Event Highlights: Bloomberg Financial Innovation Summit – November 4-5, 2021 – Day 2

Event Highlights

Bloomberg Financial Innovation Summit – Day 1

By Bloomberg Live

While FUD (fear, uncertainty, doubt) continues to dominate headlines — Is there another crypto crash coming? How will ESG, China’s crackdown on tech and El Salvador’s crypto gamble impact the industry going forward? Is the industry trying to reduce its environmental footprint? The truth is that this rapidly-maturing industry is showing no signs of slowing. We’ll talk with top experts about what we can expect to see next in the digital currency space.

Click HERE to view the video of the full discussion.

Speakers included:

Sarah Al-Dorani, Chief Communication Officer, QFC
Yoni Assia, Co-founder and CEO, eToro
Cynthia Bahati, Artist, Web3 Educator, Advisor, My Social Canvas
Sam Bankman-Fried, Founder and CEO, FTX
Philip Belamant, Founder and CEO, Zilch
Ria Bhutoria, Principal, Castle Island Ventures
BLOND:ISH
Nic Carter, General Partner, Castle Island Ventures and Co-founder, Coin Metrics
Marguerite DeCourcelle, CEO, Blockade Games
Meltem Demirors, Chief Strategy Officer, CoinShares
John Duigenan, Global CTO, VP, and Distinguished Engineer, Banking and Financial Services, IBM
Tonya Evans, Professor, Penn State Dickinson Law School
David Frazee, Managing Partner, Richmond Global Ventures, Board Member, Chia Network
Tim Gokey, CEO, Broadridge
Gene Hoffman, Chief Operating Officer and President, Chia Network
Henk Jan Hoogendoorn, Chief of Financial Sector Office, QFC
Micah Johnson, Artist and Creator of Aku
Jeff Jones, CEO, H&R Block
Stani Kulechov, Founder and CEO, Aave
Max Levchin, Founder & CEO, Affirm
Sarah Levy, CEO, Betterment
Joe Lichtenberg, Director of Product and Industry Marketing, InterSystems
Caitlin Long, Founder & CEO, Avanti Bank & Trust
Lisa Mayer, Co-founder, Boss Beauties, Co-founder and CEO, My Social Canvas
Ryan McCormack, Factor & Core Equity ETF Strategist, Invesco
Nate McKervey, Head of Blockchain and DLT, Splunk
Paul Murphy, Partner, Lightspeed Venture Partners
Erikan Obotetukudo, Founder and Managing Partner, Audacity
Anna Paglia, Global Head of ETFs & Indexed Strategies, Invesco
Commissioner Hester M. Peirce, United States Securities and Exchange Commission
Zac Prince, Founder and CEO, BlockFi
RAC
Yorke Rhoades, Director Digital Transformation, Blockchain, Cloud Supply Chain, Microsoft
David Ripley, COO, Kraken
Camila Russo, Founder, The Defiant
Michael Saylor, Chairman and CEO, MicroStrategy, Inc.
Elizabeth Stark, CEO and Co-founder, Lightning Labs
Marcus Swanepoel, Co-founder and CEO, Luno
Dmitry Tokarev, CEO, Copper.co
Leah Wald, CEO, Valkyrie Investments
Anatoly Yakovenko, CEO, Solana Labs

Bloomberg Participants:

Eric Balchunas, Senior ETF Analyst, Bloomberg Intelligence
Sonali Basak, Financial Correspondent, Bloomberg
Romaine Bostick, Anchor, Bloomberg Television
Dani Burger, Anchor, Bloomberg TV and Radio
Akayla Gardner, Reporter Bloomberg News
Katie Greifeld, Anchor, Bloomberg Quicktake
Caroline Hyde, Anchor, Bloomberg Television
Ivan Levingston, Reporter, Bloomberg
Stacy-Marie Ishmael, Managing Editor, Bloomberg Crypto
Carol Massar, Anchor, Bloomberg Television and Radio
Mike McGlone, Senior Analyst, Commodities and Cryptocurrencies, Bloomberg Intelligence
Matt Miller, Anchor, Bloomberg Television
Joanna Ossinger, Global Markets Editor, Bloomberg News
Anurag Rana, Senior Analyst, Software and IT Services, Bloomberg Intelligence
Taylor Riggs, Anchor, Bloomberg Television
James Seyffart, ETF Analyst, Bloomberg Intelligence
Alix Steel, Anchor, Bloomberg Television
Tim Stenovec, Anchor, Bloomberg Quicktake
Joe Weisenthal, Executive Editor for News, Bloomberg Digital
Renita Young, Anchor, Bloomberg Quicktake

Event Highlights

Buy Now, Pay Later: In Conversation With Philip Belamant

Being present to customers as an all-encompassing product is what BNPL is all about, said Philip Belamant, Founder and CEO, Zilch, as well as how they can compete against traditional players. Disruption is apparent in going from zero to 7.1 million customers in just 13 months. “Penetration is only 4-percent. We have a lot of runway ahead of us.”

Those customers are primarily people looking for pay platforms as money management tools, not because they can’t afford what they buy, Belamant said, and in three months, tap-to-pay hit 35-percent of their underlying sales.

Confidence in BNPL comes from experience, according to Belamant. “It’s a bit naive to think that these companies are being run by a bunch of 20-year-olds that have never seen [a financial downturn] play out. There’s definitely a huge amount of sophistication in these companies and their leadership.”

Investing in Europe; In Conversation With Paul Murphy

Paul Murphy, Partner, Lightspeed Venture Partners, talked about Lightspeed already having a presence in Europe, and the value in having teams there to form more personal relationships and discover the talent within the “explosion of phenomenal companies.”

One of the more interesting ventures is micromobility, which already has a foothold in Europe, with infrastructure and the “desire by governments to move away from diesel, primarily diesel cars, that are literally killing people on the streets.” Lightspeed has invested in TIER Mobility AG. Murphy said cryptocurrency will be an enabling force.

Building a Better Block: In Conversation with Jeff Jones

Jeff Jones, CEO, H&R Block, spoke about keeping up with customer needs and the next transformational phase with new products and services. Block Money will launch early in the new year as the company moves further into the fintech space, following its reloadable Emerald Card, all part of its Block Horizons 2025 strategy. H&R Block was a federally-chartered bank for about a decade, until divesting in 2015, Jones noted. Now, the focus is on financial inclusion. “I saw a federal report that was out over the summer,” he said. “It mentioned 18 percent of the U.S. population is unbanked, or underbanked.”

Invesco QQQ Sponsor Spotlight: Global Digital Transformation

Anna Paglia, Global Head of ETFs & Indexed Strategies, Invesco, talked about

how her company has strengthened its already deep relationship with Nasdaq, as the only domestic asset manager that directly tracks the 100 Index. “We have expanded into new and exciting relationships like the digital asset Council of Financial Professionals,” Paglia said, “and perhaps most notably, being the official asset manager of the NCAA and Q2Q.”

Quantifying that, Ryan McCormack, Factor & Core Equity ETF Strategist, Invesco, said that in a one-year period, ending May 31, 2021, they found significant patent activity across digital assets and some related themes, including 10 companies filing at least one patent relating to digital currency.

Will Chia Change the World?

When Chia, now the largest public blockchain, started four years ago, it was with a disciplined approach in order to address the real problems, such as the bedlam that has accompanied Bitcoin development, said Gene Hoffman, Chief Operating Officer and President, Chia Network. Now, Chia is focusing well ahead. “A lot of the current block chains have certain deficiencies that make it hard for national governments, multinational institutions, corporations, and others to adopt it. So Chia, was essentially designed asking the question, ‘What would Bitcoin look like if we could redesign it today and what will be necessary in 20 years to protect the economy?’ It’s the rails of the new economy,” Hoffman said.

It’s the new table stakes, said David Frazee, Managing Partner, Richmond Global Ventures, Board Member, Chia Network. “Everyone will have to do at least this.”

When it comes to sustainability, Hoffman noted it takes the equivalent of 28 Hoover Dams, annually, to run Bitcoin. Right now, Chia needs only one-sixth of a dam.

The Card: In Conversation With Zac Prince

When he started in 2017, it was clear cryptocurrency would become mainstream, said Zac Prince, Founder and CEO, BlockFi. “We were the first company to do loans using Bitcoin as collateral.” BlockFi’s hit $65 million in revenue last year and is on track to reach $475 million in 2021, and has since introduced interest-earning accounts. The company’s users are a mix of crypto enthusiasts and the “crypto curious.” The typical customer spends about $5,000 per month, paying it off in the same month, translating to use as a cash flow tool. BlockFi’s wealth management platform often takes users from those credit cards and savings accounts into investing and loans. Prince also talked about their new partnership with Neuberger Berman.

In Conversation with Sam Bankman-Fried

Considering what a regulation regime is looking like for crypto, Sam Bankman-Fried, Founder and CEO, FTX, said one piece is still missing: assuring they are backed by the assets they claim to have. “It’s lacking clarity. We need things like audits and guidelines about what those assets can be. I’m not sure where you draw the line so it doesn’t slide down into really risky areas.”

Bankman-Fried spoke about gaming-to-earn, crypto gaming, and how it can create a more liquid marketplace. “I think you’re going to see a really big difference between crypto companies trying to make a game and gaming companies trying to introduce crypto,” he said, “Almost every major game studio is working on this.”

Redefining the Creator Economy

There is a lot of excitement in the creator economy, said Meltem Demirors, Chief Strategy Officer, CoinShares, in introducing two innovators standing squarely in the intersection of finance and culture, with digital assets such as NFTs being launched on all sorts of blockchain networks.

The New Creative Economy

Marguerite DeCourcelle, CEO, Blockade Games, spoke about her personal brand, Coin Artist, gamified paintings with hidden Bitcoin keys, online digital treasure hunts and putting NFTs into gamers’ hands on her Neon District application. Located in New York, she has noticed the demand for in-person experiences, too, and said the future should include consideration of combining them to a greater extent. At Demirors’ urging, she told the story of her niece selling $60,000 worth of Plasma Bears.

Micah Johnson, Artist and Creator of Aku, started selling his paintings when he played pro baseball. Not so much when the jersey was off, he said. He took a deep dive into the digital art world, building financial capital around the Aku story; a brand with significant success, he said. “My goal is for artists to be able to maintain their brands,” Johnson said, “and to drive value back to the creator community.” His advice to creators is to look for a core identity that will stand the test of time.

From Creator to Owner: How Next-Gen Artists are Building Empires

Both DJs, computer scientists and crypto investors, BLOND:ISH and RAC sat down with Meltem Demirors, Chief Strategy Officer, CoinShares, to talk about the changing business model in the music industry.

“Culture has always been a viable form of currency,” Demirors said. “But we haven’t been able to tap into it.”

“Now you can align that value as a token,” said BLOND:ISH.

For RAC, the focus is on creating an ecosystem without all the distribution layers that eat up profits. Fans appreciate the closer interaction, he added.

Platforms like Spotify, RAC said, pay artists only about $4,000 per million plays. “It’s quite a challenge to make a decent living that way,” he said. “What’s going on now is a leveling of the playing field.” He created his own social tokens and experimented with a uniswap pool for what became the “world’s most expensive” cassette tape, and the surprise outcome of most tokens going unredeemed.

BLOND:ISH, who is also an environmental activist, said her goal is to lead humanity to freedom, abundance and happiness, and has also moved to social tokens.“Art and finance are colliding, and we’re at the center of it,” BLOND:ISH said.

QFC Sponsor Spotlight: Qatar’s Financial Ecosystem

An incubator program and teamwork, a national technology plan and special licensing to make it easier for the financial sector are all helping Qatar through its remarkable phase as one of the world’s fastest-growing economies, according to Henk Jan Hoogendoorn, Chief of Financial Sector Office, QFC. Naturally paralleling that is the insurance sector. “We differ from other regions because our banks are behind on technology, but we’re working on it,” Hoogendoorn said.

Sarah Al-Dorani, Chief Communication Officer, QFC, said the growth of Qatar’s financial industry is acting as a catalyst for financial innovation that is attracting other businesses to the region.

In Conversation With Max Levchin

Max Levchin, Founder & CEO, Affirm, the BNPL industry leader, addressed the simple but dramatic differences between Affirm and other lines of credit, summarizing it as “not based on the model of making a living on late fees and high interest,” and stating that Affirm has not charged a single penny of fees.

Levchin spoke about how Affirm is capturing worthy consumers denied by the traditional industry, or who are part of the wave of those intentionally avoiding credit cards, as well as looking for transparent and honest wealth management products that go beyond payment platforms. He called the behind-the-tech differences a “collection of new features they continually mine for,” a two-sided network and staying strictly within regulations. Affirm recently added savings accounts, and announced its entry into the crypto space. Levchin said their approach will avoid Bitcoin’s volatility.

Banking on the Future: In Conversation With John Duigenan

Overcoming obsolete core systems and meeting escalating demands of digital transformation can be accomplished by moving operations to the cloud. “Think of it more as a way of working than as a location,” said John Duigenan, Global CTO, VP, and Distinguished Engineer, Banking and Financial Services, IBM.

More specifically, a hybrid cloud also offers an affordable alternative to “rip and replace,” which Duigenan said comes down to “spending a lot of money just to stand still.” It also addresses security concerns. Two fascinating findings from IBM’s latest threat intelligence report show malware and system misconfigurations are “everywhere,” Duigenan said, adding, “In every single penetration test with clients lately, we found configuration errors that put data at risk.”

The shift started as a tidal wave in consumer banking, he said, and while interest is high across the board, action is mainly experimental, with less than five-percent in finance with projects in progress.

How Can Cryptocurrency Build Black Wealth

Panelists explored racial disparities in the U.S. and globally and discussed the opportunities for people of color to bypass the institutional banking system, whom many mistrust.

Akayla Gardner, Reporter, Bloomberg News, said black Americans are more likely than whites to hold crypto because they are willing to take on the risk, and because they are becoming educated about it through an online exchange of information. As well, the creator community is providing the power to move projects forward without conventional funding.

Qualifying an analysis of the crypto culture, Erikan Obotetukudo, Founder and Managing Partner, Audacity, noted it is still mostly populated by independently wealthy, white males, under 40.

It’s a mindshift, said Tonya Evans, Professor, Penn State Dickinson Law School, who also offered a well-versed explanation of decentralized finance. “People are starting to lean into the possibilities in crypto and the defi space,” she said.

Fractionalized asset ownerships of NFTs and creating an economy around an idea – being a founder or investor – as opposed to a consumer, are ways to invest beyond crypto, according to Obotetukudo. She spoke also to emerging markets, particularly in Africa, that are skipping over the 400-year institutional financial development in America. “Their wallet on their cell phone has become their bank,” Obotetukudo said, calling it a moment in history and an incredible opportunity for people to become part of a new, fundamental infrastructure across the continent.

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