Not just a walk in the park
I remember going to see a demo some years ago at an office at One Liberty Plaza in downtown Manhattan — right next to Zuccotti Park where the Occupy Wall Street protests occurred. This was in the summer of 2015. The demo was being put on by a crypto startup, and I remember thinking during that demo that what I was seeing was far more disruptive than anything that happened down in the park years earlier.
The startup flashed a computer browser up on a screen and showed the website they were building. It looked to me vaguely like the checkout page for Amazon or some other shopping website, a lot of fields that got filled in with a buy-type button at the bottom. But the fields weren't for show sizes or anything like that. The fields were for the covenants of a bond offer. Everything that would normally be done manually could be set on that page, and executed automatically. The trade, the exchange, the settlement, the reconciliation, the custody, it all happened at once.
You just filled in the total, the coupon, the maturity, and so on, and pressed the buy button. And that was it. You sold a bond, or bought one. The demo product was specifically designed to automate the buying and selling of bonds using the concepts behind bitcoin and cryptocurrencies, but the principle could apply for any number of different assets.
I was reminded of that story yesterday during one of the sessions in our
It's one thing for people to see that there are tradable assets in the crypto world, even if they are wildly volatile and highly risky. And there are plenty of people from the traditional markets who see the potential of that market and want in. And that's fine as far as it goes.
But the really wild stuff is the idea of all the things this technology can do for markets. Digitized, automated bond trading, the ability to manage the life cycle of a company from its inception on-chain, the ability to trade assets at any time of the day or night, seven days a week — those are the things that are most likely to stay with us after the crypto hype has come and gone.
These are the kinds of things we've been talking about at the summit, which concludes today. Coinbase's Brett Tejpaul
The next five to ten years are going to be really interesting in the banking industry.
Basel III
Speaking of things that occur on multi-year timelines…
Bitcoin may not necessarily have been created directly as a response to the Panic of 2008, but certainly part of its appeal was that it was positioned as an alternative to the financial system that melted down in 2008. But there can be no doubt that the Basel III accords were a direct response to the financial crisis.
Yesterday, the Fed, OCC and FDIC issued a suite of proposed rules that together would lower by billions the amount of capital banks need to hold as a buffer against crisis. (
Elsewhere on the multiyear regulatory front, the FDIC rescinded a rule from 2009 that barred nonbanks from bidding for the assets of failed banks (this one from Ebrima Santos Sanneh).
