Setl CEO: Dubious Crypto Transactions Will 'Run Afoul' of Regulators

Setl, which has garnered the likes of Citi, Deloitte, and Credit Agricole as shareholders, has built a platform that its CEO hopes will become the industry standard for financial institutions.

We spoke to Setl CEO Peter Randall about why he believes Setl is positioned to become the financial services industry's go-to platform.

'It’s like an automobile'

When we asked why Setl could be a contender when it comes to becoming the default network for the banking industry, Randall answered that he thinks “it’s because we approach things in a very industrial sort of way."

"I mean, we’ve got this capacity, we’ve got scale, we understand how to deliver it,” he added.

Randall explained that what it really comes down to is the fact that “we’ve done it before.” After founding Chi-X in 2006, a business that “fairly rapidly became the largest trading platform in Europe,” the business was eventually sold to CBOE for roughly $3.2 billion.

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“That’s not a bad return for those original investors,” Randall said. “So I think we’ve got a track record. We’ve got form, if you will, in being able to grow value.”

“We also approach it in a very proper way in terms of having the business logic--having the cryptographic primitives, and having a layer that’s able to deliver the sort of needs that the customer has. We call that our OpenCSD product. That’s the interface between the business, the industry, and the Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term.”

“It’s a little bit like an automobile,” Randall said. “How often do you look under the hood? Even if you do, it just looks like a big, sealed unit--there’s nothing to do. It’s a very similar idea: we’ve built an engine that goes very fast and does lots of things, and we’ve built the OpenCSD application that allows people to interact with it. We’ve built the wheels and the brakes and the heater and the radio as well.”

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— Streets Consulting (@StreetsConsult) March 20, 2018

Randall explained that the customers’ relationship with OpenCSD and the Setl chains is “wrapped up in a legal agreement… that says what the rules, benefits, and obligations are with each one of these participants,” which is particularly important when dealing with financial records.

Looking ahead: Setl in ten or twenty years from now

What role will Setl be playing after blockchain is no longer considered to be a new technology? “It’s very clear,” said Randall. “If you take a small- to medium-sized bank, and say it operates in five jurisdictions, and it offers five different products (ie lending, credit cards, securities, trade finance, and mortgages), effectively, each one of those jurisdictions will have its own chain, and each one of those products will have its own chain.”

Small business industries are ripe for #blockchain Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term https://t.co/xjcyNAeAe9 @payments_source https://t.co/UShxCZeeVx pic.twitter.com/yUbRswyO2L

— SETL.io (@setl_io) March 23, 2018

This means that in Randall’s vision, “even a small bank will have thirty or forty Setl chains. From our perspective (in terms of licensing), that’s a very attractive feature. If they want to talk to another bank, then they’ll have a chain to do that on, and so on and so forth.”

“I believe our ability to become integral to the post-trade environment across many different financial institutions, many different jurisdictions, and many different products, is very strong.”

When will banks start to take Blockchain seriously?

“One of the things that happens is that the incumbent big banks and big financial structures look at everything...and realize that there’s disruptive technology arriving and companies delivering it which frightens their existing business models, or that one of their competitors has adopted it, which means that their competitor’s cost base has gone down significantly. That fact will bring people in droves--it’s a really effective way of doing it.”

Randall explained that he doesn’t believe that the quickly changing regulatory landscape surrounding blockchain and cryptocurrency will have much of an effect on Setl. “From experience, regulators very, very, very rarely regulate systems,” he said.

“What regulators do (most times) is regulate the people that use systems. Now, because [we’re creating Setl for use within] the existing format, the people who will be operating it are already working in regulated businesses. So it’s unlikely that this is going to have too much of an impact on us.”

However, he doesn’t believe that other blockchain networks will escape the regulatory net scot-free. “It seems that a lot of the more dubious cryptocurrency transactions, however, will fall afoul of regulations. I think it’ll be interesting to see if some of their more outlandish and outrageous claims are supportable. I personally don’t believe that they are--but that’s just me, and I would say that, wouldn’t I?”