Joaquim Pedro Antunes | Head | Crypto Engineering | Xapo Private Bank | mail me |
Although the world of crypto-related financial services is in turmoil at the moment, its underlying blockchain technology has a vital role to play in the future of banking and other financial services.
In the world of finance, we are currently seeing real consensus between the traditional and the Web3 players that the combination of secure private banking, blockchain technology and Bitcoin custodianship is the future and holy grail of banking.
The world is changing and we must focus on democratising access to financial services that can make the citizens of the world safer against country risk, global political and economic risk, cyber attacks, the injustices of inequality and the impact of global disasters.
Vital to the financial system
We must combine the security of centralisation, the freedom of decentralisation, and the immutability of the blockchain as a bridge between the old CeFi and new DeFi worlds. That’s how we’ll take banking and financial access forward in the years to come.
The attributes of blockchain technology to be absolutely vital to the future functioning of the financial system. If we are focusing on the blockchain technology itself, then I see it as a triple-entry bookkeeping system that is decentralised, transparent and incorruptible.
Recent turmoil with US banks is the predictable result of poor asset-liability management and a challenging economic environment – and blockchain can be a way of bringing a level of transparency to a sector that has historically been built on equal parts of secrecy and trust.
We are the first crypto-native bank in the world and we are working closely with the regulatory authorities for banking and crypto in Gibraltar, a British territory at the southern tip of mainland Europe, to set global ethical and regulatory standards for hybrid crypto banking.
A fundamental value proposition
Recognising the risks that B2B crypto banks faced early on, and regulated to EU and UK standards, we took a business decision in 2019 to sell our Institutional Custody business and focus on a B2C retail offering. This ensured our stability, which was further underpinned by high liquidity as a result of the bank’s strong fiat and crypto reserves.
All the reasons why we became Bitcoin custodians in 2013 still stand and we will continue to stand regardless of what happens in the market: Bitcoin is robust and secure, decentralised, transparent, immutable as opposed to fiat currency.
Bitcoin also meets all the criteria of a stable and legitimate currency, including scarcity, widespread use, divisibility, insensitivity to inflation, acceptability, portability and durability, plus it’s virtually impossible to counterfeit and its digital ledger is always traceable.
Because we started as a custodial Bitcoin wallet, we have blockchain integrated into our systems from compliance and treasury management systems, to trading and transactional engines. This means that we treat Bitcoin and other cryptocurrencies as first class citizens in our platform.
In conclusion
Cryptocurrencies have a fundamental value proposition of being an alternative to the points of failure inherent in the traditional financial system.
In developing countries, allowing widespread access to stable coins can have a life-changing impact on the populations and the near-instant cross-border nature of blockchain transactions can also take hold in the remittance market.
I believe banks and fintechs can fail anytime, but blockchain is built on scientific principles and cannot break. Blockchain is immutable and that’s very powerful.