Beyond Bank Failures: Rethinking the Role of Traditional Banks in the Crypto Age

John Avery, VP Web3, FIS
Glenn Barber, Head of Sales Americas, Copper.co
Glenn Morgan, SVP, Digital Assets Practice Leader, Aon
Jim F. Vivenzio, Senior Counsel, Perkins Coie LLP, Former Director for BSA/AML Policy, Office of the Comptroller of the Currency
Moderator: Mike Castiglione, Director of Regulatory Affairs, Digital Assets, Eventus

Many believe that protecting institutional investment in digital assets is necessary for markets to flourish. From custody to trading, financing, staking, and governance – this panel discusses what it will take for more “TradFi’ institutions to enter this space and more importantly, how new entrants will impact the industry’s future.

0:00 – Introduction
0:20 – Panelists and Panel Introduction
0:48 – Mike Castiglione, Background and Introduction.
1:15 – The history of technology
1:40 – Where are we in Crypto Adoption?
2:03 – Institutional Adopters
3:27 – FDIC Report Findings
4:09 – Offices of Innovation
5:28 – Regulatory Shifts in Institutions
5:47 – The “Crypto Risk Statement”
7:00 – The “Crypto Liquidity Risk Statement”
7:50 – OFAC Sanctions
8;45 – Un-hosted Wallets Rule
8:00 – Guidance Promised
9:37 – Stay Tuned for Lots of Change!
10:05 – The Importance of Custody
10:25 – Technologies to Update Custody
10:53 – Grounded in physical security
11:40 – New Technologies for Virtual Security
12:17 – The Definition of Custody
12:53 – The Importance of Insurance
13:17 – How does insurance help investors take calculated risks
14:28 – Crypto Natives and Insurance
6:10 – Compliance Processes and Financial Institutions
16:34 – Challenges of developing relationships with banks
16:51 – A regulated environment
17:25 – Expectations when forming regulations
18:30 – The Bank Service Company Act
19:01 – Bankers to have a firm understanding of relationship complexities
20:30 – What’s now and what’s coming
21:13 – What practical things should businesses do?
21:43 – Building Next-Generation Rails
23:05 – Solving and Providing Complete Solutions
24:30 – Awareness, Influence, and Adoption
25:45 – Other Countries Setting Guardrails for Crypto
26:00 – British Regulation
26:38 – Switzerland FinTech License
27:28 – Abu Dhabi and Dubai Progress
27:57 – Hong Kong Legalizing ETFs
28:24 – A Clear Road Map
29:30 – Where will we be in a year from now?
30:36 – Compliance Costs
31:20 – Success Stories in Flight
32:12 – Blockchain Use Cases Utilized and Proven
33:05 – Thank you and closing remarks

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As the cryptocurrency and blockchain industry continues to evolve, discussions around the role of traditional banks in this new era are becoming increasingly relevant. The recent DC Blockchain Summit 2023 served as a platform for experts to delve into topics surrounding the intersection of finance, technology, and regulation. Among the key topics of discussion was the potential impact of the rise of cryptocurrencies and decentralized finance (DeFi) on traditional banking systems.

One of the notable points raised during the summit was the concept of rethinking the role of banks in the crypto age, particularly in light of past bank failures and financial crises. While banks have historically been the primary intermediaries for financial transactions and services, the emergence of blockchain technology and cryptocurrencies has given rise to alternative financial systems that operate outside the traditional banking framework.

In recent years, there have been numerous high-profile bank failures that have raised concerns about the stability and security of traditional banking systems. The volatility and speculation surrounding traditional financial markets have further fueled the growing interest in decentralized forms of finance, where transactions are conducted directly between parties without the need for intermediaries such as banks.

The advent of cryptocurrencies and DeFi has also given rise to the concept of self-custody, where individuals have greater control over their assets without the need for a centralized financial institution. This has prompted a shift in the way individuals perceive and manage their finances, potentially undermining the traditional role of banks as custodians of wealth.

In light of these developments, the DC Blockchain Summit 2023 sought to explore the evolving relationship between banks and the crypto industry. While some experts expressed concerns about the potential disruption to the banking sector, others highlighted the opportunities for collaboration and innovation between traditional banks and the crypto ecosystem.

One potential avenue for collaboration is the integration of blockchain technology into traditional banking operations, which could improve transparency, efficiency, and security in financial transactions. By leveraging blockchain technology, banks can streamline processes such as fund transfers, identity verification, and compliance, while also exploring new opportunities for digital asset management and tokenization.

Another area of exploration is the potential for banks to facilitate the adoption of cryptocurrencies and DeFi services for their customers. This could involve providing access to crypto wallets, facilitating cryptocurrency exchanges, and offering DeFi lending and staking services. By embracing these new financial instruments, banks could position themselves as facilitators of innovation while creating new revenue streams.

Furthermore, the summit highlighted the need for a balanced regulatory approach that fosters innovation while safeguarding consumer protection and financial stability. As the cryptocurrency and blockchain industry continues to mature, there is an opportunity for regulators to work collaboratively with industry stakeholders to develop a framework that supports responsible innovation and operates effectively within the existing financial infrastructure.

The discussions at the DC Blockchain Summit 2023 underscored the need for banks to adapt to the changing landscape of finance brought about by the rise of cryptocurrencies and blockchain technology. While the traditional role of banks may be evolving, there are opportunities for banks to embrace innovation, collaborate with the crypto industry, and play a meaningful role in shaping the future of finance in the crypto age. As the industry continues to evolve, the relationship between banks and the crypto ecosystem will undoubtedly be a topic of continued interest and exploration.