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Barclays Sponsors Blockchain Hackathon to Explore Derivatives Contracts Processing

British investment bank Barclays is sponsoring a hackathon to find the best blockchain solution to increase the efficiency of derivatives contracts processing, according to an announcement published August 9. Barclays is partnering with other market majors like Deloitte, the International Swaps and Derivatives Association (ISDA) and Thomson Reuters for the event.

At the two-day DerivHack hackathon, participants will be given an opportunity to implement their ideas and apply the ISDA Common Domain Model (CDM) to distributed ledger technology. The final goal of the event is to find solutions to use cases in post-trade processing of derivatives contracts.

The ISDA CDM provides a standard digital representation of events and processes which may happen in the course of a derivatives trade, presented in a machine-readable format. The product is designed to enhance consistency and aid interoperability across firms and platforms.

Per the announcement, Barclays will lay down challenging use cases to simulate the derivatives market, like an overhaul of derivatives post-trade processing, step-change in efficiency gains, as well as provide sample trade data in the ISDA CDM to implement them.

Earlier this year, there were rumors that Barclays was reviewing the possibility of opening a cryptocurrencies trading desk. An anonymous source reportedly said that the bank was assessing whether client interest was sufficient to offer crypto trading services. Later, Barclays’ CEO Jes Staley refuted the rumors, saying:

“Cryptocurrency is a real challenge for us because, on the one hand, there is the innovative side of it and wanting to stay in the forefront of technology’s improvement in finance… On the other side of it, there is the possibility of cryptocurrencies being used for activities that the bank wants to have no part of.”

In July, Barclays filed two patent applications relating to the transfer of digital currency and blockchain data storage, both published by the U.S. Patent and Trademark Office. The first patent describes a system of transferring digital currency from payer to recipient that would securely authenticate the identities of both, as well as validate and record transactions. The other relates to storing and endorsing data and claims relating to specific entities.

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Barclays Is Pitting Blockchains Against Each Other (For a Cause)

U.K. banking giant Barclays is challenging up-and-coming blockchain coders to help revamp the global derivatives market at a hackathon next month.

Revealed exclusively to CoinDesk, DerivHack will take place simultaneously in London and New York on September 20-21 at Barclays’ Rise accelerator spaces. The International Swaps and Derivatives Association (ISDA), Deloitte and Thomson Reuters are co-sponsoring the event

Those taking part will be asked to apply ISDA’s Common Domain Model (CDM), a set of process and data standards, using their choice of distributed ledger technology (DLT) platform, to efficiently model post-trade processing of derivatives contracts. 

CDM attempts to harmonize the way data is presented and reported across different firms and platforms. As such, its adoption is widely viewed as a prerequisite for the financial industry to adopt DLT and smart contracts.

One goal of the hackathon is to suss out which of the commonly used enterprise DLT platforms – R3’s Corda, Hyperledger Fabric or ethereum – handles derivative life cycle smart contracts most elegantly.

“It’s up to each team to decide what they code on,” Dr. Lee Braine of the CTO Office at Barclays Investment Bank told CoinDesk, adding that it is a “good, and genuinely open, question” which will perform the most efficiently.  

“I think the sort of things that will come out of this hackathon will include exactly that,” he said.

Braine said, by way of an example, there may be cases where existing blockchain platforms benefit from some enhancements to make them more naturally compatible with the CDM.

Referring to object-oriented computing languages such as Java, which use classes to define data formats and available procedures for a given type or class of object, he said, “you could imagine this being equivalent to adding some extra classes to raise the level of abstraction closer to that of the CDM.”

Braine pointed out that the CDM, which is all about how you alter the data structure before and after each life cycle event in a trade (such as an amendment, modification or termination of a contract), will give the judges a neat way to assess those solutions.  

“Because it is the ISDA CDM, it will be very clear what are the inputs and expected outputs for each life cycle event – but it will be up to the hackathon coders to implement the smart contracts using a programming language and platform they think is appropriate,” he said.  

Fresh eyes

For ISDA, the hackathon presents an opportunity to get some feedback from members of the industry (and newbies) about the CDM.

“Following the release of ISDA CDM 1.0, it is important that the model is explored and validated by a broad set of industry participants,” said Clive Ansell, head of market infrastructure and technology at ISDA.

A key component in the standardization of smart contract-enabled post-trade processing of derivatives are smart oracles which pipe in data to the contacts. Thomson Reuters was the first large industry player to launch a smart oracle back in June 2017 with BlockOne IQ.

“Making this capability available during the hackathon is a great opportunity to explore the evolution of standards for blockchain-based financial instruments, as they are a much-needed component in shaping the industry’s future infrastructure,” said Sam Chadwick, director of strategy in innovation and blockchain at Thomson Reuters.

Also, the two intensive days will give participants access to derivatives experts providing guidance on applying the ISDA CDM, said Braine, which should be useful whether the team is a fintech startup looking to implement derivatives smart contracts or a group of students looking to build skills and enhance their CVs.

Summing up, Sunil Challa from the business architect team at Barclays said:

“If the industry is to realize potential efficiencies and reduce costs via the adoption of standards, then there needs to be greater compatibility across different solutions in capital markets.” 

Image via Barclays

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Bitcoin Posts Solid Gains to Break Above $7,000 While Altcoins See Green

Bitcoin (BTC) has seen solid growth to break back above the $7,000 mark today, August 7. The overall crypto market is seeing a healthy flush of green, rallying forth after the weekend’s losses, as data from Coin360 shows.

Market visualization

Market visualization from Coin360

Bitcoin (BTC) is trading around $7,118 at press time, up around 2.5 percent on the day. After several faltering attempts to break past the $7,000 threshold yesterday, the leading cryptocurrency has today seen a sustained uptick as of very early trading hours. Today’s growth has not yet pushed the coin’s weekly price change back into the green, however, which still remains at around an 8 percent loss. On the month, Bitcoin is now up almost 9 percent.

Bitcoin’s 24-hour price chart

Bitcoin’s 24-hour price chart. Source: Cointelegraph Bitcoin Price Index

Fundstrat’s head of research and well-known Bitcoin bull Tom Lee today used his firm’s recently launched Bitcoin Misery Index (BMI) to evaluate the coin’s current market momentum. The index determines that any value below 27 signals promising future returns, while 68 is set as a “time to sell” misery threshold. With the index presently at 39, Lee said:

“Bitcoin isn’t broken if it’s holding at these levels. I think people are afraid it is going to go back down to $6,000 and never come back from those bear markets.”

The analyst also noted the recent uptrend in Bitcoin dominance by market capitalization, which as of press time is pushing 48 percent. In late July, BTC dominance had surged to 2018 record-highs, hitting levels not seen since last December, at a time when the coin was trading just below its $20,000 industry peak.

Lee also singled out the Intercontinental Exchange’s (ICE) plans to develop a regulated, global digital assets platform — spearheaded by Bitcoin-fiat conversion for consumers — as a strong bullish signal for the asset.

Ethereum (ETH) is currently trading around $409, up around one percent on the day to press time. The altcoin is now closing its losses on its weekly chart: while the asset is still down around $20 from its price point at the beginning of August, only yesterday its weekly value loss was above $50. Closing down to a 6 percentage loss on the week, Ethereum is still around 1.5 percent in the red on its monthly chart.

Ethereum’s 7-day price chart

Ethereum’s 7-day price chart. Source: Cointelegraph Ethereum Price Index

On CoinMarketCap’s listings, all but three of the top ten coins by market cap are in the green, although gains are capped at a modest 2 percent over the 24-hour period.

Bitcoin Cash (BCH) is the strongest performer among the top ten, seeing around 2.4 percent in growth to trade at $708 at press time. EOS and Stellar (XLM) are also seeing solid gains, with the former up around 2 percent to trade at $7.15 and the latter up over 2 percent to hit $0.24 at press time.

IOTA (MIOTA) meanwhile, has seen ongoing significant losses and is down to around $0.80 at press time. The asset’s 24-hour chart is indicating an almost 9 percent loss, and an intra-day plummet to as low as $0.74. On the week, IOTA’s performance has been volatile, after it briefly decoupled from the wider bearish market to stake short-lived growth before its subsequent plummet.

IOTA’s 7-day price chart

IOTA’s 7-day price chart. Source: CoinMarketCap

Among the top twenty coins by market cap, Ethereum Classic (ETC) is still riding major positive momentum, possibly triggered by news of its imminent listing on popular U.S. crypto exchange and wallet service provider Coinbase, which is set for August 7. The asset is up a almost 8 percent to trade around $19.70 at press time, likely buoyed by another burst of good news of its listing on zero-fee crypto trading app Robinhood yesterday.

Ethereum Classic’s 7-day price chart

Ethereum Classic’s 7-day price chart. Source: CoinMarketCap

Total market capitalization of all cryptocurrencies is around $257 billion at press time, edging upwards as the market stakes its recovery, yet still down around $20 billion on its weekly chart.

7-day chart of the total market capitalization of all cryptocurrencies

7-day chart of the total market capitalization of all cryptocurrencies from CoinMarketCap

Indications of crypto’s impending institutionalization continues to break, with insider sources yesterday telling Bloomberg that Goldman Sachs plans to “offer [its clients] custody for crypto funds,” notwithstanding the bank’s claims “not [to have] reached a conclusion” on digital assets.

Other traditional financial sector players are proceeding with similar caution, with UK-based bank Barclays today denying it is opening a crypto trading desk, while two employees recently removed LinkedIn evidence that they were working on digital asset-related products.

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Barclays Denies Crypto Products as Staff Removes ‘Digital Asset Project’ LinkedIn Info

UK-based bank Barclays has denied it is working on cryptocurrency products despite two employees removing LinkedIn evidence they were doing so after receiving mainstream media attention, Business Insider reports August 6.

According to Business Insider, Matthieu Jobbe Duval and Chris Tyrer, whom Barclays confirmed worked for the bank, had listed cryptocurrency-related duties on their LinkedIn profiles.

Duval had written he was involved in a “digital asset project” and was “hired to produce a business plan for integrating a digital assets trading desk into Barclays’ markets business: revenue opportunity, competitive landscape, budgeting and planning for delivery, I.T. buildout, capital & balance sheet impact.”

After Business Insider approached Barclays for comment, however, Duval removed the information while nonetheless confirming it was “accurate.” Tyrer, whose LinkedIn had described him as the head of the digital assets project, declined to comment.

Barclays, as well as Duval and Tyrer, have not responded to Cointelegraph’s request for comment by press time.

The curious events continue what has become a growing trend among banks of denying cryptocurrency interest at a senior level while appearing to actively develop an approach to the phenomenon elsewhere.

This week, Goldman Sachs insiders said the bank planned to offer “crypto custody” services despite a spokesman telling Bloomberg it had “not reached a conclusion” on digital assets.

A similar story emerged from BlackRock, the world’s largest asset manager, whose CEO Larry Fink last month claimed none of its clients had an interest in cryptocurrency exposure while at the same time the company formed a working group to assess Bitcoin involvement.

In March, Barclays began serving U.S. cryptocurrency exchange Coinbase in a partnership which allowed considerably faster funding options for UK traders.

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Citigroup and Barclays Join Experimental Blockchain Project

In recent years, financial institutions have begun to appreciate the perks that come with the blockchain technology. Its anonymity, speed, and security make it highly attractive to banks for use in their day-to-day transactions. Hence, the design of an in-trial platform for banks who wish to capitalize on blockchain technology.

About LedgerConnect

Multinational technology behemoth, IBM, and foreign exchange services firm, CLS, announced the creation of in-trial app store, LedgerConnect, on Monday. This platform is expected to launch in a few months’ time. With LedgerConnect, banks interested in programs based on the blockchain technology can use the platform trial pad.

These financial institutions will be selecting blockchain vendors, including Baton Systems, Copp Clark, Calypso, IBM, SynSwap, and OpenRisk. Theoretically, banks have it easier when they use LegerConncet to opt-in to blockchain projects. These banks can also use the same blockchain protocol, instead of using several incompatible ones.

In a statement made by Ram Komarraju, managing director of technology at CLS, he said:

What is the point of having these people building the same infrastructure? Instead of building several new blockchain applications for the same problem, banks can then focus their energies on their own firm’s operations.

The in-app trial platform is built on the IBM Blockchain Platform and Hyperledger Fabric Technology. It will apply blockchain technology to areas such as anti-money laundering “Know Your Customer” regulations and collateral loan management.

The platform, however, is yet to receive the go-ahead from central banks and the Federal Reserve Bank of New York. Because of its unregulated nature, banks cannot enjoy the potentials that come with using the platform. At the moment, an exact launch date is yet to be given. Vice president of financial markets of IBM, Keith Bear, gives early 2019 as a tentative date. He also hopes more banks would apply before then.

Citigroup and Barclays Sign up for the LedgerConnect Blockchain

Wall Street banks have in recent times, recognized the potentials of the blockchain technology. To solve a litany of problems and improve security, these financial institutions have tested different blockchain technology platforms.

The blockchain technology, which is the underlying technology cryptocurrencies such as Bitcoin, is a secure way to send sensitive information. Its anonymous nature and speed make it very attractive for banks, which deal in personal data and security.

Nine prestigious banks, including Citigroup and Barclays, have decided to key into the LedgerConncet. Citigroup and Barclays have in the past, partnered with different startups to help build projects that address various issues. These issues range from instant transactions to compliance with onerous financial regulations.

Integrating Legacy Systems with Emerging Technologies

The moves made by these banks is commendable, but there is the problem of the old merging with the new.

Vice president of financial markets of IBM, Keith Bear, commented on the old versus new trend. He said:

The challenge is being able to work together across organizations of different speeds. On one side we have a large highly regulated industry. On the other side we have much more agile and fast-footed fintechs with limited resources. Our role is in some respects of mediating those differences in speed and resources.

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IBM, Barclays and Citi Team Up to Launch Blockchain App Store for Banks

Even private and permissioned blockchains need to build ecosystems and achieve network effects, just like their permissionless, public counterparts.

At least, that’s the thinking behind LedgerConnect, a financial blockchain “app store” that aims to make it easier for banks to access distributed ledger technology (DLT) solutions from fintech and software providers, and for those vendors in turn to reach bank customers.

Announced Monday, LedgerConnect is the offspring of bank-owned currency trading utility CLS and enterprise software giant IBM, and counts major banks Barclays and Citigroup among its founding members.

In fact, nine financial institutions are participating in the proof of concept (PoC) and have selected services from a number of vendors including Baton Systems, Calypso, Copp Clark, IBM, MPhasis, OpenRisk, SynSwap and Persistent Systems.

On LedgerConnect, financial institutions will be able to access DLT-based services in areas such as know-your-customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.

This new hub will address a connectivity gap, where upstart fintechs and large tech firms alike are faced with the cost and complexity of spinning up their own distributed networks so banks can consume their various applications, according to Keith Bear, IBM’s vice president for financial markets.

“Having a secure network and proven infrastructure allows an app store kind of model, where banks can identify applications from certified fintech and software providers and deploy these apps over a seamless blockchain network,” Bear told CoinDesk.

For Barclays, one of the most active banks in the DLT field, the app store is a way to test out a new approach.

Dr. Lee Braine of the investment bank CTO office at Barclays, explained that there are several different deployment options to consider when architecting distributed ledgers for live environments.

For example, if a financial market infrastructure provider like CLS is providing the governance and business services for a particular use case, then there may be an option for that market infrastructure provider to also host the nodes on behalf of the banks in order to accelerate the initial speed to market, said Braine.

“Some banks may also look to explore the more decentralized deployment option of hosting their nodes themselves,” said Braine. “By participating in the LedgerConnect proof-of-concept, Barclays is gaining experience of a distributed ledger private network aimed at connecting both market infrastructure-hosted nodes and bank-hosted nodes.”

LedgerConnect itself runs partly on a permissioned blockchain based on IBM’s blockchain platform, which in turn was built on Hyperledger Fabric, and all the apps currently in the store are Hyperledger-based. However, the founders are open to other enterprise blockchain solutions making use of the app store.   

“We are not averse to supporting other ledger implementations, whether it is R3’s Corda, whether it is Quorum (provided these techs are robust and can meet the needs we have from security perspective etc.),” said Ram Komarraju, head of innovation and solution delivery at CLS.

He added:

“Our expectation is that in principle we will not be limited to one technology only.”

Original consortium

Stepping back, CLS can perhaps be thought of as the original blockchain consortium.

Granted, it was founded in 2002 (six years before the first blockchain was conceived) to provide plumbing for FX trades. But it’s been testing blockchain technology since early 2015, before Hyperledger started and when R3 was still flying under the radar.

The early CLS blockchain efforts were later formalized into CLSNet, a way of testing blockchain to match and net trades involving a range of new currencies not on the main platform, keeping immature blockchain technology separate from the core settlement engine used by 60 large financial institutions.

“There is a lot of trade processing we do for banks and buy-side firms, without getting to the last mission-critical aspects of settlement itself,” said Komarraju.

As such, CLSNet will be one of the first applications on the new LedgerConnect portal. All these apps have been selected in the hope of removing typical reconciliation efforts and data duplication (remedies include things like capturing digitalized master agreements of derivatives contracts on a single ledger for example).

“Look at capital markets today, every bank has its own silo office systems even though they are trading typically with a counterparty that has the same type of business logic but using the same technology stack,” added Komarraju.

IBM and CLS go back a ways; the main CLS platform was built by IBM. And LedgerConnect is a way of joining the dots between their respective financial infrastructure and blockchain work, at the same time extending the blockchain work CLS has been doing beyond foreign exchange into other capital market domains.

“This is really leveraging the combination of CLS’s position as a globally systemically important market utility owned by the banks, and also IBM’s investment in that,” said Komarraju.

PoC fatigue

Unlike the average PoC, LedgerConnect is at quite an advanced state, according to Komarraju.

“We didn’t start this on Monday,” he said. We have institutions that have selected a number of use cases and these have been implemented and we are in the very late stages of proving the technology.”

While Barclays and Citi are the only banks being named at this time, big hitters like JPMorgan and Goldman, which are both part of CLSNet, are logical candidates to take part.

Another list of likely suspects are the banks on the we.trade platform, which also uses Hyperledger in the form of an IBM software-as-a-service (SaaS) model.

Explaining why CLS couldn’t reveal all the participants in LedgerConnect, Komarraju hinted that some of these big banks are experiencing a bit of blockchain PoC fatigue.

“We cannot share the names of full list of banks because we haven’t (yet) received the approvals from some of them. Some of them wanted to wait until the proof of concept is complete and others needed more time for internal approvals,” he said.

Meanwhile, Bear of IBM said the whole reason we are seeing PoC fatigue is because so many of them don’t progress. While this can be because of a weak business case, or one that doesn’t need a blockchain, oftentimes it comes down to the cost and complexity of getting a network up and running.

“In many ways we are trying to get rid of that PoC fatigue,” said Bear. “I know we have to go through a PoC to do that, but it’s kind of inevitable.”

IBM image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Barclays Seeks Twin Blockchain Patents for Banking Services

Barclays Bank may be looking to blockchain to streamline fund transfers and know-your-customer processes, according to newly-released patent applications.

The U.S. Patent and Trademark Office published two applications by the U.K.’s second-largest bank Thursday, both of which revolve around account security. Perhaps most notably, however, was an application for a patent which outlined a blockchain-platform which could facilitate cryptocurrency transfers. The bank also proposed streamlining know-your-customer processes by storing identifying information on a private blockchain.

Though the existence of a patent application does not necessarily mean the bank is planning to develop any products with the technology, the releases indicate members of the bank are examining the nascent technology.

As one document explains:

“The use of a block chain provides at least several benefits. These include its public nature, allowing any other party or entity from viewing the data and cryptographic verification of the data enabled by the digital signatures, hashing and layered nature of the block chain. The transaction is a complete and verified unit of data in a form that may be added to the block chain … Further or duplicate checks and work may be avoided, which can improve the efficiency of computer networks.”

As such, Barclays’ proposal would provide “a more reliable form of verification without substantially increasing technical overheads and improves the operation of computing environments and telecommunications networks.”

And that’s not all. The application details a “super” user authority, which would have the right to migrate old information to present blocks, and perhaps even delete old ones with sufficient support from other user authorities in the system. This use could theoretically mitigate blockchain size and storage issues.

The other patent is even more direct – it suggests generating a blockchain to transfer “digital currency from a payer to a recipient.”

Barclays logo image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Barclays Files Two Digital Currency and Blockchain Patents with U.S. Patent Office

Barclays has filed two patent applications relating to the transfer of digital currency and blockchain data storage, both published by the U.S. Patent and Trademark Office (USPTO) July 19.

The first patent describes a system for transferring digital currency from payer to recipient that would securely authenticate the identities of both, as well as validating and recording transactions using public-key cryptography and a digital currency ledger.

Beyond currency transfer, the patent goes on to describe a wide range of use cases for securely and privately processing data in a trustless manner using a blockchain system. One illustration outlines how claims and attestations could be verified on the blockchain, using the example of credit status and insurance claims.

Barclays envisions the potential beneficiaries of such a system to be individuals, authorities, enterprises, and banks, as well as objects to which a digital wallet could be assigned, such as an Internet of Things (IoT) item. The patent further outlines the advantageous step of using a Merkle Tree Structure to store blocks in order to maximize efficiency and ease data validation.

The second patent relates more narrowly to storing and endorsing data and claims relating to specific entities, using the validation of personal information for Know Your Customer (KYC) checks as a key example.

This spring, it was rumoured that Barclays was assessing whether client interest was sufficient to warrant setting up a dedicated cryptocurrency trading desk. The claims were soon refuted by Barclays’ CEO Jes Staley, although the bank notably continues to help its clients to settle Bitcoin (BTC) futures contracts that are offered on derivatives exchanges such as CME Group Inc. and CBOE Global Markets Inc.

Barclays was also the first UK bank to open an account for a cryptocurrency exchange, making a deal with major U.S. exchange service and wallet provider Coinbase this March.

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ConSensys’ Ajit Tripathi: ‘Rebellious Teenager’ Crypto Is Maturing

This interview has been edited and condensed.

Cointelegraph had the opportunity to speak to ConsenSys’ Ajit Tripathi at BlockShow Europe 2018 about his experience leaving Wall Street for the crypto world, what new ConsenSys projects he’s most excited about, and why crypto regulation changes from country to country.

Molly Jane: Could you tell us a little bit more about what Consensys does and what your role is there?

Ajit Tripathi: ConsenSys is a venture production studio based in Brooklyn, and now we have offices in London, in about 30 countries, including London, Paris, South Africa, Australia, and Singapore — we’re building teams all over the world to essentially develop blockchain-based solutions. We create a lot of startups, we’re technology builders, and we are creating tools, components, infrastructure and solutions for a decentralized ecosystem.

If I had to put this in one line, we create technology for insider marketplaces.

What that means is, today, the whole world is dominated by centralized platforms, like banks or the likes of Facebook — they all dominate either data or assets and become rent-seeking participants in the economy.

We want to shift that to a peer-to-peer paradigm, where the individual is empowered. We think technology, especially blockchain technology, has a big role to play in creating an ecosystem where we do not depend on these dominant intermediaries in every single market for information and assets.

My focus is on decentralized exchanges, regulation and policy. Decentralized exchanges are peer-to-peer marketplaces for exchanging digital and digitized assets. And what that means is that, historically, we’ve had centralized exchanges, for the most part, right? Like the NASDAQ, or NYSE, and so on and so forth, that are very efficient in terms of providing liquidity but then are not so great for low-liquidity assets.

I come from the enterprise space. I worked for Goldman Sachs, Barclays, UBS, PwC — some of the most established institutions and the kind of intermediaries I talked about — and I sort of bring the whole power, and this innovation in the crypto ecosystem, to institutions and legacy. My role is to help some of these institutions understand what’s going on in crypto and how they can leverage this technology to participate in this decentralization revolution, so to speak.

MJ: These past few months have seen what some would call an “exodus” of Wall Street players leaving the traditional financial sphere for the crypto sector. As someone that has gone down the path, can you speak to the reasons that brought you to ConsenSys?

AT: I can’t speak for everybody’s motivations, right? On the one hand, some people are excited about the growth of the crypto ecosystem, and that’s perfectly honorable and great. And some people are excited by the sheer amount of wealth that’s flowing into this ecosystem, and that’s perfectly honorable as well.

I’m an engineer, I came from technology and did some work in consulting and regulation. In the process, I met Joe [Lubin]. Joe is the CEO of ConsenSys, and Joe has something about him, he is an inspirational figure, he has this ability to excite people about this future.

Like this decentralized internet, and then this decentralized insider-marketplace idea that we are building, in so many, different sectors of the global economy. This whole thing about being able to build something, something that’s futuristic. A lot of large institutions want to innovate, or companies want to innovate, but they have the innovator’s dilemma, they’re tied to what exists today, and they are scared of disrupting their own businesses.

With ConsenSys ,there is no such thing, right? ConsenSys exist to create new things, ConsenSys does a lot of experimentation, ConsenSys is purely focused on innovation, and that’s what made me really excited about ConsenSys at this time, because if you have an idea and if you have a team — and you can actually make things happen — then ConsenSys is a great place for people to go. And we are hiring right now.

MJ: What projects is ConsenSys currently working on that you’re the most excited about? Are any close to mass adoption?

AT: It’d be very, very difficult for me not to be excited about some of our projects. Blockchain is an early-stage technology, right? But, at the same time, in the enterprise space, we have seen a lot of progress. Truffle is the most popular development tool in all of the Ethereum (ETH) development community, then Metamask has had 1 million downloads — it’s a wallet. Infura can support up to 12 billion transactions a day, which is for read-only transactions, and takes a lot off the load of the public Ethereum blockchain.

For a wide range of digital assets that need this peer-to-peer discovery for exchanging, we are working on this next-generation decentralized exchange platforms. Trustology is our platform for an institutional great crypto custody that will go live at the end of this year. I mean, we have 40+ projects: we have a “blockchain for social impact” project, we have a venture capital arm now, we are creating a lot of ventures in partnership with enterprise customers.

In some sense, our role is to unleash this entrepreneurial spirit — or energy — of the whole blockchain community, whether it’s the enterprise community or the crypto community, and these are all starting to converge.

MJ: I’ve noticed on your Twitter that you had been very vocal against the implementation of the General Data Protection Regulation (GDPR) privacy bill. Can you explain your position?

AT: Yeah, I have strong views on that. So GDPR is well-intentioned, right? I mean, it was partly that our current privacy regime is outdated — that previous regime needs an update.

Because, now, we have Facebook, and we have Google, and you have lots of these data intermediaries — it’s central monopolies that are taking everybody’s data and selling ads back to them. And as we found out from Edward Snowden, they might be giving their data off to the government for surveillance.

But if you look at how the regulation has been written, then it has some significant flaws. Regulation needs a little bit of adaptation to the technology that’s emerging, because privacy isn’t the only need, right? Europe needs to remain competitive against other jurisdictions, we need to create great technology, we need to make sure that our economies are competitive against China, and India, and the U.S., and so on, and so forth. We need a technology ecosystem in this continent that’s competitive. And GDPR runs the risk of being too restrictive.

For example, we have a right to be forgotten, now what does that mean in practice? I did a lot of consulting for banks, and at PwC, and now if you try to actually delete a customer’s data from the bank because of the GDPR, there are 10 other regulatory requirements that prevent you from doing that. So, in theory, it sounds fantastic but — in practice — implementing GDPR is really hard now, and it can actually make people very concerned.

Parity, which has a KYC utility PICOPS — which is very popular with the Initial Coin Offerings (ICO) — had to stop its service because now they are really concerned about GDPR. [From] now on, you definitely want to have KYC and AML regulations, ICOs comply with all of that. And now suddenly we have to stop a very useful service called PICOPS because of the GDPR. These guys don’t want to be in legal trouble because they are offering a great service, right?

We are working on a project with the European Commission. It’s called the EU Blockchain Observatory, and we invite all the blockchain ecosystem participants to engage in that process. At some point, policymakers and regulators will adapt GDPR to this new and exciting technology that’s coming up. But until then, there is a lot of confusion and and uncertainty in the marketplace.

MJ: Could you speak more about the general regulatory uncertainty in the crypto space, worldwide?

AT: Regulatory approaches around the world are rooted in their culture, right? For example, when we talked to kids at the dinner table in the U.S. when they’re not behaving, we tell them to go to their rooms. In China, in India, we might actually hit them.

So crypto is like this kid growing up, and regulators are like these parents who behave in ways that are attuned to their culture.

Now some of these are knee-jerk responses from regulators around the world because, for example, in China there was a Communist Party Congress just before Bitcoin (BTC) was banned. The government didn’t want social instability, and there was a very bullish market that could have caused a lot of problems for individual investors. A lot of these things that regulators are doing are well-intentioned, but part of the challenge is that the crypto community hasn’t really engaged with policymakers.

We haven’t tried or invested in educating, so — initially — Bitcoin came out of a bit of a revolution. We were rebelling, the crypto community was rebelling against the “Chancellor Bailout,” and Occupy Wall Street was the theme.

But now that kid — the rebellious teenager — has grown up a little bit. It’s time for us as technologists to engage with the other processes of the society like regulation and policy, and work collaboratively, help regulators understand what’s going on, help governments understand what’s going on, educate ourselves on why the rules are the way they are, why the securities laws are set up the way they are. And then, maybe, find this ground where the technology can develop and create the fairer world, but, at the same time, without causing some of the issues that might occur if we are not responsible in using this technology.

MJ: Thank you so much for speaking with us and attending BlockShow!

AT: Thank you so much. It was my pleasure.

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Financial Institutions In A Race: Who Will Bring Crypto Trading To The Fiat Masses First?

September 12, 2017 will go down in infamy when talking about the relationships between traditional fiat financial institutions and their views on cryptocurrency. It was the day that JP Morgan CEO, Jamie Dimon, called Bitcoin a ‘fraud’.

A lot has happened in the financial and crypto space in the eight months following that event, especially in terms of banking institutions and Wall Street’s perception of Bitcoin and cryptocurrencies. As Bitcoin started making a few waves in traditional finance, Wall Street-types were polarized. Some scoffed at the idea of digital, decentralized currency, while others took note and saw potential.

It has now come to a point where the financial fiat sector is dipping more than just a toe into the cryptocurrency world; with futures trading now well established and blockchain experts being hired left, right, and centre. There is a definite race on now for major banks to start offering clients the chance to trade cryptocurrency through their offerings.

Goldman Sachs

On May 3, Goldman Sachs, a financial institution that has done a turnaround in terms of its attitude towards cryptocurrency, announced that it does not believe Bitcoin is a fraud. This was a hark-back to those famous words from Jamie Dimon, but more importantly, they also announced their plans to start trading crypto.

Commenting on the decision, Rana Yared, an Goldman Sachs executive involved in creating the offerings, said the bank had been “inundated” with client requests.

“It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it is an alternate store of value.’”

Goldman’s path to potentially get its own cryptocurrency desk up and running has taken a long and winding path.

In early 2014, Goldman declared that Bitcoin was not a currency, and also said separately that it is too risky for banking companies investors. However in 2017, Goldman was starting to consider letting investors trade Bitcoin directly, and also one of the top five most active corporate investors in blockchain technology.

It was at the end of Jan. 2018 when Goldman Sachs also refuted rumours that they were starting a crypto trading desk, but as it turns out, their stance may well be softening.

Barclays

There are also rumors swirling around Barclays Bank potentially opening a crypto trading desk, but these too have thus far been refuted.

Barclays Group CEO Jes Staley picked out compliance and regulatory barriers as their biggest issue, but also spelled out this growing race to be ‘in the forefront of technology improvement in finance’:

“Cryptocurrency is a real challenge for us because, on the one hand, there is the innovative side of it and wanting to stay in the forefront of technology improvement in finance… On the other, there is the possibility of cryptocurrencies being used for activities that the bank wants to have no part of.”

Still, it has been reported that Barclays is gauging institutional demand for cryptocurrency to determine if the new business model is feasible. It has been said that a crypto-trading operation would require approval from Tim Throsby, CEO of Barclays International, and possibly Jes Staley.

A spokesperson at the bank later issued the following statement:

“We constantly monitor developments in the digital currency space and will continue to have a dialog with our clients on their needs and intentions in this market.”

Morgan Stanley

Morgan Stanley is another major bank that looks to be in the race to open up this crypto-trading operation, more so, it looks to be focusing a lot of effort into being the first-to-market. Morgan Stanley and Goldman Sachs have a long standing rivalry, and in this ‘Arms Race’, the first to get a successful crypto trading desk up would take a lot of plaudits.

There are reports, from an unnamed source, that Morgan Stanley is focusing virtually all of its attention on cryptocurrency trading as of right now. The source from inside Morgan Stanley allegedly said:

“Several of us have been reaching out to what we would call ‘mid-tier’ money managers that we know are on the cusp of opening crypto focused hedge funds. We have done some work with pure-play crypto funds as well, but we’ve been more specifically tasked to engage with firms that are apt to add to their current portfolios as opposed to starting from scratch.”

“I can’t tell you who those are, as we are under NDA’s with several, but you can bet that things are moving quickly and deals are being struck. And you can guess why.”

“Goldman is taking a different track than we are and our directives seem to have them in our sights at the moment. If we are able to engage on a 1 on 1 basis, as opposed to through third parties [such as] Circle, then we ultimately lead in the space.”

The source goes on to liken this building towards crypto trading as an arms race between the two banks, but ultimately, they are not the only ones trying to reach the goal first.

“Truth be told this is the next arms race. Everyone is rushing into cryptos. Everyone. There isn’t a bank, a fund, a fund company, a former legend attempting to reclaim old glory, private equity, venture capital, lending, exchanges, consulting firms – everybody.”

Hitting the traditional exchanges

In this frenzy to appease customers and their want of cryptocurrencies, even the owner of the New York Stock Exchange (NYSE) is considering letting customers buy and hold Bitcoin. It is again a bit cloak-and-dagger as the source article from the New York Times cites “emails and documents” as well as four anonymous sources.

The move by NYSE owner Intercontinental Exchange (ICE) is a little different in its approach too as there clearly is no defined path as to how to get Bitcoin to the traditional masses.

“[ICE] has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning Bitcoin the next day — with the backing and security of the exchange,” the Times wrote.

NASDAQ has also hinted that it would be happy to put its hat in the rind, but only when the markets mature enough for it to be viable.

NASDAQ CEO Adena Friedman said to CNBC:

“Certainly, NASDAQ would considering become a crypto exchange over time.”

The CEO is of the opinion that cryptocurrencies will not be going away but that they are still far from being mature enough; regulations and government acceptance a big role player in determining when they will be ready for the likes of NASDAQ to get on board.

Everyone is getting onboard

What the Morgan Stanley source is saying seems to ring true in the world of banking. Not only is it the crypto asset that is attracting these institutions to try and be first-to-market, it is the development of the blockchain technology and all that can offer the financial world.

Farzam Ehsani, a former blockchain lead at Rand Merchant Bank and now co-founder and CEO of VALR, told Cointelegraph:

“All banks are realising they need to get onto this Blockchain boat, I don’t think many banks necessarily understand where the boat is going, but they realise that this is a development that is taking off and that if they want to be on this journey that everyone is going on, they need to be on the boat.”

Futures leading the way

It was only a matter of time before these rumours and rumbling turned into a full scale sprint, and it looks as if it really is the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) who can be credited with opening the floodgates with their foray into Bitcoin futures trading.

The release of their futures tied in with the height of Bitcoin’s biggest rally towards $20,000 and although initial uptake in Bitcoin futures was tepid, this is expected to change as investors more averse to risk look for safer ways to enter the market.

The CBOE is now even championing the cause for Bitcoin ETFs, this comes after the Winklevoss twins failed in their bid in 2017. Dennis O’Callahan, CBOE’s director for product development, spoke to Cointelegraph in March, indicating that they are not stopping at just Bitcoin futures.

“Being in product development our task is to look for new products all the time, so we are constantly evaluating that market, and we are evaluating other cryptocurrencies too, among other items.”

The banking sectors rush towards cryptocurrencies has clearly been predicated on the pick up of interest in Bitcoin as a valuable and investable asset. There’s enough evidence out there to suggest that many institutional investors are planning to venture into cryptocurrency.

In Nov. 2017, Triad as well as Datatrek Research conducted a survey, garnering responses from 317 institutional traders on whether or not they have interest in investing in Bitcoin and other cryptocurrencies.

According to the research, 36 percent of institutional investors were considering buying Bitcoin while 19 percent already had.

Survey Results

Image source: Datatrekresearch.com

An untapped market

The so-called ‘arms-race’ to be the first to bring out a crypto trading desk makes sense, the institutionalised investor market is clearly hungry for a safe, regulated, and familiar way to be involved in cryptocurrency.

This has been proven by surveys, by the interest in Bitcoin futures from CBOE and CME, and by the way in which banks, and financial institutions are putting their foot in the door.

There is no doubt that whoever does get their product out first will be highly profitable, and if the response is anything like the build up to the release of futures, Bitcoin could be in for another huge rally.