Cryptocurrency & Financial Services
OPENING COMMENTS
Nov. 29, 2018

Introduction
Associate Director,
Strategic Advisory
(2018 – Present)
Blockchain Strategy Lead
& Vice President
(2015 – 2018)
120
clients
115
employees

The Evolution of Decentralized Finance
 Proliferation
 Survival
 Convergence

Cryptocurrency and Financial Services
What happens when an unstoppable force
meets an immovable object?

The Proliferation of New Species
Digital Assets Financial Services
Distributed Ledgers
a new system of record
Crypto Institutions
a new asset class
Tokenized Assets
a new issuance mechanism
Decentralized Finance
a new financial system

A new system of record
 Inspired by “Blockchain, not Bitcoin”
in The Economist, Oct / Nov 2015
 Permissioned, private, append-only, distributed
databases for traditional assets and systems
Distributed Ledgers

Survival and growth
Growth drivers
 Risk mitigation for experimentation
 Controlled phases of adoption,
participation, and integration
 Familiar governance and ownership
structure
INTERBANK
INFORMATION
NETWORK SM
Survival factors
 Understanding B2B network effects
 Shifting from “command and control”
to “participate and orchestrate”
 Asking “Do we need a blockchain?”
Distributed Ledgers

A new issuance mechanism
Tokenized Assets
 Derived from Depositary Receipts-based solutions
to securities settlement pilots of 2016
 Process of immobilizing and re-materializing off-chain assets as
digital tokens that inhabit permissioned or public blockchains

Survival and growth
Growth drivers
 Investor familiarity with underlying
assets driving inherent value
 Streamlined execution and cost
structure
 Greater access to illiquid assets and
unique financial instruments
Survival factors
 Navigating local regulatory
requirements
 Avoiding over-promises of liquidity
(and returns) to investors
 Educating investors on investment
suitability and potential risks
Tokenized Assets

A new asset class
Crypto Institutions
 Grew out of the exchange hack lessons of 2014
 Centralized financial institutions built to serve a new class of digital assets
by facilitating their exchange, ownership, and productization

Survival and growth
Growth drivers
 Sufficient scale and liquidity to meet
market requirements
 Secure, trusted fiat on-ramps
 Gradual implementation of
KYC / AML procedures
Survival factors
 Competing against “traditional”
entrants on compliance & product
 Improving user experience
 Reconciling centralized intermediary
role with a decentralized ecosystem
Crypto Institutions

A new financial system
Decentralized Finance
 Evolved from Distributed Ledgers, Tokenized Assets, and Crypto Institutions
 Transformation of traditional financial services into open, trustless protocols
based on decentralized networks and open-source financial primitives
Traditional Financial
Services
Lending
Derivatives
Exchange
Funds / Indices

Survival and growth
Growth drivers
 Permissionless, censorship-resistant
access to financial services
 Programmable instruments and
transactions with built-in escrow and
global reach
 Open-source ecosystem in active
development
Survival factors
 Finding a sustainable business model
 Achieving sufficient scale and liquidity
to support market demand
 Creating a user-friendly but secure
experience for accessing
decentralized financial services
Decentralized Finance

Converging on the future
Convergence points
 Adoption challenges
 Business models
 Governance approaches
 Regulatory development
No single solution can capture the future today,
but in aggregate, we may succeed

Contact
franklin.bi@wachsman.com