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Blockchain technology has been gaining traction in recent years, with many financial institutions exploring its potential applications. Discover how blockchain technology can be leveraged to drive innovation and efficiency in a rapidly evolving landscape.
FTSI hosted a live panel to learn about the latest trends, regulation and compliance, and emerging real-world use cases of blockchain in the banking space.
Our expert speakers included Becky Reed, CEO of Lone Star Credit Union, and Eric Guthrie, Esq., blockchain attorney and Partner at The Cogent Law Group. Along with Travis Hoban, Chief Technology Officer at FTSI, this live panel covered how blockchain can improve the efficiency, transparency, and security of financial transactions, and its potential for transforming services including payment systems, lending, and asset tokenization.
Now available on demand: Watch the full panel here
Lone Star Credit Union’s Journey with Crypto
Becky's journey began in 2014 when she joined Lone Star Credit Union, recognizing the network structure issues that hindered operational efficiency. Despite being a mid-sized credit union with limited resources, she envisioned a future where the institution embraced cloud technology and decentralized networks. This vision led to the successful transition to a private cloud infrastructure with the assistance a credit union service provider.
Her fascination with blockchain technology grew as she delved into the concept of distributed networks. She saw parallels between the decentralized nature of credit unions and blockchain's potential to revolutionize the finance industry. Her belief in decentralized finance (DeFi) as the future of finance reinforced her commitment to explore blockchain's possibilities.
Becky discussed Bank Social, a nonprofit organization focused on educating credit unions and regulators about blockchain technology. The organization aims to bridge the gap between credit unions and blockchain through educational initiatives. Her collaboration with Bank Social led to the launch of Bank Social's crypto exchange for Lone Star Credit Union members in August 2022. This exchange offered members a trusted and secure platform to buy and own cryptocurrencies.
Education played a crucial role in Lone Star Credit Union's approach to blockchain and crypto adoption. Becky emphasized the importance of educating staff, board members, and members themselves. By providing educational materials and resources, the credit union empowered its members to make informed decisions regarding cryptocurrencies. Their marketing efforts focused on the educational aspect, ensuring members understood the technology and its implications.
The response from Lone Star Credit Union members was overwhelmingly positive, with a significant adoption rate observed during the exchange's rollout. Members appreciated the credit union's dedication to their financial wellbeing and the provision of a reputable platform to engage with cryptocurrencies. Their emphasis on education and risk mitigation resonated with members, promoting responsible crypto usage.
Insights from a Blockchain Attorney
Eric, a blockchain attorney, shared his journey into the world of cryptocurrencies which all started during a conversation with an Uber driver back in 2015 who had purchased Bitcoin for gaming purposes. The driver made a profit when the price rose to $50 per coin and decided to sell for a profit.
At that time, Eric didn't pay much attention to Bitcoin, considering it as a temporary trend. However, in 2017 when the topic resurfaced, Eric delved deep into researching Bitcoin and blockchain technology, eventually writing his first book on the subject. He realized the potential of blockchain beyond investments and decided to incorporate the technology into his legal practice.
Eric explained that blockchain intersects with various areas of law, such as banking, securities, commodities, patents, trademarks, and copyrights. To effectively represent clients in this space, lawyers must comprehend both the technology and legal intricacies. Eric's experience led him to join The Cogent Law Group, becoming one of the first attorneys with expertise in both blockchain and law. They have since built a substantial fintech practice serving clients globally.
Read more about blockchain technology in Eric’s new book, Blockchain or Die: Learn to Profit from Cryptocurrencies and Blockchains.
The Regulatory and Compliancy Landscape
Eric dismisses the notion that initial coin offerings (ICOs) are “dead” due to regulatory clampdowns. He highlighted the importance of adhering to regulations and not attempting to circumvent them. Eric advised that compliance is crucial, as it builds trust with investors and enhances a company's credibility. He emphasizes that embracing regulatory processes can be an advantage rather than a hindrance.
Becky explained additional use cases for blockchain beyond cryptocurrencies, clarifying that when referring to "crypto," she means the entire cryptographic ecosystem underlying the blockchain, not just cryptocurrencies themselves. Becky mentioned smart contracts as a significant development, where code is executed automatically on the blockchain. An example would be utilizing stable coins wrapped in smart contracts for car loan transactions. This automation streamlines processes, enhances transparency, and simplifies complex procedures involving car titles.
Eric emphasized the importance of understanding the industry before venturing into blockchain. He suggests conducting thorough research, seeking expert advice, and hiring professionals with relevant experience. His recent collaboration with a successful beverage entrepreneur led them to integrate cryptocurrency into the beverage industry. The extensive work on the project includes writing a precise white paper and business plan, which will be used for investor pitches and regulatory compliance.
Overall, our live panel provided insights on blockchain and crypto technology from two different lenses; a blockchain attorney and a credit union CEO. Their expertise and knowledge contribute to the growing understanding of blockchain's potential and its intersection with the legal and financial sectors.
Schedule a discovery call with Travis to find out if blockchain and crypto technology could be the right move for your financial institution.