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  • user 12:19 am on September 18, 2017 Permalink | Reply
    Tags: ‘NoAction’, , , Letter, , Reassures, Upstart   

    CFPB Reassures Fintechs with ‘No-Action’ Letter for Upstart Network 

    Online lending service has received a “no-action” from the Consumer Financial Protection Bureau, the first such letter to be issued by the regulator, the announced yesterday. Upstart Network requested the &;no-action&; letter. Companies can apply for a no-action letter from the CFPB if they are launching a new financial product. The [&;]
    Bank Innovation

  • user 12:18 pm on April 7, 2017 Permalink | Reply
    Tags: , Letter, , ,   

    Ant Financial Sends Out Open Letter to Woo MoneyGram 

    Ant really, really wants to buy : just take a look at the it issued to the money transfer service this morning. As a leading digital payments company, Ant Financial&;s users are global and increasingly looking to transfer money around the world – which is what MoneyGram does best, the letter opens. [&;]
    Bank Innovation

  • user 12:19 am on November 14, 2016 Permalink | Reply
    Tags: Letter, ,   

    A Letter to President Trump 

    Dear Donald, I am writing you this because I love our country and, despite your hateful rhetoric, I suspect that you do as well. Since I doubt you do much reading other than fanzines about yourself, I don&;t expect you to read this or the many other unflattering (but true) posts I&8217;ve written about [&;]
    Bank Innovation

  • user 12:18 pm on July 10, 2016 Permalink | Reply
    Tags: , Letter, , ,   

    Open Letter to the OCC: Make Real Innovation Possible 

    A trifling blogger on banking writes to the Office of the Comptroller of the Currency, despite its historically apathetic view on such matters.
    Bank Innovation

  • user 12:18 pm on July 10, 2016 Permalink | Reply
    Tags: , Letter, , ,   

    Open Letter to the OCC: Make Real Innovation Possible 

    A trifling blogger on banking writes to the Office of the Comptroller of the Currency, despite its historically apathetic view on such matters.
    Bank Innovation

  • user 10:54 pm on May 9, 2016 Permalink | Reply
    Tags: , , , , Letter, , ,   

    Open Letter: Open Standards & Consensus Ledgers 

    The history of how have developed in the Western World is a valuable source of information for the future of Ledger ( tech for most everyone else, I know I am stubborn and contrarian). I have previously written on my blog about the necessity of open standards in the crypto space and am doubling down with this open which is a cry to arms.

    Engineers of all stripes &; mechanical, electrical, chemical&; &8211; got together in the United States and the UK to create open standards in the 19th century. They tinkered, tested different paths and settled on a consensus method out of which the current organizations in charge of creating and managing standards emerged.

    There are roughly four methods to create open standards. Two of them are hierarchical and fiat driven, one is market driven and the last one is a hybrid.

    The first two methods are a) legislative and b) regulatory driven. These bodies are administrative and bureaucratic, highly hierarchical and deliver mandates for the creating of open standards. The results are usually poor and sub-optimal. The third method is purely market driven &8211; let the best market participant win, develop its IP and create standards &8211; and produces equally non-optimal results. One of the best examples of a market driven approach is the market dominance Western Union reached in the 19th century around the intellectual property it built and managed in early telecommunications and finance. The result limited competition and innovation until new organizations took wrestled the mantle of open standards for themselves and cooperated to create a more level playing field.

    The fourth method is a hybrid method that incorporates market and hierarchical vectors. This hybrid method is governed by a neutral body that drives towards consensus by involving all market participants while developing clear rules that all abide by.

    The key to success for a hybrid method are:

    1) Involve as large a network of stakeholders as possible

    2) Create a set of transparent rules and a framework to develop, manage and govern open standards so that no one party can distort and control the process

    3) Ensure that open standards are grounded, leverage the new technology, and deliver value to all professionals in a given field.

    4) Sustain involvement from industry participants through open collaboration going forward so that open standards and the body that manages and governs them is a living entity.

    Not developing open standards or developing sub-standard open standards has its downside. the absence of widely approved and appropriate system architectures means lack of interoperability, waste and duplicative efforts and eventually material delays in the widespread acceptance and use of a new technology.

    I posit that consensus ledger tech is at an inflection point. Get open standards right and this new technology will see accelerated adoption sooner than most thought leaders predicted. Miss the opportunity and we may experience disappointment for a while. This is especially important as consensus tech can and will be applied and used by more than one industry and for many use cases, and because each industry is the sum total of specific properties such as regulation, legal frameworks and business processes that have evolved specialized work flows and processes over time &8211; none more so than the financial services industry.

    To be more specific, any industry or business models that incorporates use cases that can benefit from peer to peer platforms, disintermediation, some level of de-centralization, transactional and data transparency, is poised to benefit from consensus ledgers. This means the capital markets, insurance and payments sectors within the financial services, marketplaces within the retail industry, social networks, media &8211; social and traditional &8211; higher education, data management in general &8211; data monetization and identity management &8211; to name but a few, are poised to benefit from consensus ledgers.

    Therefore, the wide adoption of consensus ledger tech is a function triangulating between and optimizing for regulatory concerns, existing legal frameworks, existing standards &8211; as developed for data, data handling, data messaging, data taxonomy &8211; and existing software and hardware engineering practices/standards, existing operating systems and existing industry needs ACROSS heterogenous industries. (One also needs to take into account existing payments systems and practices given and how these may interact with consensus ledgers.) Further, the development of open standards will invariably have an impact, through feedback loop mechanisms, on current and accepted ways of doing business as well as how these accepted ways are regulated and legally bounded.

    Additionally, and to add complexity to the mix, we are dealing with three competing stacks already and the inevitable interoperability issues that raises: a) ethereum, b) and c) ripple/stellar. This makes it even more crucial to arrive at agreeable top level open standards and avoid balkanization to the extent these stacks will co-exist, users may favor one or the other for specific use cases or more than one in other use cases.

    For these reasons, I strongly believe the hybrid path outlined above is the only optimal path. This path ensures a neutral body is empowered to develop and govern standards applicable to meta issues around consensus ledger tech stacks and interoperability. This does not mean such a body would rule over business logic, i.e. smart contracts, which industry incumbents and service providers would be free to collaborate or compete on depending on appropriateness and strategic goals.

    I note various entities have already raised their hands to tackle open standards &8211; for-profit organizations as well as not-for-profit organizations &8211; none of which, to my knowledge, have deep knowledge with managing open standards. I am outlining below who should, in my opinion, be asked to help with open standards for consensus ledgers as well as various paths to the creation of a new standards body.

    I see three options for the hybrid path. Either through the creation of a new ad hoc body or via an existing organization.

    As for the first option, we can use the example of the Internet Engineering Task Force, IETF, see here which was created in 1986 for the sole purpose of promoting voluntary internet standards. One could envisage a new task force, a truly independent one, without any ulterior commercial motives, to be created  with the participating of various stakeholders across industries and manned by professionals hired out of existing standards bodies. A very viable option in my opinion.

    As for the second option, it would be a derivative of the first one. The only difference being that a for profit organization would volunteer to seed such a body and allow itself to remain neutral and promote a truly open governance framework.

    As for the third option, I see only a handful of candidates that would be truly neutral, global and bring a breadth and depth of expertise in the field of standards creation, management and governance that all industry stakeholders would have no material objections. These are a) the Institute of Electrical and Electronics Engineers, IEEE, see here, which is a neutral and global body and has in its midst many software engineers and computer scientists; b) the International Organization for Standardization, ISO, see here, and the International Electrotechnical Commission, IEC, see here, which both have joined forces and created a joint commission, the ISO/IEC JTC 1 tasked with developing and managing standards in Information Technology, see here.

    As an aside, I believe bodies such as the International Organization of Securities Commissions, IOSO, see here, FpML see here, the Financial Industry Business Ontology, FIBO, created by the Enterprise Data Management Council, see here, have a role to play. I am sure other similar bodies in the payments or insurance sectors and outside of the financial services industry would be appropriate value add actors.

    My wish is for at least one of either IEEE, ISO or IEC to get involved with consensus ledger technology, or for a for-profit organization to create ad hoc framework with a neutral governance process to step forward. The latter would only be effective at a sector level, i.e. insurance or capital markets for example, thusly we may miss the opportunity to unify standards pan industry which may have negative implications from an interoperability point of view. Would the latter be such a suboptimal path I wonder? Practicality needs to be taken into account obviously and aspirations to boil oceans from the onset usually amount to little in the long run.

    Finally, the creation of open standards will also usher the material benefit of allowing the emergence of new tech stacks and/or facilitate the strengthening of existing ones (ethereum, ripple/stellar, bitcoin).

    Have I missed anything?


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