DC Blockchain Summit — Regulation, and Adoption
It took me a few days to internalize what I have learned at the DC Blockchain Summit 2019 hosted by Chamber of Digital Commerce last week. The event is arguably one of the best blockchain events. If you are a blockchain insider especially in the US, I urge you to watch the livestream here.
After a two day back-to-back event where US regulators, blockchain projects, law firms, and IT solutions giving their ideas about blockchain and cryptos, I see the future one step clearer. I see that regulators will still take the do-no-harm approach to crypto regulations, while clearer clarification regarding the nature of tokens will be seen more.
I also see real adoption of blockchain in different sectors and organizations, from small and medium owners to the World Bank, from the supply chain, finance to voting.
I see traditional financial institutions building infrastructures for a tokenization economy. I see consulting firms and big IT solutions companies helping the real world adopting blockchain mostly through permissioned blockchain platforms.
When I attend industry summit, I am not there for some particular information. I look for the change of rhetorics and narratives, both what is most frequently mentioned and what has died out along the way.
What do the regulators say?
The organizer has invited SEC, CFTC, FINRA(Financial Industry Regulatory Authority) and Treasury to give keynote talks or share on a panel. The overall theme is all these regulatory bodies tend to avoid over-regulation. But there is increasing pressure on the regulators to provide clear guidance on the nature of tokens.
As US SEC Chairman Jay Clayton confirms today that the SEC staff has found that ETH is not a security under U.S. law.
I think clarifications like this will be seen more over the year for more tokens. While some cryptos like Ether will be considered not a security, there will also be clarification on cryptos that are considered securities, and hence have to follow securities rules for registration and trading. In this case, exchanges have to re-examine and re-adjust listed assets. For Ether, we might see more derivatives in the making.
During this conference, we see more and more actual projects with real application. From using blockchain to solve problems in capital markets (PeerNova) to voting, from car title transfer (CHAMPtitles), government blockchain tryout to World Bank POCs.
Tokenization economy ahead of us
STO is in full bloom.
Traditional financial institutions are excited to be able to tokenize asset and reduce friction for the issuance, trading, transfer, clearing and settlement. There were DRW Cumberland, Polymath, CMT Digital, tZero, OpenFinance, Fidelity, ABE at the event, sharing their ideas about the market.
What was not mentioned in the summit
There was little mentioning of dApps. Cisco VP said that for enterprise blockchain only 20% is good, most panelists agreed. That’s the general rhetorics here. The real world does not believe in fully decentralized apps. Hence not much mentioning of dApps.
There is also little mentioning of what the traditional giants are doing to avoid being disrupted by blockchain.
My takeaway from the summit is that when regulations in the US clarify about security definition, it would fasten the adoption of a few crypo assets that are deemed not securities by the regulators but it will also make the rest crypto asset follow rigorous securities compliance. Bitcoin and Ethereum trading will see more institutional money due to that clarity.
As for blockchain adoption, permissioned platforms makes much more sense to enterprises. Blockchain, like the cloud service, will be just one add-on to an existing business. It’s going to be a 20–80 ratio of blockchain to the core business. We will see more infrastructure using blockchain in various industries and regions.
Tokenized assets will be more popular. More traditional financial institutions will add it to their existing services. This also provides opportunities for consulting firms, wallet and custodian services, exchanges, etc. It will pave the way for a tokenized economy. But that might be a decade away from us.