The truth is that the vast majority of transactions involving cryptocurrencies are more traceable than cash, and even electronic transactions. You simply have to have the adequate tools and knowledge to use information provided by the blockchain. Understanding this information and how it works is one of the points on which we have worked the most.
Q: Are you planning to extend the service to private clients? And to other geographies?
A: We are analyzing the markets in which we have a presence to verify whether the appropriate conditions are met (regulation, maturity, knowledge, demand, etc.) to launch the service for individuals and institutions.
Q: En este nuevo servicio, su competencia principal son pequeñas ‘fintechs’ ¿Cuál es la ventaja que ofrece BBVA frente a estas ‘startups’?
A: Our product is targeted at private banking clients seeking to diversify into this type of asset. The biggest advantage from the standpoint of these client profiles is the integrated set of features we offer them for managing their traditional and digital portfolios, and that we are a bank with an international footprint, regulated and with more than 150 years of history.
Q: In Switzerland, the offering and popularity of this kind of product is greater. How did Switzerland turn into a hotbed for decentralized technologies and digital assets?
A: Switzerland has become one of the most advanced ecosystems in asset tokenization thanks to the support from authorities. From the beginning, Zug (a small town located 30km away from Zurich) attracted relevant business initiatives in the field of crypto assets. Today it is known worldwide as Crypto Valley and is one of the most important innovation hubs in the crypto-asset world, and is home to Ethereum, Tezos or Cardano, as well as many other companies in the ecosystem. Both the regulator (FINMA) and the Swiss government see this space as an opportunity for the country to position itself as an innovative financial hub in capital markets and support the arrival of companies and banks in this space.
Q: Do you think the rest of Europe should speed up their work on crypto asset regulation?
A: It is always advisable to move ahead as quickly as possible and with the required ambition to create a secure and competitive ecosystem with other geographies, to attract investment and talent. BBVA works with a global vocation and in the field of cryptocurrencies we have to keep up with regulatory progress.
As for Europe, a draft new regulation was released in October, the so-called Regulation of Markets in Crypto-assets (MiCA), which is beginning to sketch the regulatory lines for cryptocurrency service providers . This is very good news, because the level of demand for guarantees that it hints at is very high, and this is essential to build a safe market for all participants. We, as a regulated entity, will go hand in hand with that regulation.
In addition to the European regulator, many regulators are becoming aware of the importance to regulate digital assets. This movement is gaining traction globally.
Q: BBVA always talks about this service as a first step in gaining experience in digital asset management. What do you mean exactly? What kind of services are we talking about?
A: We believe that it is worth exploring the potential of asset tokenization as a significant innovation that could have a disruptive impact on capital markets and on security or data exchanges.
Blockchain technology enables the creation of unique digital assets that can be stored and transacted between individuals, which can be automatically scheduled and executed on a shared database that can be made publicly available to anyone. These are highly relevant features that could potentially have a dramatic impact on the way securities, which are already fully digital assets, are stored and traded. However, the concept is still in its infant stages, and many pending issues are still on the table: management of open databases, role of depositories, compensation of risk positions, etc.
Q: China, Japan, and Asia in general are already running a number of digital currency pilots. Even Europe has started analyzing the possibility of a digital euro. Do you think that all currencies will end up having a digital version that will compete with bitcoin, ether, etc.?
A: There are more than 50 central banks around the world conducting in-depth analyses about the need to usher in these new types of digital currency, their design and the implications for or impact on both the financial system and means of payment. Once these analyses are concluded, we will be able to see if it makes sense to create another digital version of each coin or not.
Q: To wrap things up, what ‘blockchain’ service or application do you expect to see sooner than later as part of banks’ service portfolios at street level?
A: There are already banks, mostly digital (‘neo banks’) or small-sized banks, that already allow their customers to invest in cryptocurrencies such as bitcoin or ether. Mid-sized and large banks could, as the aforementioned institutionalization drive solidifies, start adding these new types of assets to their offering.
In addition, in the field of the so-called private ‘blockchains’, some very relevant banks are already starting to offer transactional banking products (‘trade finance’, ‘cash management’, payments, KYC) powered by blockchain-based technologies to their customers.
As for the next step, if allowed by regulations and key players continue to invest in this technology, we might start offering tokenized products – such as bonds or stocks – to our customers in the coming years.