SBF, Circle founder and other well-known entrepreneurs talk about NFT, stable currency finance and supervision

SBF, Circle founder and other well-known entrepreneurs talk about NFT, stable currency finance and supervision

From March 23rd to March 24th, 2022, the Bank for International Settlements (BIS) held the Bank for International Settlements Innovation Summit. During the Panel 1 discussion session, Circle CEO Jeremy Allaire, FTX CEO Sam Bankman-Fried and Fireblocks CEO Michale Shaulov.

The author participated in the whole meeting and listened and translated the content. How did the well-known entrepreneurs in the encryption field see the central bank’s digital currency? How do you view the relationship between regulation and technological innovation? Below is the full text of Panel 1.

*Note: Due to equipment, network, speech speed and other issues, the author’s speculation on the original words may not be accurate, it is for reference only, and comments are added where necessary. Does not provide any investment advice, does not accept any PR requirements, this article does not constitute any investment advice.

Summary of core ideas

· In the future, we will see quite a bit of disintermediation. Users can access financial markets more equitably, and we are approaching a world where every user, be it a complex trading firm or ordinary people, has access to fair financial applications, protocols, and liquidity .

In essence, NFT is not just digital art, it actually has other effects, including security, participation in other financial applications, etc. And we’re actually seeing a lot of players, including a lot of big asset managers and investment banks, who are starting to look at how to propagate NFTs to the primary and secondary markets.

· Everyone will be able to abstract away the complexities of DeFi’s decentralized financial space. But the real question is who will be able to create the best experience, the experience that continues to link these services, which is still an open question.

New infrastructures are being built for the exchange of value, not just in the area of ​​payments, but in the structure of how economic organization happens, including all the structures of how economic exchanges between entities take place, which is amazing. Many times when these breakthrough technologies come out, what if we look at them from an old world perspective and compare them to faster faxes? Better long distance calls? This is inappropriate.

· There are inherent compatibility issues between new technology and legacy systems, for example, scenarios such as integrating our infrastructure with core banking platforms. For example, many infrastructures that run DeFi are run indirectly in the cloud, and most of them are OK at the technical implementation level, but the problem is that the knowledge, capability gaps and risks faced by different teams are very different. We You can see how strong some market players are, while others are very average.

· The real problem at the moment is the lack of regulatory clarity that exists in many jurisdictions. But most regulators are now looking for solutions to enable innovation.

· Success and failure can happen, in my opinion, breaking down the question, such as what value can a service create? How to get more customers? Improve the economic system? I think the regulatory framework for cryptocurrencies around the world is a bit confusing right now. Approaches vary from region to region, and each jurisdiction is trying to address regulatory issues individually. But I think there has been a lot of improvement on the regulatory side, and few countries in the world have a framework for digital assets in the last few years.

· Regarding regulation: The United States has made tremendous progress in the last year. The core of what we will see is: First, the proof of reserve audit of stablecoins may become the standard; second, including market, regulation, clarity, federal supervision, systemic risk , protection. The third is the emergence of a registration system for some digital assets, many of which may blur the lines between traditional asset classes.

· In my opinion, it is software that changes the architecture, which in turn changes the nature of the asset. Instead of trying to cram everything into an existing system, we need to come up with new definitions for digital assets. A digital asset is a currency, it is a commodity, it is a security, but our definition of a digital asset is very specific because we find many digital assets that meet two or more of the above properties.

· But risks still exist, including various risks including fund monitoring, custody, and operation. Disclosure of risk is of course important, but we need to achieve some kind of consensus, there are currently attempts to map the way the existing financial system works and its regulations to the open source infrastructure of the Internet, but I don’t think the two are comparable.

· I think there is definitely coexistence between CBDC and stablecoins, including digital treasuries. But much of the market and money is actually run through the different assets and bonds in the market to unleash the real power. Central banks have to think about both of these things, unless we have cross-chain swaps like atomic swaps between these two assets. 

I think what might be really interesting is to give people the freedom to create sandboxes that don’t necessarily run on a global scale, but do test some of these projects in a controlled environment and then people can really see the effect, and they can iterate on it.

Underlying Technologies for Emerging Financial Systems

Let me introduce the participants first: the host is Marten Bech, head of the Swiss Innovation Center of the Bank for International Settlements

Entrepreneurs include:

SBF, Circle founder and other well-known entrepreneurs talk about NFT, stable currency finance and supervision

Circle Corporation, Jeremy Allaire—CEO (famous serial entrepreneur)

Circle was founded in 2013 by Jeremy Allaire and Sean Neville. In September 2015, Circle received its first BitLicense from the New York State Department of Financial Services. In April 2016, the UK officially approved Circle’s first virtual currency license, and Circle is also the issuer of the USDC stablecoin.

Funding: From 2013 to 2016, Circle received more than $135 million in venture capital in 4 rounds of investment, including $50 million led by Goldman Sachs. In June 2016, Circle raised $60 million in Series D financing, and on May 15, 2018, Circle raised $110 million.

Let me introduce the CEO of Circle, Jeremy D. Allaire:

Born Jeremy in 1971, he co-founded Allaire Corporation with his brother JJ Allaire in 1995; Allaire Corp. went public in January 1999 and was acquired by Macromedia in 2001.

In February 2003, Allaire left Macromedia to join venture capital firm General Catalyst as a technologist and entrepreneur-in-residence. In 2004, Allaire founded Brightcove, which went public in 2012, before Allaire stepped down as CEO in 2013 and is now chairman of the board.

In October 2013, Allaire announced the launch of Circle, an internet-based crypto/consumer finance company that aims to bring the power and benefits of digital currencies like BTC to mainstream consumers.

FTX Corporation, Sam Bankman-Fried—CEO

Sam Bankman-Fried, the son of Stanford Law School professors Barbara Fried and Joseph Bankman, attended Canada/US Math Camp (a summer program for mathematically gifted high school students) as a teenager. From 2010 to 2014, Bankman- Fried attended MIT where he majored in physics and minored in mathematics.

In the summer of 2013, Bankman-Fried worked at Jane Street Capital, a well-known hedge fund, and in November 2017, he founded the quantitative trading company Alameda Research.

After attending the crypto conference held in Macau at the end of 2018, and also inspired by the concurrent fork of BTC, he moved to Hong Kong and founded the crypto derivatives trading platform FTX in April 2019. SBF is a supporter of altruism and pursues altruistic ways of making money, is also a member of Giving What We Can and plans to donate the majority of his wealth to charity during his lifetime. SBF is a vegetarian, and he often sleeps in his office next to his computer.

FTX: A well-known cryptocurrency trading platform with an average daily trading volume of $10 billion and more than 1 million users as of July 2021;

In January 2022, FTX raised a $400 million Series C at a $32 billion valuation;

· On February 11, 2022, FTX.US announced that the company will soon begin offering stock trading services to its US clients;

In February 2022, it was reported that FTX was creating a gaming division that would help video game developers use blockchain-based technologies such as cryptocurrencies and NFTs for video games;

Fireblocks Corporation, Michael Shaulov – CEO (Cybersecurity Serial Entrepreneur)

Michael is the CEO of Fireblocks, a secure digital asset infrastructure company. Before joining Fireblocks, co-founding Lacoon Mobile Security, which was acquired by Check Point, Michael was a serial entrepreneur and entrepreneur in cybersecurity.

He has spoken at RSA Conference, BlackHat and Infosec conferences. Before going into business, Michael pioneered the field of mobile security at the Israeli Military Technical Unit (8200) and received a special honor from the President of Israel for his outstanding contributions.

Fireblocks: Fireblocks was established in 2018 and is committed to building security infrastructure and custody services. The core technology is mainly composed of Fireblocks Networks and MPC-based wallet infrastructure. Clients such as banks, fintech firms, trading platforms, liquidity providers, OTC dealers and hedge funds are able to securely manage digital assets across a wide range of products and services.

Financing situation: There are currently five rounds of financing. In December 2021, the E-round financing will be US$550 million. Since its establishment, it has raised a total of 1 billion US dollars.

The following is the full text of the Panel 1 discussion session

Moderator Morten: I’m Morten from BIS, and it’s a great pleasure to be part of this conference, which will discuss the fundamental technologies that drive innovation in the financial industry. We will discuss the advantages and risks surrounding stablecoins and Defi, and we will also discuss what the public sector can do to keep the financial system safe and stable. Today we have three guests. They can also be said to be giants in the field of cryptocurrency and DeFi, and they are all committed to creating the next generation of financial market infrastructure. Let’s introduce:

Jeremy Allaire, CEO of Circle, a global financial technology company; Sam Bankman Fried, CEO and founder of FTX, one of the largest cryptocurrency trading platforms in the world; Michael shavlov, a company in digital custody + security CEO of Fireblocks.

Welcome, before starting the discussion, you can introduce yourself. For most people, you must be familiar with you, but because there are also officials from central banks in the audience, you can introduce yourself and your company again.

Jeremy Allaire: Thanks for the invitation. I’m Jeremy Allaire and the CEO of Circle Corporation. I have been an entrepreneur with a technical background for almost 30 years. I have also worked in many different jobs and software technology product development in the internet space and started Circle about 9 years ago.

Our mission and vision is mainly to focus on the specific application of the public chain and how to establish a hybrid currency model, which can take legal currency, such as US dollar or euro or other mainstream currencies, and express it in a digital way, here infrastructure, through the public Internet to play a role. Our task is, how can we make storing and transmitting value as cheap and secure as possible?

Second, how are you open to innovation, which model is feasible when you have a cryptocurrency that is programmable on the public internet? We are the main operator and issuer of USD Token/USDC. USDC is one of the largest USD digital currencies in the world. It has grown by 1000% in the past two years, and the current circulation is about 53 billion.

This is indeed the core market infrastructure of the crypto-economy and can be used as a trading platform for digital assets, decentralized finance, and increasingly with existing payment systems. That’s about myself and Circle.

Sam Bankman Fried: I’m Sam Bankman Fried, CEO of FTX, and I worked on Wall Street for a while after MIT. FTX is a cryptocurrency trading platform, which means from the background, it is a complete system.

We have done a good job in everything from front-end interface, back-end technology, matching engine, mobile application, custody, clearing, etc. We have a daily transaction volume of 15 billion US dollars on the platform, which can be ranked in the top three in the world.

FTX has primarily focused on regulation over the past year, gaining regulatory approval as much as possible, and we are also working hard to help build a global regulatory infrastructure for key currency ecosystems.

Michael shavlov: My name is Michael shavlov. I’m the co-founder of Fireblocks. The first 20 years of my career were in cybersecurity, initially for the Israeli Cyber ​​Command. Before starting Fireblocks, at Checkpoint’s company, Checkpoint was one of the largest cybersecurity companies. In 2018, we started Fireblocks, our goal is to protect cryptocurrencies (the field). First, we provide our clients with a secure custodial infrastructure where institutions and businesses around the world can safely store these (crypto) assets.

Second, we have built the Fireblocks Network over the past few years, which is essentially a type of messaging infrastructure layer that allows institutions to make secure settlements on different blockchains today, without being vulnerable to various attacks, and the operational process Simplified. Over the past 18 months, we have been very deep in delivering and enabling DeFi (security) for our clients, empowering them to operate safely and efficiently in DeFi innovation.

As a result, Fireblocks is currently serving more than 1,000 financial institutions, from hedge funds, trading platforms, to some of the biggest banks in the world. We also work with many payment service providers. And we have caught many cases where assets have been transferred.

The future of finance & the role of future banks

Moderator: The first question is about the future of finance. Finance will never stand still. What do you think about the future of finance? What will the financial system look like in 5 years? How can cryptocurrencies truly be leveraged for real-world assets? In other words, what role do you think banks will play in the future? What will be decentralized in the future and what will be centralized?

Sam Bankman Fried: First question: I don’t know, no one knows. We all do and talk. But if there is one prediction that has to be made, it is that we will see quite a bit of disintermediation.

Users can access financial markets more equitably, and we are approaching a world where every user, be it a complex trading firm or ordinary people, has access to fair financial applications, protocols, and liquidity . This situation is different from how many markets operate today.

That’s the strength of cryptocurrencies, and I think in the next few years we’ll see crypto being transported to many other areas of the financial system. So this is an area that I am very optimistic about.

Michael shavlov: I agree with Sam that the future is hard to predict, but we’ve spent some time trying to think about that. Perhaps at some point in the future, the transformation of the financial system will develop in the direction of decentralization. For us, because this is a part of our business, we spend a considerable amount of time dealing with traditional financial institutions, including banks, including central banks and other sectors.

So now in the market, I see that many people are concerned about the legal digital currency, and many powerful application cases for it are emerging. In addition, I think many people have heard of NFTs, but in essence, NFTs are not only Digital art, it actually has other implications, including security, participation in other financial applications, and so on. And we’re actually seeing a lot of players, including a lot of big asset managers and investment banks, who are starting to look at how to propagate NFTs to the primary and secondary markets.

But I think the question now is, what will happen in the future? They will be able to abstract away the complexities of DeFi’s decentralized financial space. But the real question is who will be able to create the best experience, the experience that continues to link these services, which is still an open question.

Jeremy Allaire: I would add that whenever I think about 5 years from now, I try to go back to first-principles thinking, what I think might be possible, and then try to imagine.

As Michael pointed out, we have just started to think about some of the most basic points. There can be a sufficient reserve, digital dollars, which can be exchanged anywhere that can access the Internet, and even transactions can be settled at the speed of the Internet. There are very Strong privacy and security guarantees, transaction costs only account for a small fraction.

If we look at the past, we find that the essence of the Internet is an open and permissioned network, people can connect computers, network protocols appear, and then through common protocols, structured information and Internet data protocols are exchanged. At that time, no one predicted that not only all users in the world could instantly obtain knowledge on the Internet for free, but no one expected that the amount of information created and published in the world would increase by a million times. Speed ​​and scale will become like this.

Similarly, the world 5 years from now, the procedural capabilities of stacking through (crypto) currencies, although the current building blocks are relatively rudimentary, has captured the imagination of many people, this idea has been around for 5 or 6 years, and then It has started to generate real growth over the past few years. The speed at which pure science, innovation, developer innovation, business model innovation is happening, thousands of ideas around the world are building on this public infrastructure.

It’s amazing that new infrastructures are being built for the exchange of value, not just in the area of ​​payments, but in the structure of how economic organization happens, including all structures of how economic exchanges between entities take place. Many times when these breakthrough technologies come out, what if we look at them from an old world perspective and compare them to faster faxes? Better long distance calls? This is inappropriate.

What happened in reality? This requires entrepreneurs to really create the future. In 2007, when the iPhone came out, it could have a touch screen and a nice interface, and then other technologies gradually merged and developed.

For example, with the advent of 3G, faster and faster data exchange was possible. As a result, some mobile phone companies decided to combine GPS with their mobile phones. Many people think that this is just a navigation, but what they didn’t actually expect is that when we combine these things, we can use it in logistics, transportation, etc. and other links have produced profound changes.

Today, programmable (crypto) currencies on the internet, including public infrastructure accessible to anyone, will unleash economic innovation that is hard for anyone to predict at this point.

On transition and challenges

Moderator: Thank you, and one more question, how do you think the transition in this field will happen? Will there be some clear winners and pitfalls? In our project with some partners at BIS, we are basically integrating a new digital asset-based infrastructure with the traditional ancient banking system, and it feels like this presents us with a lot of challenges, but may also limit the potential innovation.

Michael shavlov: Are there particular technical channel challenges in this transition? I think there are. There are inherent compatibility issues between new technology and legacy systems, such as the integration of our infrastructure with core banking platforms.

For example, many infrastructures that run DeFi are run indirectly in the cloud, and most of them are OK at the technical implementation level, but the problem is that the knowledge, capability gaps and risks faced by different teams are very different. We You can see how strong some market players are, while others are very average.

The real problem at the moment is the lack of regulatory clarity that exists in many jurisdictions. But most regulators are now looking for solutions to enable innovation.

Jeremy Allaire: A lot of things are gradual, and all the three companies here are doing is to keep iterating, not to solve all the problems that exist. In my opinion, one of the most powerful features about this particular technology is that innovation is completely open, all infrastructure is open source, run spontaneously by the community, and everyone invests in their own computing infrastructure, improving the protocol, which represents public interests and public opinion. This is also how much of the internet has been built and has become an extremely resilient infrastructure.

The technical foundations provided by the encryption computing layer are all created in an open model. Some teams are working hard to create a better whole. Of course, challenges also exist, whether it is scalability, privacy and security, or regulation. ; but everyone understands that these require continuous improvement. For example, there are many blockchains that are improving through zero-knowledge proofs or similar technologies.

I’m very encouraged by the engagement from central banks, regulators, policy makers, constructively coming together from around the world to engage with these topics to understand them.

How to understand risk

Moderator: How do you think about operational risks or other risks in a different way? How to take some technology-neutral approach to thinking about these issues?

Sam Bankman Fried: Success and failure can happen, in my opinion, breaking down the question, such as what value can a service create? How to get more customers? Improve the economic system?

When this is clear, a lot of things become clear. Is it a loser or a winner? Or is this not important at all? What new value can be added here? When this is established, it often becomes very clear how to continue to create value, as we have been doing. Although the form may change, it is fundamentally the same. So, I focus more on what the specific company has to do to adapt to the changes.

Moderator: All central banks will think of a problem in the face of DeFi, and that is its scalability. Jeremy, what do you think about scalability? Do you think this problem can be solved? How long will it take to fix this problem?

Jeremy Allaire: The current progress is there. At the earliest, it can process 7 transactions per second, and now it has risen sharply. If you think about blockchain and computing architecture together, the real scale improvements stem from improvements in its computing input, the continuous cycle of productivity following Moore’s Law, and the increase in bandwidth, I think there will be continued tremendous progress in this area.

How do you view regulation? What do you want the central bank to do?

Moderator: All the guests here also mentioned risks. Let me hear your thoughts. In this new world of the future, how should regulation be viewed? What do you want from central banks and regulators? How to understand risk?

Sam Bankman Fried: I think the regulatory framework for cryptocurrencies around the world is a bit confusing right now. Approaches vary from region to region, and each jurisdiction is trying to address regulatory issues individually. But I think there has been a lot of improvement on the regulatory side, and few countries in the world have a framework for digital assets in the last few years.

Now, five or so countries have comprehensive regulatory frameworks, and many more are moving in this direction. In particular, the United States has made tremendous progress in the last year, and the core of what we will see is: first, the proof of reserve audit of stablecoins may become the standard; second, including market, regulation, clarity, federal oversight, systemic risk, protection.

The third is the emergence of a registration system for some digital assets, many of which may blur the lines between traditional asset classes.

Jeremy Allaire: I would add that I feel that blockchain and financial services built on blockchain operate differently. As Sam said, theirs combines custody, clearing, settlement, payment transactions, so many different components, in just one software stack, and historically, these parts of the capital markets have been separate.

I think it’s the software that changes the architecture, which in turn changes the nature of the asset. Instead of trying to cram everything into an existing system, we need to come up with new definitions for digital assets. A digital asset is a currency, it is a commodity, it is a security, but our definition of a digital asset is very specific because we find many digital assets that meet two or more of the above properties.

However, risks still exist, including various risks including fund monitoring, custody, and operation. Disclosure of risk is of course important, but we need to achieve some kind of consensus, there are currently attempts to map the way the existing financial system works and its regulations to the open source infrastructure of the Internet, but I don’t think the two are comparable.

Therefore, this requires more study and exploration. On the regulator side, there are many more detailed issues worth discussing. But we’ve also seen serious discussions on these issues in many of the major financial regulators over the past few years, which is very encouraging.

Michael shavlov: Yes, I agree. My point is, first of all, we need to make sure that we don’t incorporate new, disruptive innovations into old frameworks. A lot of times, either it basically reinvents the old essence, and that kind of thing doesn’t make sense. Now for regulators, I think two things make sense. One is that regulation is a global thing, so ultimately there must be a reasonable global consistency framework, and crypto assets have no borders, so I think there needs to be some degree of coordination between regulations in countries in various regions of the world.

Second, I think regulators need to ask themselves first. How can existing innovations be leveraged to improve end-user protection? It’s definitely doable. Even though people often complain or criticize cryptocurrencies, such as money laundering and other criminal activities, in reality, I think cryptocurrency is probably the worst way to launder money, because it is traceable, and one address can trace all transactions. KYC and new technologies will enhance the protection of users.

The new system also brings interesting start-ups. Some startups can add protection to the system, and regulators need to learn how they work.

Sam Bankman Fried: From other assets to cryptocurrencies, there are a lot of similar policy or regulatory principles around consumer protection details, but in many specific cases there must be some improvement.

The role of the central bank

Moderator: Thank you, very good discussion. What role do you think the central bank will play in this future system?

Jeremy Allaire: Start with the history of electronic money, innovate, then establish standards and adjust details. I think stablecoins are just another product of this kind of innovation that merges with the public internet and open source technology. So it has its own unique strengths, and at the same time, from a central bank perspective, obviously, the architecture needs to evolve with that as well.

I believe that lessons from the pace of innovation and technology choices that have occurred from public Internet innovation will also persist. I’m leaning that there will be forms of coexistence, but I also believe that the core architecture will evolve from computing and data and transaction technologies of the past to something more secure and interoperable.

Michael shavlov: I think there is definitely a coexistence between CBDC and stablecoins, including digital treasuries. But much of the market and money is actually run through the different assets and bonds in the market to unleash the real power.

Central banks have to think about both of these things, unless we have cross-chain swaps like atomic swaps between these two assets.

Recommendations for the BIS Innovation Hub

Moderator: Do you have any suggestions for BIS Innovation Hub? The BIS Innovation Hub is basically set up to help central banks explore technology. I would love to hear any suggestions from you.

Michael shavlov: Regarding the open community, open source definitely helps bring about some innovation. I think what might be really interesting is to give people the freedom to create sandboxes that don’t necessarily run globally, but do test some of these projects in a controlled environment and then people can actually see to the effect, and they can iterate on it.

Jeremy Allaire: I think a lot of innovation is happening in the open source, open blockchain ecosystem, working with some of the major open blockchains and even running with their own private consensus model, in sync with the infrastructure the market is building, doing Experimental stack.

Sam Bankman Fried: There are a lot of cool things to do, especially to think about how to win.

Reference: https://en.wikipedia.org/wiki/Circle_(company)

https://en.wikipedia.org/wiki/Jeremy_Allaire

https://en.wikipedia.org/wiki/FTX_(company)

https://en.wikipedia.org/wiki/Cryptocurrency_exchangeCrunchbase

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/sbf-circle-founder-and-other-well-known-entrepreneurs-talk-about-nft-stable-currency-finance-and-supervision/
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