5 Biggest Crypto Themes From Coinbase CFO, Signature Bank Chair

  • Coinbase CFO Alessia Haas and Signature Bank chair Scott Shay discussed cryptos in a recent event.
  • They believe that cryptos will revolutionize the labor market and the banking industry.
  • They also emphasized the need for new, “purpose-built,” “bipartisan” laws for blockchain.

Coinbase CFO Alesia Haas believes that crypto has “well moved past fringe or early adopters” and into the mainstream.

The numbers support her claim. In July, Crypto.com reported that the number of global crypto users had reached over 200 million, doubling since January. A recent Pew Research Center survey found that 16% of US adults have personally traded or invested in a cryptocurrency.

In fact, during a live conversation hosted by the Economic Club of New York on November 16, Haas said she thinks that in the future cryptocurrencies will provide the answer to “economic freedom.”

Joining her was fellow panelist Scott Shay, co-founder and chair of Signature Bank. Together, the two discussed the five biggest themes in cryptocurrencies today.

Labor markets will be revolutionized

One offshoot of blockchain technology has been the creation of non-fungible tokens (NFTs) — digitally stored certificates of ownership pegged to items of value. Haas believes that NFTs have the potential to completely transform the creator economy because they record every transaction in an “ownership lineage,” allowing artists to receive royalties for each secondary sale.

Additionally, she believes that there will be “drastic changes” in the types of jobs available to workers. Besides cryptos, other sectors that may usher in these changes include electric cars and artificial intelligence.

“There’s going to be a reduction of intermediaries,” she said. “Back-office settlements or reconciliations — those types of roles, when they can be automatically performed by code, will no longer need to be performed by humans.”

Haas has also seen the nascent rise of a concept called “contributors in residence” or “entrepreneurs in residence,” where anecdotally, engineers have contributed part-time to multiple projects they find interesting.

“I think you’re going to find that people will follow their passions a lot more,” she said. “They’re going to have unique opportunities to do multiple things in part-time capacities which will change the way the labor pool works.”

CBDCs will seem ‘less attractive than meets the eye’

One topic that has come into the spotlight recently is central bank digital currencies, or CBDCs.

However, Shay thinks that there would be “tremendous resistance” to a government-issued currency. For instance, he believes that people will fear the government having oversight over all their transactions, or being prohibited from donating their money to particular causes when a different administration holds office.

“We live in a divided society, and there is no more powerful tool than controlling one’s ability to expend money,” he said.

Additionally, Shay believes that many issues will arise if the government begins allocating private capital, which will be one of the ramifications of the government holding and lending out all money. One potential way to mitigate these risks, he says, is to cap CBDCs at a certain amount.

Bipartisan laws must be created

“The changes that are made possible by these technological innovations just don’t fit in the existing financial system,” Haas stated during the conference.

Many financial regulations were written decades ago, before the existence of blockchain. She emphasizes the “need for more thoughtful, purpose-built regulation for crypto, because these are new underlying technologies that will remove the need for intermediaries.”

“We align very much with the spirit of the laws — the need for consumer protection, market structure, and protection against illicit activity, but I think we can have really good debates on how we get there,” she continued. “And how we get there can look dramatically different today than it did in the 1970s.”

Shay says that ultimately, congressional engagement will make an impact, since he believes that many issues cannot be fixed with existing regulation and can only be fixed by implementing completely new laws.

“We need it to be bipartisan, because we need everybody to embrace this,” he said. “The last thing we need is a law that could be revisited or changed depending on which party has control.”

Traditional banking will evolve

Over the next ten years, Shay believes that people will start recognizing the value of immediate payments and break free from traditional banking hours.

“Sooner or later, banks will have the ability to transact with each other and with clients on significant sums anytime day or night,” he said, with the caveat that it may take some time to reach this status because of the heavy regulations that banks face.

A lot of risks that people face today, such as credit, operational, or product risk, will also get taken out of the equation when money transfer becomes instantaneous. This goes back to “the central idea of finance,” which Shay says is “taking all risks that you possibly can out of a transaction.”

He also thinks that the biggest revolution in banking will happen in recordkeeping, at the core operating system level. Blockchain will allow institutions to forgo tracking long-winded, multi-party record trails, ensuring that future transactions are as seamless and timely as possible. Personally, he believes that the 2008 mortgage crisis could have been avoided entirely if blockchain had existed to make clear the liable party for a mortgage.

“Blockchain will be fundamentally better for commerce,” Shay said.

Cryptos’ favorable future

While individuals are beginning to accept the rise of crypto, cities are unlikely to issue their own cryptocurrencies — although Haas predicts that more and more people will request to be paid with cryptos.

On this point, Shay elaborates that “interoperability is a critical part in the usability of a currency” to avoid paying foreign currency spread when traveling.

“Ultimately, the winning protocols for currency will be those that are easily interoperable,” he concluded, clarifying that this doesn’t apply to cryptos used primarily as a store of value rather than a method of payment, such as Bitcoin.