship resistance monetary system.

[1] Check https://www.linkedin.com/feed/update/urn:li:activity:6497140631427694592

[2] Central Bank Digital Currency

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

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