Week 38 recap, Blockchain+Banking
quote from Ira Auerbach, the newly named head of Nasdaq Digital Assets
Our big themes at Fin3: (1) Financial Services are going to run on blockchain in 10 years, and (2) in the U.S., blockchain technology and crypto will be regulated. This week did not disappoint. Nasdaq (NDAQ), the 28bln market cap parent company of the Nasdaq exchange, announced that it was creating an institutional-focused crypto business. Nasdaq's initial focus is institutional custody. To us this is a significant event - there is not a crypto custodian that can really qualify as institutional quality (Coinbase is probably the most well-capitalized), and a major financial infrastructure institution like NDAQ will open the doors for more mainstream adoption of digital assets. link: https://www.forbes.com/sites/emilymason/2022/09/22/nasdaq-enters-crypto-business-with-focus-on-security/?sh=729235673dee
On the regulatory front, news reports about the pending Stablecoin Act hit. Key points: - the bill would not limit banks' authority in issuing digital assets that represent deposits, as permitted by applicable state and federal law,
- all stablecoins will need to be 1:1 reserved - we here at Fin3 obviously are huge supporters of this idea, as our platform enables banks to create 1:1 fully reserved stablecoins - non-banks will be allowed to issue stablecoins, although they will be regulated by the Fed
- 2-year ban on issuing of "algorithmic stablecoins" (the use of the term stablecoin here is a misnomer - this is a scheme to create tokens backed by no value and a ban is great step towards restoring trust after Terra/Luna)
- we also heard through the grapevine that KYC/AML compliance will be mandatory for stablecoin issuers - we can discuss a system to solve for this in detail with anyone who would like to.