Editor's note: This article is compiled fromAmericanbanker. Translator: Suixin, produced by Odaily.

What will happen in a year.

Last year, after Lamborghini after Lamborghini appeared at Consensus New York (it was later discovered that the attendees rented it to "show off their wealth"), the price of Bitcoin dropped from $20,000 to $3,000 (although the price has been somewhat lower recently). recovery), and this year's Consensus Conference did not see expensive sports cars such as Lamborghini again.

Almost unanimously, experts and entrepreneurs alike mentioned the volatility of cryptocurrencies and the potential of the underlying technology (blockchain) at Consensus.

Eric Maskin, a Nobel laureate in economics who describes himself as a crypto skeptic, said, “It’s an open store of value, and I worry that we’re replacing government fiat currencies with private money.”

While bitcoin has taken a hit, experiments with blockchain and cryptocurrencies have seen more adoption among institutions and businesses, including Wall Street banks.

"When the market is in a downturn, we don't get scared; when the market goes up, we don't get too excited," said Paul Veradittakit, a partner at blockchain investment fund Pantera Capital. "Now individual and institutional investors are hoarding Digital currency, and what we want to do is to provide staking and lending services for the encrypted currency assets earned by investors.”

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what are the banks waiting for

Although some banksOptimistic about the blockchain, but many banks remain firmly on the sidelines. A key question is whether and when this will change.

Tom Glocer, lead director of Morgan Stanley's board of directors, executive chairman and co-founder of cybersecurity services company BlueVoyant, and capital markets technology startup Capitolis, believes that most banks do not seem to want to participate in blockchain until it becomes mainstream. This melee.

"For now, it's wise not to shift all your business to the blockchain because of efficiency, security, etc.," Glocer said. "It's better to do some controlled experiments."

Nadav Zafrir, chief executive of cybersecurity think tank Team8, said banks also had to consider some risks, such as the fact that blockchain presents new opportunities for hackers to exploit. He believes that as the world becomes more connected, hackers have the potential to topple longer dominoes.

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Will regulators join in?

However, it's not just a matter of wanting to or not.

Many U.S. banks are facing regulatory challenges that hinder them from launching blockchain projects.

For example, Lior Glass, head of blockchain at BNY Mellon, was researching blockchain use cases for home loans when he was stymied by state regulations requiring banks to hold paper copies of home loans.

There are still many questions about whether the application of blockchain can really improve the project.

“Blockchain technology has not disrupted banks yet,” said Oleg Abdrashitov, director of Russia’s PJSC Sberbank Blockchain Lab. “We won’t see new business models until we can tokenize securities and properly tokenize fiat. It Helps us reduce risk and reduce inefficiencies, but banking products are still traditional banking products.”

The solution, some say, will be for regulators to come on board, especially a central bank, to create their own stabilization mechanisms.

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Is the U.S. Regulatory Sandbox Working?

The financial technology sandbox is a popular tool for the global financial system to make cryptocurrencies and blockchain known to the market. But adopting such an approach in the U.S. is problematic given regulatory constraints.

"Sandboxes can be useful," said Hester Peirce, commissioner of the U.S. Securities and Exchange Commission (SEC), "but you don't want parents building sand castles in it. Usually you want children to figure things out on their own. Once there are regulators watching You, innovation is limited."

She said the U.S. needs a combined effort of multiple agency sandboxes, such as the Securities and Exchange Commission, the Federal Trade Commission and the Commodity Futures Trading Commission, to determine which parts of the technology each regulator should own.

It could be useful, Peirce added, if a company could negotiate with the sandbox and say, "Give us some grace we need to make it work, but also be completely transparent to you."

Rep. Tom Emmer, Republican of Minnesota, said that given the differences in encryption laws between the federal government and state governments, it may be necessary for Congress to introduce legislation, not to make it into law, but to popularize it to lawmakers.

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Are banks still necessary in a blockchain world?

Probably the biggest debate is, do banks still matter because of cryptocurrencies?

"For economists, one of the reasons we like encryption is that it brings you back to first principles," said David Yermack, dean of finance at New York University's Stern School of Business. not necessary."

But others argue that while a future without banks is possible in theory, it is not in practice. Eric Maskin stated that public currencies, if replaced by private currencies like cryptocurrencies, have the potential to interfere with the functioning of our economy, such as the process by which central banks limit the business cycle by adjusting the money supply.

“The idea that you can bypass the banks with cryptocurrencies sounds attractive, but the banks decide which startups are promising and which are not,” Maskin said. “If we disrupt the banking system, we are at risk.”

Crypto has not always met the historical economic standards of money, Yermack added, noting that few merchants accept it as payment, it can only process 7 transactions per second globally, and it cannot be used as a store of value because it is so unstable. Furthermore, he believes that economists cannot manipulate the cryptocurrency market as easily as they can manipulate the current financial system. There is no way for the government to incentivize competition so that monopolies do not arise.

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Who is responsible if something goes wrong with the blockchain?

If blockchains replace the current financial system, developers may face the same fiduciary responsibilities as banks.

That responsibility looks like a contentious industry debate. Some say it comes down to prioritizing the "duty of care" and the "duty of loyalty," with "the first objective being to do no harm, but the second objective being the best interest of the client.

“Do I want Zcash developers to focus on a protocol that makes Zcash holders rich? No,” said Peter Van Valkenburgh, director of research at Token Central and Zcash board member, describing the duty of care. “I want Zcash developers The best software can be built to protect financial privacy, but if it means the price of Zcash goes down, so be it.”

Responsibility for loyalty means developers will be accountable to stakeholders. However, there are many competing stakeholders in the blockchain, said Vlad Zamfir, an ethereum developer at the Ethereum Foundation, which includes token holders, miners and third parties.

Valkenburgh places the blame on loyalty or shareholder responsibility for the 2008 financial crisis. The highest bidder when Lehman Brothers went bankrupt was the U.S. government, which was considering the cost of economic collapse.

"The problem with institutional design is that if you impose accountability, it drives everyone away from participating in these activities, potentially killing activities that are good for society," he said.

But Angela Walch, a law professor at St. Mary's University School of Law, said the duty of loyalty may still matter if developers can put things into code that others don't know about.

I am Odaily reporter Wu Suixin (WeChat ID wsuixin12), please note your name, unit, title and reason when adding friends.

I am Odaily reporter Wu Suixin (WeChat ID wsuixin12), please note your name, unit, title and reason when adding friends.