I'm not a huge supporter of how finance is regulated, but paradoxically, I tend to believe that we won't enjoy the full benefits of blockchain/crypto until the tech is innovatively employed by regulated entities (e.g. open finance, account portability, self-sovereign ID, etc.).
There's another angle in this paradox, which is: blockchain/crypto founders usually want to avoid all the hurdles and costs associated with regulated services (e.g. finance), which is why there's so much stuff happening in DeFi, as it's perceived as a regulation-free safe harbor.
What most blockchain/crypto founders seem to be failing to properly address, though, is that they're favouring short-term opportunities with limited growth potential over mid/long term opportunities with much juicier prospective growth rates.
Look for the blockchain/crypto founders and startups who don't only feel comfortable with regulations, but are also looking to actually use these technologies to improve/revolutionise the existing systems (instead of trying to build no man's land).
This is precisely why I find companies like Lendonomy, R3 or even Ripple to be so interesting. They form part of a handful of companies who are actually trying to bake the technology into the traditional systems.

Distributed ledger > proprietary APIs.
Regulators in charge of supervising finance, consumer protection, competition and markets, should be actively researching how DLT platforms could be used to enforce improved oversight and transparency on these fields, as industry participants have natural adversarial interests.
To put things in context, the UK Competition and Markets Authority was responsible for the creation of the first Open Banking regulatory framework, which obliged the 9 largest banks in the country to create APIs, so they could easily share customers' data as per their request.
This was a revolutionary move in terms of competition, because it made it easier for customers to leave their banks (i.e. it enhanced account portability). — Additionally, open banking also created substantial momentum for financial service unbundling, which means that, aided by
novel figures like account information service providers (AISPs) and Payment Initiation Service Providers (PISPs), non-banking fintechs could specialize in providing certain specific services (e.g. wealth management, bill switching, remittances, etc.), whilst delegating
banking processes to actual banks through their AISP and PISP licenses.

This phenomenon (open banking) triggered an unstoppable wave of competition and improvement of financial services. Definitely one of the main reasons the UK is the global fintech hub it is today.
Now, imagine what would happen if, instead of requiring banks to share customer data through the maintenance of proprietary APIs, they were required to store all customer objects (data, accounts, assets, etc.) in consortium-managed distributed ledger platforms.
The above would reduce account portability friction and costs to near-zero levels, which means that customers could switch their financial service providers as easily as they switch from Target to Walmart and vice versa. Competition in financial services would be taken to a
whole new level.

Moreover, a scheme such as this could be extrapolated to other industries, such as telecomm (carriers), utilities, ID providers, etc. All whilst the different industry-focused DLTs could interoperate and share info. between each other as per customer requests.
These DLT platforms could have tiered access structures, where different participants could have authority to access different data levels, according to how they're regulated.

More importantly, consumers would have access to their info, how it has been used, when and by whom.
Ideally, these DLT platforms would have open source components that would allow for the creation of independently-maintained explorers (akin to crypto explorers).

Switching from one bank to another would be as easy as importing your ETH or XRP wallet into another client.
There are things that crypto guys can learn from traditional finance guys, and there are things that traditional finance guys can learn from crypto guys.

The most interesting stuff will arise in the intersection between both worlds.


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More from @Arturo_P_A

29 Mar
After reading 6 or 7 articles about this announcement, I think I finally got to weed out the unsubstantiated noise and actually understand how the USDC/USD settlement and payment process on Visa's treasury will work.

1. Crypto. com users who hold USDC and have a Visa card attached to their Crypto. com account, make USDC payments to Visa merchants.

2. USDC payments are cleared, but funds not immediately transferred by Crypto. com to Visa (i.e. settled).

3. At the end of the day, Crypto. com sends a USDC batch transfer over Ethereum to Visa's Eth address held on Anchorage, hence settling its intra-day payment obligations. Visa is, then, taking some credit risk (which will translate into costs for Visa partners and merchants).

Read 12 tweets
26 Mar
I don't know if it's possible under US law, but in case intervention is allowed for #XRPHolders in SEC v Ripple, SEC commissioner @HesterPeirce should file an amicus brief, as it'd be THE opportunity to stand for her vision and push for new regulatory policy within the SEC. Image
Imagine the impact that having an SEC commissioner opining against the SEC's own actions, would provoke on the judge.

Hester Pierce has published a variety of communications with the clear intention to show her dissension with the crypto enforcement actions launched by the SEC.
It's time for her to take the next step and follow a path that will actually make the SEC's high-level decision makers to understand her views and act accordingly. The innovation momentum will not last forever, or at least, not in the US.
Read 4 tweets
8 Mar
I'm perplexed that neither @coincenter nor @BlockchainAssn have issued a single statement on SEC v. Ripple (let alone fight the industry-harming interpretation of securities laws), despite this case CLEARLY falling within these advocacy groups' missions [attached for reference]. ImageImage
I see no single strategic reason, beyond perhaps management bias, for these blockchain/crypto [more like BTC/ETH] advocates, to not fight the SEC's harmful predilection to regulate crypto through reckless enforcement actions that destabilize the industry as a whole.
The same goes for @DigAssetMarkets.

These advocacy groups describe themselves as entities created with the sole purpose to help creating adequate regulatory frameworks for digital assets, yet they choose to relinquish the single most important opportunity to shape the landscape. Image
Read 16 tweets
5 Jan

While the entire US crypto industry (exchanges, funds, associations, PsPs, lobbyists, etc) is currently focused on fighting the AML rules proposed by FinCEN, the XRP Community has been left ALONE fighting the securities battle FOR THE BENEFIT of the whole industry.

The entire US crypto industry (excluding the XRP Community) has been miserably failing to acknowledge that, until now, all the SEC has had for purposes of characterising a blockchain-based token as a security under the Securities Act of 1933 ...

... is a 75 year-old judicial precedent (i.e. 1946 Howey Test), and some non-binding internal guidance. That's it. Nothing more. No clear federal regulations and no clear binding precedents.

Read 10 tweets
25 Dec 20
Just finished reading the SEC v. Ripple Complaint — Most of the allegations in re. XRP being a security are built around the false idea that investors bought an asset that had no 'use' beyond speculative purposes.

This is exactly where their whole case cracks up.

Ripple has to properly document and demonstrate all the 'uses' made available by the XRPL since the beginning of times. Some of them include:

- Immediate and cheap peer-to-peer transfers (everyone could be its own ODL since XRPL was first launched).

- Every XRP investor has had access to a fully functional decentralized exchange since the very beginning, being able to use XRP to trade against a variety of IOUs.

- XRP has been a very useful instrument for payments since it came into existence.

Read 12 tweets
9 Mar 20
March 9, 2020

Congressman Paul Gosar introduced the "Cryptocurrency Act of 2020" to determine which US regulator is responsible for which digital assets (DAs).

The proposal divides DAs into 3 main categories:



1) Crypto-Commodities are defined as goods or services, including derivatives, that:

a)have full or substantial fungibility.
b)the markets treat with no regard as to who produced the goods/ services; and
c)rest on a blockchain or decentralized cryptographic ledger.

2) Crypto-Currencies are defined as representations of USD or any synthetic derivatives therein, either based in algorithms, smart contracts or collateral to stabilize against USD.
Read 10 tweets

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