The blockchain/crypto week in quotes

“We had this first wave of massive hype around ICOs in 2017, early 2018, and then a little bit of a pullback. And now in 2019, it feels like people are focused on building… I think the market is going to be quiet for a little bit, while people focus on actually creating things. It feels like a little bit of a Mesopotamia, ‘cradle of civilisation’ moment, where everyone has the ingredients they need, needs to focus in and start to build out those empires, and create what the future is going to look like, and that’s what this year is going to be about.” CoinList CEO Andy Bromberg

“In a single hour of trading yesterday (30th January), XRP managed to erase an entire week’s worth of losses. A jump of 10% seems to have buoyed the entire crypto market and sentiment is once again optimistic. Ripple was in the news yesterday as CEO Brad Garlinghouse and CEO of SWIFT Gottfried Leibbrandt appeared onstage together at the Paris Fintech Forum. The SWIFT CEO announced a partnership with payments provider R3, which Ripple also does business with.

Crypto investors have joined the dots and, rather than rivalry between the two companies, are seeing the development of a larger network, which includes all the major players in the industry and represents the next step in cryptoasset technology. We’ll have to watch and wait to be sure, but this potential collaboration seems to have further buoyed market sentiment.” Mati Greenspan, Senior Market Analyst, eToro

“There are basically three key pillars to providing banking in developing markets. Nobody in Haiti says, “My problem is that I’m unbanked.” Most people in Haiti don’t know what the eff that word means. You go to Mexico, you go to the Philippines, you go to Indonesia—nobody says, “Oh, my God, if only I wasn’t unbanked.” Nobody cares about that, except maybe people with great intentions at NGOs.

What people care about is, “Can I get credit in a pinch? Can I send or receive money at reasonably low cost? And can I invest? If I’m saving my family’s money, even if it’s only $50 a month, can I invest that money, or do I have to leave it under the mattress? And can I invest it in something other than my country’s failing currency?” In Venezuela or Argentina, if you’re older than 40 you’ve probably seen this rodeo 10 times: currencies failing and getting propped up, or failing and starting over. So all three of those models are relevant in developing markets.

Now, this is where crypto starts to get interesting. For two reasons. One is Bitcoin’s ability to serve as hard money. But, and this is a big one, it’s only going to become useful for the average consumer in the short term—the next five years—if you can take that hard money and use it to collateralise other asset classes. Because the average consumer does not have the mental capacity right now to understand what a cryptocurrency means. It would be like explaining TCP/IP to your grandmother so that she can watch Netflix. It’s not going to happen. But if you can collateralise real-world assets using crypto, [without] introducing new third-party custodians, you’re onto something really interesting. Because now you can represent fiat currencies, stocks, bonds, commodities in a way that doesn’t require you to become a bank. That’s interesting. You’ve got a combination of hard money and regulatory arbitrage to solve real consumer problems. That’s what I think it’s going to take to break into developing markets.” Abra CEO Bill Barhydt

“I do think that Bitcoin pulled a little bit of demand away from gold last year, in 2017. Interestingly, we just polled 4,000 Bitcoin investors and their number one investment for 2019 is actually gold. So gold lost to Bitcoin and now it’s going the other way.” Jan Van Eck, CEO, Van Eck Associates

“It’s definitely not a case of if, but when crypto ETFs will begin to emerge. As crypto assets gain legitimacy as an asset class of their own, it is imperative that businesses that make money by providing access to different asset classes will cater to crypto assets as well.

For this to happen, two main things are required. Firstly, it’s crucial that the valuation of crypto assets moves from the current, purely speculative approach to a focus on the fundamentals. As well as this, the support of regulatory bodies that recognise crypto/digital assets as a legitimate asset class that they do not deem to be too risky will be essential to getting ETFs approved. 

It should be noted that some exchange-traded products do exist at present, for example the Swiss listed ETP. Given the regulatory landscape, it is likely that the ETFs will be available in jurisdictions outside of the USA first. If one has to predict a possible date for a USA listed crypto ETF, 2019 seems too optimistic.” Vaibhav Kadikar, Founder and CEO, CloseCross 

“Blockchain isn’t going to reinvent the global payment system, but it will provide marginal improvements. The most meaningful impact will probably be three to five years away and mostly on trade finance.” JPMorgan’s Chair of Global Research, Joyce Chang

“As we motor on into 2019, we have already seen the first piece of communication from the FCA in the form of a consultation paper from their Crypto Asset Task Force, issued last week. This document looks to set out the FCA’s proposed guidance on the existing regulatory perimeter and how crypto assets fall within that.  For those who expected this communication to be ground-breaking and definitive, we are a long way from that as we await the final findings in Summer 2019 which is when we expect to see some firm guidance that we can all work to, so in the meantime we will have to make do with the snippets that they choose to publish to the market.

From a GlobalBlock standpoint it is great to see a combined and concerted effort from the government, HMRC and UK regulator to bring some clarity to the market, and we look forward not only to the protections and clear tax implications that it brings to investors, but also the overarching structure and framework presented.  This should really assist in bringing the next level of investment from wider sectors to assist in the next phase of market evolution and adoption across both retail and institutions.

From a retail perspective, we cannot emphasise enough the importance of consumer protection in the guidance in line with existing financial services regulations.  Despite a significant fall in crypto prices over the last 12 months, we are still experiencing solid interest from the retail part of the market, which we feel will only grow once the confidence is there that protection is available.

The institutional key to success is simple with four main drivers to future growth, the first two being education and security and the second two, and most pertinent being regulation and compliance. Essentially, the compliance environment in crypto, whilst hailed for its anonymity, makes it very difficult to verify identity and risk profiles to be compliant with KYC/AML rules, so any progression here will be welcomed.  From a regulatory perspective, the current landscape is nascent and so even if other countries’ governments and financial authorities are being a little slower to react, having some insight and guidance in the UK can only be a good thing, especially given how highly regarded the FCA is.” David Thomas, Director and Co-Founder, GlobalBlock