Thread by @quant_network

Starting shortly: today's #Sibos Big Issue Debate - Can digital value solve real world problems?

Emilie Rieupeyroux from @euronext, Shahmir Khaliq from @Citi, Sophie Gilder from @CommBank, and Umar Farooq from @jpmorgan will be @StreetsConsult's panel.

A 🧵...

"No one in this room is ready to transact when there is no one to contact if things go wrong," says Rieupeyroux. "What you want, at the very least, is someone you can sue if things go wrong."

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"When you look at smart contracts, you can easily imagine an environment where someone you trust is certifying the smart contract," says Rieupeyroux. "There are many areas where centralised players can deliver value in a decentralised environment."

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"There's a role to play in terms of trust," says Farooq. "The role of the centralised institution isn't dead. But the execution may be decentralised."

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"There's still a long way for DeFi to go to grow up," says Gilder. "Interest and hype doesn't reflect the number of users. We could help but we'll tread very carefully because of the lack of regulatory clarity."

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"We're trusted because we're regulated," says Khaliq, "We shouldn't rush to the conclusion that DeFi will kill TradFi. As we go on this journey of making ourselves more efficient, you're going to see a separate value chain which is evolving bank technology."

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"Lending and syndication, trade finance - any process that entails multiple parties who want to exchange information on a universal platform is a DeFi use case," says Khaliq, "We're exploring a number of those use cases in our firm with our clients."

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"One clear use case of DLT is immutability: the ability to timestamp, guarantee data," says Rieupeyroux. "The second is automated market-making schemes; they're very impressive - even if it is very early stage. Any retail investor has the potential to be part of it."

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"Traditional finance needs to understand that blockchain technology can actually overcome a lot of the money laundering issues," says Gilder. "We're not there yet but it's getting harder and harder to launder money with crypto."

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"We tend to look at these ideas as the ultimate solution to all of our problems," says Rieupeyroux. "It's actually a lot more expensive to execute a crypto trade than equities. But that's missing the point of new technology."

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"Data security has to be front of mind for all institutions," says Gilder. "I'm excited about using new technology to do a better job of that. If we get it right, web3 allows you to control your own data, monetise it, but prevent others from accessing it."

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"It's not real yet but stay tuned on identity,"says Farooq. "There are lots of things you can do with NFTs. Can we create digital goods that are collectables? We do it with paper products all the time, why not digital? It becomes an anchor of your identity over time."

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"Interoperability is the solution, to be clear," says Rieupeyroux. "But, as far as I know, there are not yet 100% secured interoperability protocols. Too often, the bridges act as 'open' bridges. It still needs to be developed."

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"We've come up with solitons that have nothing to do with blockchain," says Khaliq. "The challenge is to focus on the inefficiencies, design around them, not always the particular technology. We could miss the shorter paths to commercialisation"

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"We need regulatory engagement though," says Khaliq. "It's really important to take regulators along for the ride. Otherwise, you can come up with a great solution that you regulator doesn't buy - that's a show-stopper."

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