This week I had a long meeting with the FCA reviewing our fully regulated Peer to Peer savings and loan platform JustUs.
The FCA has the unenviable task of trying to stress test the health of the financial services industry in the middle of a health and economic crisis via their quarterly “Covid19 Financial Impact Survey” sent to all regulated firms.
I have also had a meeting with the regulator to discuss or continual developments to our Anti Money Laundering systems and controls. I do feel like I’ve become a full time FCA employee, and believe you me, it’s a challenging role to say the least.
Regulation is the key to mass crypto adoption, and we are doing our bit to deliver the best digital money to as many people as local regulators will allow.
Why did I get into crypto?
After the last credit crunch, I had plenty of time on my hands and researched the concept of Peer to Peer financial services. I believed then, and even more so today, that the mobile use of P2P money and technology is a more equitable way for finance to function, provides better banking experiences, and with crypto efficiencies provides a global access to better digital money.
Covid19 has accelerated the adoption of Global P2P digital money via Mobile App’s and the crypto currency train does not look like stopping any time soon. I feel quite guilty that our sector is benefitting from these terrible times, but we are providing real world solutions to many problems.
Many neo-banks have been super successful in attracting millions of mobile customers but have really struggled to make these customers profitable. A large percentage of new era digital bank founders are techies or accountants and lacking in the must-have lending experience which can bring these businesses into profit. Lending is my bread and butter, so our established Moneybrain P2P banking App was built with lending first and crypto second, giving us a profitable and scalable business model from the outset.
Why Moneybrain & BiPS and what can it do that’s different?
I have a confession to make, I was one of the early buyers of Bitcoin, purchased about $20 or $30 at about $0.30 per BTC – It took days to process the transaction early 2000’s and the computer was thrown away in an office move 2012 as I thought the technology was to antiquated and couldn’t scale.
The following year I created eMoneyUnion to be an electronic P2P lending platform, using modern centralised tech, and building upon the Bitcoin peer to peer white paper to create an eMoney platform for savings and borrowings.
I managed to attract investment from branding and investing Gurus Sir John Hegarty and Tom Teichman to the team who had the same disruptive beliefs in providing an alternative to a broken economic system and we came up with our collaborative lending platform JustUs – here’s Sir John and my son Billy who came up with the logo back in November 2017.
It became very obvious to me, that whilst the decentralised Bitcoin crypto nevana could transform the world by giving people full control of their money, the central Governments of the world would never let it happen in its purest form, so we aimed to get as near to it as possible within the existing monetary system and regulatory framework.
We had seen what Tether had done, creating a digital token used predominantly for trading on exchanges but also for remittances and in DeFi. The regulatory challenge we identified was no globally accepted Chartered Accountant audit of their promoted 1:1 USD pegged reserves, nor has there ever been, although their legal counsel has advised that this is coming.
The other additional challenge was a worldwide lack of anti money laundering checks going on with decentralised wallets and exchanges which could facilitate the sending and exchange of Tether anonymously. Tether does extensive KYC checks on its customers. Still, it is my view that basically every tether, along with any other exchanged cryptocurrency anonymously could be questioned.
Applying KYC/AML after the event off crypto issuance is a challenge to say the least, particularly from a contract and law enforcement point of view as is clearly documented in the US with many regulatory challenges.
What will the global regulators do about crypto? Regulate.
The bubble which is Defi will burst – you can’t go around lending 10’s billions of $ to a nation’s citizens without some sort of registration or global compliance agreement, for example in the UK – if you lend a consumer money or crypto you need to be regulated by the FCA –
is anybody? NO
is it happening? YES
It’s non-regulated and will cause great damage with people losing Billions, I can see it happening all over the world now, 100 X leverage, paying 40-100% returns – really!
This is the new crypto wild west and the regulators will just shut it down, it’s as simple as that.
Does crypto work and deliver real world solutions?
With the correct regulation, crypto smashes it. We have pushed the boundaries by minting our asset backed digital currency BiPS in November 2019, not as a stablecoin, but as a non-regulated Exchange Token as defined in the UK and freely transferable digitally in a compliant manner as property.
Tether as the world’s most traded crypto is going to have to mould itself into a regulatory framework to survive as the new regulatory defined e-Money.
We have ratified BiPS to have the same global free commodity status as regular fiat – the key is not being pegged 1:1 and the holders of our currency having no rights to the underlying assets.
We feel the Moneybrain Wallet and App with BiPS is a real gamechanger.