FinTech and Crypto: 7 Years On

This post marks the seventh anniversary of FinTech Rising. I wrote the first posts while attending the 2014 Sibos* conference in Boston.

The biggest thing I learned at that conference was the emergence of bitcoin into the mainstream financial system. As I wrote in that first FinTech Rising post, “Throughout the conference, the line on Bitcoin went something like this: It may not be the form digital currencies take, but it shows that cryptocurrencies are here to stay.”

Now we have the price of bitcoin topping $62,000 with the imminent launch of a U.S. bitcoin ETF. And we are reporting on the role of stablecoins in the cryptofinance system as a bridge to the traditional financial system. U.S. financial regulators and policymakers are seriously negotiating for territory, and this quote from a skeptical (well, hostile) banker in 2014 has more or less come to pass:

“To the Bitcoin people, the world is a happy place with no regulations and money is just flowing,” one banker at SIBOS said. “Then they get hit with sanctions and see what happens.”

Bitcoin ATM in Chicago’s Merchandise Mart, October 2014, when the price of BTC was $343.00

The rest of that initial article holds up well. It was too optimistic, which surprises me. The focus was on why and how banks collaborate with digital FinTech companies. Apple Pay was new, and the bankers were talking about how they could provide infrastructure and a platform for the tech companies.

They also talked about the importance of the data they hold, the trust they have built, and how much FinTechs need both. That line of argument isn’t so cut and dried as it seemed to me then. The development of finance and technology is not tidy.

The decentralized finance systems that have grown out of bitcoin and its blockchain gives us plenty of untidy development to follow. The difference between traditional centralized finance and emerging decentralized finance is locus of trust and data: trust in institutions or trust in code. As we start our eight year, we will keep you posted.

* Sibos is the annual gathering of the SWIFT organization and the transaction banks, payments and banking vendors, and the consultants that support international payments and interbank messaging. There are two acronyms from the 1970s behind Sibos and SWIFT. The Swift International Banking Operations Seminar started in 1978 by the Society for Worldwide Interbank Financial Telecommunications, established in 1973 to facilitate transactions between the world’s banks. For a brief history of electronic banking and payments, see the Preface of Chris Skinner’s book Digital Bank.

– Collin Canright