Biggest Banks Should Fill Void Left in Crypto After Collapses, Says Standard Chartereds Geoff Kendrick

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The March collapse of Silvergate, Silicon Valley Bank and Signature, three of the world’s most crypto-friendly lenders, left a massive hole in the digital asset financial system.

But with blockchain offering a potential route to global finance for previously excluded parts of the world, among myriad other use cases, Geoff Kendrick, head of crypto research at Standard Chartereds, believes the biggest banks around the world owe it to potential customers in developing economies to fill the void. in crypto.

Kendrick spoke to Forkasts Jenny Ortiz-Bolivar about the world’s vast unbanked space and why her bank, Standard Chartered, has taken a proactive approach to digital assets.

The questions and answers have been edited for clarity and length.

Jenny Ortiz-Bolivar: Standard Chartered Bank’s approach to crypto is much more open to blockchain and crypto technology compared to competitors such as HSBC. What exactly drives this approach?

Geoff Kendrick: Obviously, I can’t talk to our competitors about their desire for crypto. But on the SCB side, we were relatively early in this space. We recognize the importance of blockchain technology. We recognize the importance of this broader ecosystem to, quite frankly, many of our core businesses in terms of global capital markets. I would say that over the next 5-10 years blockchain is going to become a much bigger part of the financial markets and SCB is at the forefront of that change.

Our core footprint as a bank is in Emerging Asia, Emerging Africa and the Middle East. For these regions, some of the major use cases for digital assets, and those for Bitcoin and other transactional coins in particular, are extremely important. In these regions, many individuals and businesses still lack access to a broader ecosystem of financial assets of the type available in the West. In these countries, alternative financial outcomes are potentially advantageous. So there is a natural overlap between some of our major countries and where Bitcoin and other digital assets can help.

Ortiz-Bolivar: In that regard, how do you see the role of blockchain and crypto in the future of banking? What synergies are we likely to see?

Kendrick: When it comes to the future of blockchain, there are a number of potential use cases. At one end of the use case spectrum, we have the World Bank telling us that the global unbanked sector transacts about US$20 trillion annually. As mentioned, much of this transaction space is unbanked as financial institutions are not available in many of these key countries.

If you plan to move these transactions into the blockchain space via Bitcoin or an equivalent using multiples of Visa and MasterCard, for example, even that could lead you to a Bitcoin valuation of around $50,000. That’s about double what we’ve been recently. Thus, thanks to blockchain, those in emerging markets, a huge unbanked space, can access a financial system from which they have otherwise been excluded.

Elsewhere, I do think I can see a continuation of what traditional financial institutions have already done to migrate to blockchain over time. Here I am thinking of insurance type services. One can imagine that they could be offered in the medium term on the blockchain and therefore cheaper because there are fewer people in the chain. Similarly, ETF (exchange Traded Fund) type products could end up on the blockchain. Essentially, the potential use cases are endless when considering the types of smart contracts that Ethereum and others are able to offer.

Ortiz-Bolivar: Finally, this year has seen the collapse of a trio of crypto-friendly banks, starting with Silvergate in early March. These shutdowns have left a critical void in the crypto ecosystem. What is Standard Chartered doing to fill this void?

Kendrick: These banks were, as you say, very important parts of the crypto ecosystem and we need bigger, longer-term financial players like Standard Chartered to enter this space. Over the past six months or so, we’ve also seen concerns about centralized exchanges, including the collapse of FTX in November. Again, I think this presents an opportunity for banks like Standard Chartered to offer broader trading and custody services.

Players like us who have been in other financial spaces for a long time have a lot of plumbing around these guards and other solutions that are needed in the medium term for crypto to grow. It is time for us to step into this space. Over time, this will likely lead to an influx of institutional money, allowing crypto assets and Bitcoin in particular to become much more mainstream.

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