Independent Banker - December 2017 - 48

publicly aired his concerns about
bitcoin and digital currencies. In
another example, Marouane Garçon,
founder and portfolio engineer of
Loch Loyal, a private blockchain
investment firm, says he has heard
horror stories from friends trying
to convert their bitcoin to US dollars
and having their bank accounts
closed after attempting to conduct
multiple transactions. " Banks have
to get with it, or they are definitely
going to get left in the dust, " he says.
Some banks are embracing the
trend. Rob Viglione, cofounder
of ZenCash, a privacy-centric digital
currency, points to a partnership
between $75 billion-asset USAA and
Coinbase, an online platform for
buying and selling bitcoin, ether and
litecoin-three of the most prevalent
types of virtual currencies. Through
the Coinbase Connect feature, USAA
members can see their Coinbase wallet
balance on the bank's website and
mobile application, though they can't
make purchases at this time.
Meanwhile, a group of large international
banks is reportedly banding
together to create a new type of
digital money-dubbed the " utility
settlement coin " -to settle financial
transactions using blockchain, a digitized,
decentralized, public ledger of
all cryptocurrency transactions.
Regulators, too, are starting to give
digital currencies more consideration.
The Federal Reserve recently
indicated in a report on strategies for
improving the US payment system
that it will continue to study and
solicit input on how distributed
ledger technology and cryptocurrencies
fit into a " safe, efficient and
resilient " payments system. This past
summer, the Securities and Exchange
Commission (SEC) issued guidance
on the regulation of initial coin
offerings (ICOs), which occur when
a cryptocurrency startup wants to
raise money.
There are other indications, as
well, that virtual currencies are
taking root. For instance, Burger
King recently announced it would
test WhopperCoin on a distributed
ledger platform. " It doesn't get more
mainstream than fast-food burger
chains, " Brodsack says.
Jon Holmquist, head of marketing
for the US branch of bitFlyer, a
" While the eventual
winner or winners of
the digital-payment
race jockey for
position, consumers
will...want their trusted
financial institutions
to help them stay safe
while test-driving
some of these hot-rod
payment vehicles. "
-PAM BRODSACK, CO-OP
FINANCIAL SERVICES
Japanese bitcoin exchange, likens
the situation to the slow trajectory
of digital banking acceptance.
Although it took time for banks to
embrace online and mobile banking,
nowadays it's difficult to find banks
that don't have an online or mobile
presence. " I think the adoption curve
is going to be similar, " he says.
Indeed, industry watchers expect
to see more adoption of virtual
currencies over time, especially
48 ICBA Independent Banker December 2017
as digital currencies become more
widely used outside the United
States. Philip Au, cofounder of
Crypto Explained, a cryptocurrency
research firm in New York, points
to international companies like
TenX and Monaco card that provide
users with a physical card to spend
cryptocurrencies in the real world.
These cards are initially used in
parts of Asia and Europe, but Au says
he expects to see more companies
working on bridging the gap between
cryptocurrencies and traditional fiat
payments in the future. " There will
be more in the future; they just need
to get up to speed on the technology
and how it will interact with the traditional
banking system, " he says.
Digital currencies are also poised
to become another form of mobile
payment. " In the next five years, I
would not be surprised if my traditional
banking app includes a virtual
currency wallet built in, " says Joshua
S. Rosenblatt, an attorney at Frost
Brown Todd who co-chairs the law
firm's blockchain and digital currency
practice.
Observers predict that at some
point, digital currencies could even
replace cash-though the timeline
for that is farther off. " I am totally
sure that cash will disappear from
turnover in some time, " says Anti
Danilevski, chief executive of
KICKICO, a fundraising platform.
It's too soon to tell which virtual
currency or currencies will prevail.
While bitcoin is the largest by market
cap, it's still early to predict its longterm
staying power. James Song,
managing principal of Faircap Partners,
a private-equity fund based in
Myanmar that is building virtual currency
technology, says he expects a
clear winner to arise over time: " The
market will take care of itself. "
Song compares the situation to
Independent Banker - December 2017

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