The biggest banks should fill the void in crypto after the collapse, says Standard Chartered’s Geoff Kendrick

The March collapse of Silvergate, Silicon Valley Bank and Signature – three of the world’s most crypto-friendly lenders – left a huge hole in the financial system for digital assets.

But with blockchain offering a potential route to global finance for parts of the world that were previously excluded, among countless other use cases, Standard Chartered’s head of crypto research Geoff Kendrick believes the world’s biggest banks owe it to potential customers in developing economies to fill the void left. in crypto.

Kendrick spoke to Forkast’s Jenny Ortiz-Bolivar about the world’s vast unbanked space and why his bank, Standard Chartered, has adopted a proactive approach to digital assets.

Questions and answers have been edited for clarity and length.

Jenny Ortiz-Bolivar: Standard Chartered Bank’s approach to crypto is much more open to blockchain and crypto technology compared to competitors such as HSBC. What exactly is driving this approach?

Geoff Kendrick: Obviously, I can’t speak to our competitors in terms of their desire when it comes to crypto. But on the SCB side, we have been relatively early in this area. We recognize the importance of blockchain technology. We recognize the importance of this broader ecosystem to, quite frankly, many of our core businesses in terms of financial markets globally. I would say that in the next 5 to 10 years the blockchain is going to become a much more important part of the financial markets, and SCB is at the forefront of that shift.

Our core footprint as a bank is in emerging Asia, emerging Africa and the Middle East. For these regions, some of the most important uses of digital assets, and especially Bitcoin and other transactional coins, are incredibly important. In these regions, there are still many individuals and companies who do not have access to a wider ecosystem of financial assets of the type available in the West. In these countries, alternative economic outcomes are potentially beneficial. There is therefore a natural overlap between some of our core countries and where Bitcoin and other digital assets can help.

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Ortiz-Bolivar: In that regard, how do you see the role of blockchain and crypto in the future of banking? What synergies are we likely to see?

Kendrick: When it comes to blockchain’s future, there are a number of potential use cases. At one end of the spectrum, we have the World Bank, which tells us that the global unbanked sector has transactions of approximately US$20 trillion a year. As mentioned, quite a lot of this transaction space is unbanked because financial institutions are not available in many of these core countries.

If you think about taking these transactions into the blockchain space via Bitcoin or the equivalent using multiples from Visa and MasterCard, for example, even that could get you a Bitcoin valuation of around $50,000. That’s about double where we’ve been recently. So, through the blockchain, those in emerging markets – a vast unbanked area – can gain access to a financial system from which they have otherwise been excluded.

Elsewhere, I think we will see a continuation of what traditional financial institutions have already done to migrate to blockchain over time. Here I am thinking about insurance services. You can imagine that they can be offered medium-term on the blockchain and therefore cheaper because there are fewer people in the chain. Similarly, ETF (exchange traded fund) products can end up on the blockchain. Essentially, the potential use cases are endless when you consider the types of smart contracts Ethereum and others can offer.

Ortiz-Bolivar: Finally, this year has seen the collapse of a trio of crypto-friendly banks, starting with Silvergate in early March. These closures have left a critical gap in the crypto ecosystem. What is Standard Chartered doing to fill that void?

Kendrick: These banks were, as you say, very important parts of the crypto ecosystem, and we need larger, long-term financial players like Standard Chartered to step into this space. Over the past six months or so, we have also seen concerns around centralized exchanges, particularly the FTX collapse in November. Again, I think it presents an opportunity for banks like Standard Chartered to offer broader trading and custody services.

Players like ourselves who have been in other financial areas for a long time have a lot of the pipes around these repositories and other solutions that are required in the medium term for crypto to grow. It is time for us to step into this space. Over time, that will likely lead to an influx of institutional money, making cryptoassets and Bitcoin in particular much more mainstream.