On-chain finance is no longer a "fringe" market opportunity. The strong case for TradFi leaders to embrace and invest in blockchain, digital assets and related products and services is clear: By integrating blockchain technology into their businesses, they can unlock new revenue streams, enhance operational efficiency and accelerate transaction settlement times, increase transparency, improve security, and future-proof their institutions in the face of ongoing product innovation that could trigger the radical remaking of the financial industry. The shift to digital assets is not just an opportunity for growth but is also a necessity for TradFi companies to remain relevant and competitive as the financial industry evolves into one powered by blockchain.
LEADERS is a flagship channel that spotlights C-level executives and top experts as they discuss transformative topics for an audience of key decision-makers. We deliver thought leadership on the most pressing issues driving financial services. The LEADERS series is made possible by the support from top industry collaborators including Uphold.
Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Holly Sraeel (00:10):
Welcome to American Bankers Leaders Live. I'm Holly Rael, senior vice President of American Banker Live Media. I'll be talking today with Uphold CEO, Simon McLaughlin about the future of on chain finance and why it's time to bank on a digital asset economy. So Simon, on chain finance, digital asset economy, blockchain, and tradify. It's a big thing. It's a big lift for tradify players. So let's talk where we are right now.
Simon McLoughlin (00:39):
Well, first of all, thank you for having me, Holly. My pleasure. We are at a really interesting inflection point. When you stand back, there are only a few technologies in the world that have the potential to add several percentage points to global GDP and blockchain is one of them. But for the past 10 years, it's been a pariah technology. The previous US administration took a very anti crypto stance and as a result, the technology never received the reception, the integration it deserved
Holly Sraeel (01:16):
Or the respect
Simon McLoughlin (01:17):
Or the respect, and it was sort of associated with short term retail speculation on digital assets, which is not the story, the real story and
Holly Sraeel (01:24):
Fringe and fringe
Simon McLoughlin (01:25):
And fringe. The real story is that blockchain is a transformational infrastructure technology, and what's happened over the past nine months since the new administration has been in power is just extraordinary because the weight of the world's largest economy has now been thrown behind blockchain and crypto assets. The US administration recognizes that crypto is a friend to American policy. I think they've woken up to the fact that it's a technology race they can't lose, and it's also a way of dollarizing economies all around the world from the studs up with stable coins. So we are in this amazing position where for the first time, the participants, Citi Citigroup, JP Morgan, the regs, uk, Europe, Singapore, US, and the technology faster blockchains have all come together and this is the moment where this sort of fringe technology, which everybody's been ignoring and associated with silly speculation on meme coin. It's like, oh my goodness, okay, this is a transformational technology that's now being embedded in the infrastructure of some of the world's largest financial institutions, and that's happened at a breakneck speed.
Holly Sraeel (02:45):
So let's talk about this. What are the real opportunities for banks as you see it at this moment?
Simon McLoughlin (02:51):
Well, if you stand back, blockchain and digital assets have the potential to transform virtually every service that a bank offers from credit provision to payments, to savings, to transforming backend infrastructure. I mean, I remember the Accenture survey a few years ago that showed that across the eight largest banks, the potential savings from back office efficiency alone was some $8 billion. They could cut 30% of operating costs. If you look at lending, defi has been a spectacular success through all market cycles and it's brought the cost of lending down from typically five to 8% to 2%, and then you've got stable coins for the first time. People can send a dollar anywhere in the world in less than a second for less than a cent. These are all transformational levels of service, and the banks, I would argue, are going to be the major beneficiaries because they bring structural advantages that fintechs don't have. They bring distribution, they bring trust, they bring regulatory oversight. So this is a technology suite that banks can now adopt in order to transform their service offerings to customers, but also to massively reduce the cost base.
Holly Sraeel (04:23):
So it's a fascinating opportunity. It's huge. They're aware that it's coming and that they have to participate. They're making talent assignments internally and projects and trials and stuff, but what's the biggest barrier for Tradify right now?
Simon McLoughlin (04:41):
I think the biggest barriers for tradify adoption of blockchain, so four categories. The first is regulation is still nascent. There's no coherent body of regulation around the world. There are certain activities, so tokenization of real world assets. You'll hear a lot of people talk about, oh, you could tokenize real estate and put it on a blockchain. Well, no, you can't. The legal framework doesn't exist. The second challenge is integrating decentralized ledger technology. Blockchains with legacy banking systems is fantastically complex. The third challenge is banks require very high levels of resilience and speed, which some blockchains don't provide. And I think what we're seeing as an infrastructure provider uphold is a blockchain infrastructure company. So we are helping banks integrate digital assets and blockchain by taking away all of the technical hassle. So things like custody, last mile, integration of systems, integrating of digital assets to the interface of the bank's own customer interface. That's stuff that we can do very easily and just helicoptering up to a high level the key challenges for any bank, very few people have a thorough understanding of tradify and digital assets, so it's a talent gap. One of the things that our partners come to us for is our leadership team all have either banking or broker dealer backgrounds. So banks come to us and they recognize our understanding of control systems, the regulatory environment, so they kind of look in the mirror and they recognize themselves in what we do.
Holly Sraeel (06:30):
So we're going to circle back to that later. Let's talk about the challenge of technology. How much of a challenge is technology versus regulation for tradify? You know the drill, they have to comply with all the regulations. They have legacy systems in place. They want to get out in front with the new technology. And it's a challenge.
Simon McLoughlin (06:55):
It's a huge challenge and what we are finding is a lot of banks are integrating blockchains in the heart of what they do so that they sit alongside traditional rails. I think one of the most fascinating things that we are likely to see over the next year is at the moment everybody's talking about stable coins. The stable coin is a representation of a dollar held in a reserve backed by a real dollar that moves on a blockchain and it's issued by a FinTech. But when you step back, a FinTech is not the natural issuer of a dollar on a blockchain. The natural issuer of a dollar on a blockchain is a US bank, and I think you're going to see it's called us tokenized deposits. So US dollar tokenized deposits basically mean a dollar issued by a bank that travels on a blockchain that enjoys FTIC insurance, reg E protection, chargeback protection. And now there was a letter went out to US banks in March that basically said the OCC letter that says that banks can now indulge in certain novel banking activities. I think tokenized deposits are going to be huge because what you give the customer is a dollar that not only has a bank account number, but it also has a wallet address so it can travel in two dimensions and I think that's going to be transformational. I think you'll see us tokenized deposits rise and become equally as important as stable coins.
Holly Sraeel (08:35):
That's interesting because the intense focus in the industry and also in media to be fair, is on stable coins and nobody's talking about the other. And so do you think that they should be viewed simultaneously or do you think one should be more significant in focus for banks than the other?
Simon McLoughlin (08:57):
Personally, I think tokenized deposits are way more important.
Holly Sraeel (09:00):
Interesting. Okay. So tell me a little bit about that.
Simon McLoughlin (09:03):
So I mean, if you think of the disadvantage of stable coins, they don't count as cash on company balance sheets. You can't pay interest on a stable coin. There's a certain degree of opacity over the backing. Is it really backed or not? And there are very, very few consumer protections associated with the stable coin. All of those disadvantages are solved in a US deposit token because that's simply a dollar issued by a bank on a blockchain which enjoys all the protections of a regular dollar because it is a regular dollar, it's not a token, and I think there's going to be a huge move towards those kind towards that model.
Holly Sraeel (09:54):
I agree with you. Actually I do. I think you're right about this. Let's talk a little bit about what's unique about managing custody on chain compared to traditional custody.
Simon McLoughlin (10:07):
Well, I think it's one of the most difficult things for traditional financial institutions to do because I mean traditional custody is all about legal ownership process and controlled access and where is the asset. Whereas custody for digital assets is about one thing. It's about cryptography. Fundamentally, whoever owns the private key owns the asset.
(10:31):
You can almost say that the asset is the private key and therefore the role of digital asset custody is to keep the key super secure, but abstract away as much complexity as you can for the customer. So one of the things we do at UPHOLD for our customers, including bank customers, is we allow them to integrate different custody options. So we can offer customers self custody, which means they hold the key, they're completely sovereign, no one can sense you their access to their asset. They can have a custodial service, which means we hold the key on behalf of the bank. So the bank will delegate its authority to us and we hold the key under a contractual arrangement conforming with the bank's own policies and procedures. Although a very important service we've launched is assisted self custody, which basically gets rid of a lot of the risk of self custody. The trouble with self custody is if you lose the key,
(11:30):
You've
(11:30):
Lost the asset. It's irre recoverable, nobody can help you. Whereas assisted self custody means if you lose your one key, there's
(11:37):
A backup,
(11:38):
Not so much as a backup, but you can put your remaining key together with a key that we hold to create a brand new key, and that takes away a lot of the risk for consumers.
Holly Sraeel (11:49):
Okay, interesting. Let's talk a little bit about tokenization that is expected to unlock liquidity and has that not happened and why?
Simon McLoughlin (12:04):
Well, I think if you look at digital assets, there are three at scale use cases. The first is Bitcoin is digital gold arguably the best savings technology ever invented. There's stable coins for payments and there's tokenization of real world assets. That third use case I think is going to be the largest of all, but it's very nascent today. What you're seeing is experiments in walled gardens by the big banks. JP Morgan's has its onyx program. Citibank have a similar program, but they're all on permission blockchains and a permission. Blockchain is simply a private database that the bank a central, there is a central authority that guards access to that database. That's not really the spirit of blockchain and tokenization at scale. My belief is the future of tokenization, it will be on permissionless networks, but that won't be possible until regulatory compliance information is encoded in the token itself. Because at that point you can have control over who owns the token based on the code in the token, and that's what will open up. The really exciting thing here is tokenization of real world assets at scale. It allows global capital formation much more transparently and much more efficiently.
Holly Sraeel (13:34):
So how far off might we be from seeing that?
Simon McLoughlin (13:40):
I think it's something we're likely to see in the next 12 to 18 months.
Holly Sraeel (13:46):
Really,
Simon McLoughlin (13:47):
The reason I say that is
Holly Sraeel (13:48):
That's sooner than I would've expected you to say.
Simon McLoughlin (13:51):
Well, I think there are certain projects. The actor standard is basically creating standards for the encoding of regulatory compliance information in a token. If you look at networks like Avalanche, they're doing something very similar. So they're creating smart tokens that create fundamental information about the holder and the asset classes. I think you're going to see tokenized first at scale will be the ones where there are ISO standards. So the standard information, they're already ISO standards for how a digital artifact represents a real world asset. So the best use cases are going to be commodities initially. So I think the tokenization of oil, the tokenization of energy will give traders new instruments that they can trade 24 7, 365 days a year with instant settlement. But for example, for oil companies, I know of one project that's using us at the moment. A group of oil companies have come together and they're tokenizing the oil in the pipes that are above ground because it's asset's. A bit like Airbnb. You get to monetize your spare room. The oil companies are coming together to tokenize oil that is in their pipes at any one time but is not currently being monetized. And that's fascinating. That will create a new form of spot exposure for traders to oil and arbitrage opportunities for those traders.
Holly Sraeel (15:28):
It's just fascinating. Lots going on. Let's talk a little bit about the internal challenges that are slowing banks down. You and I had bantered about that earlier in the week. Existing legacy technology issues, talent gap issues. What other challenges internally are slowing them down?
Simon McLoughlin (15:50):
Well, I think it often comes down to a mindset issue with
Holly Sraeel (15:54):
Culture. Yeah,
Simon McLoughlin (15:55):
Culture. Because I mean banks are very risk and regulatory driven and digital assets and blockchains just bring completely different paradigms. They bring the paradigms of freedom, inclusion, self sovereignty. And I think a mistake that banks are making is to try and replicate old ways of thinking, old rules on new rails. Instead of embracing the possibilities of blockchain and digital assets, I think my challenge would be break free of old ways of doing things and reinvent from the studs up. And that's what infrastructure companies like Uphold can help with.
Holly Sraeel (16:40):
So our use suggesting then that the best shot they have of influencing that change in mindset is to spend time with companies and leaders like those at Uphold and other players who know this cold who have other also financial services experience in order to help shift the mindset of how they approach this.
Simon McLoughlin (17:04):
Absolutely, absolutely. If you look at a really poorly implemented set of rules in digital assets, it's the travel rule. So the travel rule takes certain concepts from the world of traditional payments and misapply them to digital assets, and it's created a system particularly in Europe that's unworkable and it's based on a fundamental misunderstanding of the technology and its potential. A problem that banks and regulators have is they simply don't employ enough people who've got a deep technical background in blockchain and digital assets. And it is a brave new and very different world.
Holly Sraeel (17:45):
We talked a little bit, I guess we should touch on it now. Getting the right kind of talent in-house is going to be a challenge. There's a tension between throwing money at recruiting top talent to help shift the mindset to help bring that knowledge transfer in and enabling innovative people to stay in a very conservative environment. So what do you hear? What do you see in the market in terms of what banks are looking to do to recruit talent and what's your advice?
Simon McLoughlin (18:19):
Well, I think what I see repeatedly, and I sometimes see it when our own staff are poached banks take people with a deep background in digital assets and blockchain, but then people with an entrepreneurial mindset find themselves in very conservative institutions where they're simply not the risk appetite to allow these people to thrive. And I think the banks and brokers that are doing this most successfully are creating separate divisions that are focused on digital assets and a given greater leeway and a given greater risk appetite to experiment in a controlled and phased way and then roll out the innovations that scale later
Holly Sraeel (19:01):
And to move a little faster because the pace of things internally at banks is much slower than what you'll find with crypto companies, blockchain companies, anybody in the on chain ecosystem outside of Tradify. And we've seen in other paradigm shifts the commercialization of the internet where banks tried to set up separate divisions, all fueled by people coming out of the world of technology and it was an adjustment. So we'll see if it happens. What about when you're going to make an investment in a blockchain? There are so many different blockchains and standards. How does a bank go about assessing and choosing the right technology to avoid being trapped?
Simon McLoughlin (19:53):
We believe in a multi chain world,
Holly Sraeel (19:55):
It's
Simon McLoughlin (19:55):
Not like there's going to be one chain that's going to be most successful. We see a world in which there are going to be hundreds of different blockchains, each one suited to a different use case. And so for a bank, the natural thing to do is to plug into an infrastructure provider like Uphold because we keep up to date on all the chains. So
Holly Sraeel (20:15):
You could offer any of the chains. Yeah.
Simon McLoughlin (20:17):
So we offer today we've got 43 different blockchains, nine stable coins running on 24 different networks. And what a bank needs to do is to plug into an infrastructure provider that provides composability in terms of linkage to different chains. Because fundamentally a bank needs to just sit on a network of blockchains so they can get money to wallet addresses on virtually any network. The idea of integrating those networks in-house, it doesn't work. It takes typically two or three months to integrate a blockchain. They all are written in different languages, they have different configurations. It's a very complex exercise. So what we are finding is banks come to us so that we do the infrastructure heavy lifting. They can concentrate on sexy products for their customers,
Holly Sraeel (21:09):
Which is a good lead into the next question. So with any new technology or any new product backed by technology, the very first thing that bankers ask is when can we expect real business cases tied to real ROI? So as they weigh deeper into this world, how do you talk to banks about how they should temper their expectations around business usage and ROI tied to it?
Simon McLoughlin (21:43):
Well, I think the ROI is there very powerfully from day one in the sense that heavy investment in blockchain technology, what does blockchain do at the most fundamental level? It collapses authorization, settlement, clearing, reconciliation, deeply manual processes that employ hundreds of people at banks into one layer. So there's an opportunity to take out very significant back and middle office cost savings. I mentioned earlier the estimate of typically 30% for a large bank that becomes a recurring saving over the years. That's very material at the most basic level. Incorporating digital assets simply offering different kinds of cryptocurrencies to customers is a very lucrative business. Typically the spreads on something like Bitcoin or 150 basis points, you compare that for US equities, which are at best two basis points, often loss making. So the ROI is there very much from day one. And I think what banks are waking up to is over the next 15 years, there's going to be the largest wealth transfer in history from baby.
Holly Sraeel (23:06):
It's already started.
Simon McLoughlin (23:07):
It's already started from baby boomers and Gen X to Gen Z and Gen Gen alpha $80 trillion of wealth is going to be transferred to digital native generations. These are people who are going to expect money and investments to be as instantly movable as a text or a video file. And blockchain really is best seen as a recognition that most money and financial assets are just digital information on ledgers. But in the legacy world, there are lots of different ledgers that don't talk to each other. And so you end up with unnecessary friction and cost and intermediaries, whereas this new coming generation is going to expect instant movement of money globally. And that's what blockchain facilitates. So the big story here is banks need to prepare for what this coming digital native generation are going to want from financial services at the most basic level. They're going to want to access to digital assets.
Holly Sraeel (24:14):
They don't really have that much time because the transfer is already starting and it's obviously going to continue over the next 10 or so years or 15 years. So they need to really get moving and move from serious strategy into execution of projects and pilots and serious business commitment. They
Simon McLoughlin (24:39):
Really do because there's been this very strange period. I mean blockchain,
Holly Sraeel (24:43):
Well, we talked about it, Jamie Diamond on air announces that he thinks Bitcoin is bullshit, but they have, look where they are now,
Simon McLoughlin (24:52):
One of the biggest blockchains blockchain teams in the whole industry. There's been this very peculiar period of policy denial of the value of blockchain and crypto. Bitcoin was introduced when 2008, so it's now 17 years old, but the technology has not achieved the adoption it deserves because fundamentally of policy decisions in the previous US administrations that impeded its growth. But now there's this recognition that it is a very important transformational technology. Things are evolving at an absolutely breakneck pace.
Holly Sraeel (25:34):
Do you think that if I think about from when this, I started covering this about seven years ago. If you think about what has happened, sometimes I think that the disintermediation that occurred against banks by some on chain players was really just a way to wake up the banks because a good portion of players in the on chain finance ecosystem need banks.
Simon McLoughlin (26:04):
Yeah, absolutely.
Holly Sraeel (26:06):
So do you feel that Tradify players right now are at lesser risk of disintermediation or is it still a somewhat significant risk?
Simon McLoughlin (26:24):
I think tradify players are going to be the major beneficiaries
Holly Sraeel (26:27):
Because
Simon McLoughlin (26:29):
Tradify players have structural advantages that fintechs can't emulate, that they have scale, they have trust, they have distribution, they have regulatory oversight, and all of those things applied to the adoption of this new and transformational technology. And this is just a technology for efficiency. It's fundamentally about speed, cost, and efficiency. The major beneficiaries are going to be the traditional financial institutions that embrace it most forcefully and quickly.
Holly Sraeel (27:02):
It's interesting because you are talking about that the major benefit of this is efficiency. And I think early in the world of crypto and blockchain, there was too much fringe stuff going on and it clouded anybody anybody's ability in banking to see the future, right? I think that's fair. And then the couple of implosions that occurred, I mean, didn't help things. I would argue too, Trump asserting his own coin is also not a great thing. Anything that becomes a sideshow is a distraction from what you're talking about, which is this enormous opportunity. What I have been billing as I think we're staring at the radical remaking of the financial system as we know it. Do you think that's overstating it?
Simon McLoughlin (27:49):
No, I don't. And I think the crypto native community did a terrible job in the early years by creating this sort of false narrative that crypto was an alternative, an alternative radical anarchic system
(28:03):
As opposed to tradify. And actually certainly upholds philosophy is this is a technology to update the existing financial system and to amplify it, not replace it. And blockchain is fundamentally an infrastructure that any financial institution can adopt relatively easily and offer the kind of services and assets and investments and payment capabilities that this emerging native digital generation is going to want. If you look at what's happening in China at the moment, it's fascinating. There's this convergence of social media and payments technology, correct? And I absolutely believe that's something we're going to see over the next two or three years. We're going to see social media platforms like WhatsApp, embed payments technology using crypto because people gravitate to products that offer convenience. And what's been lacking in blockchain up to now is the one thing that blockchain hasn't solved is identity. So identity doesn't currently exist on blockchains and that's held it back. But the integration of social media and digital assets, that's a very happy marriage because both rely on identity. You are sending information whether it's a text field or whether it's a Bitcoin from one known person to another known person.
Holly Sraeel (29:34):
Do you think though that as we move toward that period where everything will be concentrated in a individual's hands and so they can shop and they can issue stablecoin payments and do everything as they want to, do you think that banks have an obligation or would benefit from trying to start educating consumers now or customers of any type? I mean, obviously institutional customers are pretty educated, the institutional investors, they know what they're dealing with. But if this is going to truly remake the financial industry as we know it, then at some point it's going to go down to small businesses and consumers and they would be digital natives, some of them. And so should they start educating them now before they even have a well positioned themselves?
Simon McLoughlin (30:25):
I think my view is consumers don't need to know the names of the technical concepts underneath the hood. You don't need to know what a CH is or Fed now is.
(30:36):
You
(30:36):
Just need to know that it's different types of bank transfer. Equally, I don't think there's any need for customers to understand which blockchain money is moving on or how it works. I think it's much more important that they just feel the benefits of, oh, okay, I can move money instantly. I don't have to wait T plus two for settlement.
Holly Sraeel (30:56):
Yeah, I think they want to know that it's $0 versus 15 for a wire transfer. Or I guess what I was asking about with the education is to try to beat back whatever's remaining from those fringe things that everybody heard about because that's not where this is going, but we'll see how people respond. I mean, digital natives are more risk, excuse me, less risk adverse. They don't think they'll do any transaction on a device at that consumer level. And small businesses, anything that they can get that's more efficient, cheaper for them to operate their business issue, payments, payroll, whatever, it's all a good thing. So it sounds like Tradify is in a good position and it'll be interesting to see though, how they do start talking about this eventually. No, they don't have to talk about the type of blockchain and how it operates in private key or whatever, but they are going to have to come up with a strong campaign to say, you should do this. This is what it means for you as a customer. This is what it means for you as a business or whatever. Anyway, I'm fascinated to see how they do it because they're not great at messaging early.
Simon McLoughlin (32:13):
Well, I think if you look at the way money moves across border today, it's a magic trick. The man on the street thinks dollars move from the US to Europe. No, they don't. Swift is a messaging system that just deducts money from your local bank's account at a foreign bank. It's an incredibly inefficient system that I think there's 22 trillion tied up in nos, ostra accounts unnecessarily, which could be freed up.
Holly Sraeel (32:41):
Now, do you see, as we see Tradify way deeper into this new world, do you see any risks that they'll have to manage around or manage through?
Simon McLoughlin (32:53):
There are a lot of risks. I mean, a lot of the technology is, there are lots of technology concepts that are not yet complete. One of them I mentioned already, identity on the blockchain itself doesn't exist. Equally, loss of private key, meaning you've lost your assets irretrievably, that doesn't work in the real world. There has to be a better technical solution for that. Smart contracts can be hacked. Solidity is a language on Ethereum, it's prone to hacking. There have been many instances of smart contracts being hacked, so there are still significant technical challenges to be overcome,
Holly Sraeel (33:34):
But they face those right now anyway in the existing system, right, with increasing fraud because of AI and professionalized organized criminal rings, always trying to hack into things. So they're used to dealing in that world. Okay, so question for you from where you sit, what's working and who's getting it right in Tradify at this moment?
Simon McLoughlin (34:03):
I think the company that's getting it right most fully is probably JP Morgan. The thing I like about JP Morgan, even though they were staunch opponents of Bitcoin,
Holly Sraeel (34:14):
Well their CEO was the
Simon McLoughlin (34:15):
Sta, their CEO had personal views against Bitcoin. That's true.
Holly Sraeel (34:18):
Correct.
Simon McLoughlin (34:19):
The thing I like about what JP Morgan is doing is they are thinking ahead in terms of connecting their private permission chain to public blockchains. So they've got a partnership with Chainlink. Back to what I was saying earlier, I firmly believe that permissionless chains are the future. It's just that there's a technology gap to fill before they fulfill their potential. And that technology gap is regulatory compliance and identity embedded in the tokens themselves. But at that point, it becomes a very exciting world because that allows global capital formation. Anybody with a mobile phone and a wifi connection can fundamentally participate in financial services. That's truly transformational. And I think that's where we are heading, but it'll probably take two or three years to get there.
Holly Sraeel (35:09):
Okay. Two or three years. But like that. It's going to go like that.
Simon McLoughlin (35:13):
It's going to.
Holly Sraeel (35:14):
So what's the worst thing that Tradify companies can do right now as they plot their digital asset strategy?
Simon McLoughlin (35:22):
Think that this is a fringe technology that they can ignore?
Holly Sraeel (35:27):
I agree
Simon McLoughlin (35:28):
Because changed very quickly in the space of just eight months,
Holly Sraeel (35:32):
And we can see in the top 10 institutions, bank institutions, setting aside asset managers, we can see that they're naming heads of digital assets. They're dedicating research time and plotting strategy. Alright, so my last question for you. Give me your one single prediction of something you think we're going to see happen over the next 12 months that people might not be thinking about.
Simon McLoughlin (36:05):
I'm going to choose, I think it's going to be US banks issuing dollars directly on the blockchain. And I think that model will supplant to a large extent stable coins. And my reasoning is I don't think fintechs are the natural issuers of a dollar. The natural issue of a dollar is a bank and it represents the most enormous opportunity, I think particularly for small and medium banks, medium-sized banks to extend their reach. This is technology that really allows a smaller or mid-size bank to punch way above its weight.
Holly Sraeel (36:46):
Way above. Yeah.
Simon McLoughlin (36:47):
Yeah.
Holly Sraeel (36:48):
Well you heard it here first, so my thanks to you for joining me today. It's been a great pleasure and we'll be watching, see what happens. Thank
Simon McLoughlin (36:58):
You. Well, thank you for having me.
Holly Sraeel (37:00):
Oh my pleasure. To get more insight about the growing influence of digital assets and on chain finance, visit American Bankers website and watch for news soon on the launch of a new executive Leadership Summit on chain on March 19th and 20th in New York City. My thanks to Simon for joining us and we'll see you soon for another Leader's Live.
