Chris Skinner is known as one of the most influential people in technology, as an independent commentator on financial markets and fintech through his blog— Finanser.com. He has recently been voted Game Changer of the Year and Financial Markets Advisor of the Year by Finance Monthly, CEO of the Year by CV Magazine, FinTech Speaker of the Year by TMT Global and has been an advisor to the White House, the World Bank and the World Economic Forum.
In an exclusive interview with The Business Standard, Chris talked about his take on cryptocurrency, why it is hard to regulate and why a digital disruption is bound to happen in the finance and the banking sector. Here is an excerpt of that interview for our readers.
The Business Standard (TBS): Do you think cryptocurrencies will replace traditional banknotes in the near future?
Chris Skinner (CS): It depends who you trust. If you trust the internet to manage money for you then, yes. If you trust the bank and the government to look after your money for you then, no.
TBS: Are you in favour of the total extinction of cash in notes and coins? Why?
CS: I wouldn't say that I am for or against. There are compelling reasons why getting rid of cash makes sense. It is not secure, hygienic or appropriate to use in this 21st century age of digitalisation. However, there's not a clear alternative to cash. Cash has a beauty in that it is an immediate, transparent and anonymous exchange that can be totally trusted. Can you show me a true equivalent of that online? There are some that are close, but most are auditable, traceable and require identification and verification checks. As a result, cash will be with use for a long time to come.
TBS: Why is regulating cryptocurrencies tough? Without regulators, do you think large scale investors would feel safe to invest in cryptocurrencies?
CS: Cryptocurrencies can be regulated for sure. In fact, most investors are making their investments via regulated exchanges for that reason. However, there is a Wild West of cryptocurrency users out there who are operating with zero regulatory involvement. Those currencies and areas are not supported by the mainstream investment community, but the mainstream investment community is starting to come around to cryptocurrency services. Just look at Tesla who invested $1.5 billion of their treasury reserves in bitcoin or BNY Mellon, who now offer custodial services for cryptocurrencies, and you will see what I mean.
TBS: Bill Gates in one of his interviews said, the way cryptocurrency works today allows for certain criminal activities and it would be good to get rid of that. Do you agree with his take?
CS:Most people claim cryptocurrencies are purely for criminal usage. They are wrong. In fact, there is more criminal activity in the banking system than in the cryptocurrency system. Maybe Bill should address that area first.
TBS: A number of governments across the world have banned cryptocurrencies in their respective countries. Do you think they have a lack of understanding of this or these are just blanket bans?
CS: Countries try to ban what they cannot understand, so it is mainly the latter issue. Countries that understand cryptocurrencies are either well down the path of creating their own digital currencies, such as China, or creating regulatory structures to support the use of cryptocurrencies, such as the licensing of regulated trading platforms and exchanges.
TBS: Banking and finance industry has been going through a massive disruption. What are the key factors behind this?
Unlike retail and travel, banking has been relatively sheltered from the upheaval the internet has brought to global markets until now. For the past ten years, there has been a major development, focused upon banking and finance, emerging from the technology sectors worldwide and, specifically, from London, Singapore and Silicon Valley. Called FinTech, the key to this disruption is that companies using cloud computing and smartphone networked technologies are changing the way in which we think about money. More than this, due to the global financial crisis, the regulators are encouraging these start-ups to change the world of banking. Those two factors – technological innovation and regulatory support – have created a multi-billion industry of change.