Digital Currency Insights from the Philadelphia Federal Reserve Bank’s Fintech Conference

“There is a gap between crypto’s promise and progress.”

“[trying to regulate crypto is] like trying to repair a plane while it’s in the air.”

“Money works better when everyone uses the same thing”

“Billions of dollars have been earmarked for blockchain and crypto as hair must be invested.”

These are just a few things I heard the speakers say on Day 1 of the Philadelphia Federal Reserve Bank’s 6th Annual Fintech Conference on August 3, 2022.

The event’s agenda was full of blockchain and digital asset-heavy sessions, and each panel featured renowned speakers from the worlds of banking, finance, regulation, blockchain and digital assets.

What industry insiders think

The speaker line-up was heavy on banking and regulators, and their insights were refreshing for someone like me who has primarily attended blockchain and digital asset-focused events – where everyone beats the drum in favor of these emerging markets – for the past five years .

Stablecoins, distributed ledger technology (DLT), central bank digital currency (CBDC), DeFi, NFTs and metaverse were the main topics of discussion throughout the day, many bankers and regulators have a much different view of these concepts than blockchain and digital. currency enthusiasts, and several had data to support their opinions.

The good news is: Many speakers believe that distributed ledger technologies have the most value when they come in the form of a computer platform with its own programming language, paving the way for programmable money and other aspects of finance. They were not very concerned with BTC and other cryptocurrencies that have no business use, economic value or value to businesses and consumers beyond speculation.

Others found value in distributed ledger technology being used as infrastructure to create digital identity solutions, improved currency rails, systems with increased transparency, and systems with modified intermediaries that make transactions more efficient or cost-effective.

However, the people with these views were primarily representatives from the blockchain and digital asset industry, such as Paul Grewal, Chief Legal Officer at Coinbase (NASDAQ: COIN); Dante Disparte, chief strategy officer at Circle; and almost all panelists were on the final panel of the day, “The Future of Fintech: DeFi, NFT, Smart Contracts, Metaverse, Web 3.0?”

The group with the most conviction was highly skeptical of blockchain technologies and digital assets and the purported value they could introduce to the world. This group was made up of people who worked in public agencies and in the banking industry.

They were doubtful that DeFi would take off significantly because DeFi apps and services do not require you to know who the counterparty is in a transaction and therefore are not protected in courts or given the other protections in the legal system that most financial products receive. Due to the adverse circumstances mentioned, this significantly limits the type of contracts most people want to enter into in the DeFi world.

The skeptics argued that most banks have the green light to issue stablecoins, but that no bank has done so yet because consumers do not have demand for them and most digital currencies are a poor medium of exchange, adding that they will not be. used in real trade. Others expressed that digital assets are not really decentralized because a few big players have the lion’s share of coins/tokens and many protocols have a development team, which means there is a central point of failure in the system.

In other words, the speakers who made the strongest arguments believed that digital assets had more disadvantages than advantages that have prevented and will continue to prevent institutions, accredited investors and other serious banks and financiers from getting involved in the area in a significant capacity.

Still, the room was packed due to the heavy lineup of blockchain and digital currency topics and speakers. The audience was eager to hear about distributed ledger technologies and digital assets, and the two sessions that did not focus on blockchain/Bitcoin topics had the fewest audience members.

But everyone came for “crypto”…

Overall, it was clear that the speakers from the banking, finance and regulatory worlds did not see digital assets as a threat. A speaker on the regulator’s panel said his office does not see large-scale adoption of digital currency products and services by families in America, and that most of the digital currency ecosystem today is related to speculation.

“Different committees are working on different approaches, they’re all taking it seriously, but I can’t say when Congress will respond and how it will work,” said Nellie Liang, undersecretary for domestic finance at the U.S. Treasury Department.

The regulators signaled that they are prepared to enforce laws on blockchain businesses, knowing that fraud, theft, market manipulation and conflicts of interest that harm users abound in digital currency. They also made it clear that they are focused on putting consumer protections in place to address these issues, but expressed that digital currency would have to become a primary form of payment or see significant adoption and use in the world to spread.

After the regulator’s panel, the crowd began to file into the Philadelphia Federal Reserve Bank lobby to drink coffee and network with the other attendees.

“This next topic is not about crypto, but you should stick around to see it,” said Karen Webster, CEO of PYMENTS.com, who moderated one of the day’s two non-digital currency sessions.

“It’s time to talk about the other 99.7% of payments, [cash, credit, and debit card transactions],” said panelist Renaud Laplanche, founder of Upgrade, a buy-now-pay-later service, as people headed for the door.

What Laplanche said made me laugh. He is right. Blockchain and digital asset transactions are such a small, insignificant part of the transactions that take place in the global economy.

I stayed to watch his session and so did others. I think people found it interesting, but not nearly as interesting as the blockchain and digital currency topics that were discussed. I draw this conclusion from the number of people in the audience who stayed to watch the session and the number of questions the audience had during the question and answer section.

The world of blockchain and digital assets is small. If we were to take a snapshot of the global economies, trade, banking and financial systems, we would find that digital assets make up such a small part of the data that they would not be worth talking about.

Either way, distributed ledger technologies and all that comes with them have captivated global market participants – not global market decision makers.

There is clear gravity in blockchain-based ideas, a force that draws people in and makes them want to learn more even when authority figures dismiss the subject. There is objective value within blockchain technologies that has not been unlocked yet. Blockchain creates new opportunities and business models, but everyone who builds with blockchain insists on creating a blockchain-based version of something that already exists – until this cycle is broken, the authoritative figures will continue to be skeptical of what the technology can do for the world.

But the fact that people are packing the Federal Reserve Bank’s auditorium because they think they need to know about distributed ledger technologies and be prepared for a future of abundance means that there are individuals and companies building on-chain solutions that will one day revolutionize business – and the consumer markets.

Watch: BSV Global Blockchain Convention Presentation, Making Blockchain Easy for Real-World Use

New to Bitcoin? Check out CoinGeeks Bitcoin for beginners section, the ultimate resource guide for learning more about Bitcoin – originally envisioned by Satoshi Nakamoto – and blockchain.