Distributed ledger technology is poised to transform financial services. But how, when, and what role will regulation play? Gilbert Verdian, Quant’s Founder and CEO, weighed in on stage at CordaCon 2022 in London.
Gilbert discussed how blockchain technology is changing traditional financial services and how DeFi will lower costs to bring new efficiencies. He shared his views on a panel session moderated by Dominic Hobson at the Future of Finance, joining Todd McDonald at R3, Richard Crook at BCB Group and Michele Cutroni at SDX.
Read selected excerpts from Gilbert Verdian.
Does traditional finance need to adopt a decentralised model and blockchain technology? Why would they do this, and what are the advantages?
“We are seeing traditional financial institutions adopt DLT because it can help them grow. They can get exposure to new customers accessing new funds and ETFs, which they couldn’t before. The digitalisation of traditional finance has become a natural evolution of technology.
[TradFi] can gain new efficiencies by transforming securities and other instruments into digital assets—it’s a win-win for institutions, exchanges and consumers. It’s exciting because we will see the convergence of tokenised money working alongside digital assets with settlement using reverse payments or payment vs payments.”
Do you think the regulators will prefer convergence or competition, with the need for the markets to be safe and consumers protected?
“Regulators have been given a very difficult task. This technology is very nascent. It’s only been around for 13 to 14 years. They’ve had to wait for the market to mature to understand how to regulate it. Now, that the market has grown, DeFi has been a great learning curve and shown what’s possible. The regulators now understand it and are taking the right approach by letting the markets decide what is appropriate and then, regulating against that. Now the market is waiting for the rules to come in, so that they can treat it [new digital securities] just like any other asset class.”
In the long run is this a victory of DeFi or CeFi? Will it converge?
“Where we are and where we are heading is a transformation of the financial system. It’s not one versus another. We see evolution as society evolves, and everything we do and consume will be increasingly digital. The financial system is changing too, and digital assets are a mechanism that will help it evolve to meet our needs over the next 10 to 15 years.”
