Opinion: The Global Financial System Awaits Tokenization in Crypto and Banking
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This article is Part Two of a three-part interview series with William Quigley, a prominent cryptocurrency and blockchain investor and co-founder of WAX and Tether. The interview, conducted by Selva Ozelli exclusively for crypto.news, covers various topics related to cryptocurrency, banking, and the future of NFTs. Part One focuses on the prison sentences of Sam Bankman-Fried and Changpeng Zhao.
In the first part of the interview, Quigley mentioned his background as a former bank auditor at Andersen. In relation to this, he was asked about his thoughts on tokenizing the banking system. Quigley briefly summarized his perspective, stating that money and payments have constantly evolved throughout history, transitioning from digitization to tokenization. He highlighted the potential transformative impact of tokenization on various aspects of the financial system, such as ownership of assets, international payment processing, and transaction verification. Quigley also referred to Coincub’s Crypto Banking Report, which explores the active exploration of asset tokenization by financial institutions worldwide.
Tokenization offers several advantages, including programmability, instant settlement, atomic settlement, and the immutability of shared ledgers. These features can enhance liquidity management, speed up settlements, reduce risk, and improve transparency and accountability. Quigley acknowledged that challenges and risks exist in tokenizing the banking industry, citing the example of the fall of cryptocurrency exchange FTX and its subsequent impact on the market and banking sector. He also raised questions regarding the establishment of unified, interoperable ledgers, cybersecurity measures, legal and regulatory frameworks, and cross-border asset ownership.
In the second part of the interview, Quigley provided insights into Tether, the first-ever fiat-backed stablecoin that he co-founded. Tether, launched in 2014 by Tether Limited Inc., is backed by traditional currencies like the US dollar, euro, and Chinese yuan. It aims to minimize the volatility associated with digital assets. Quigley mentioned Tether’s position as the largest cryptocurrency in terms of trading volume and its role as a hedge against volatility. However, he acknowledged the risks associated with any investment and emphasized Tether’s efforts to maintain transparency and regulatory compliance.
The interview also addressed the issue of illicit transactions involving Tether. Quigley acknowledged that Tether has been linked to illicit activities but highlighted the company’s cooperation with law enforcement and regulatory agencies. Tether has implemented measures such as a voluntary wallet-freezing policy and partnership with blockchain surveillance company Chainalysis to monitor transactions and identify potential risks.
In conclusion, Quigley expressed his optimism about the future of blockchain technology and the ongoing efforts of financial institutions, developers, regulators, and other stakeholders in addressing the challenges and risks associated with tokenization. He emphasized the importance of global standards in areas such as money laundering and taxation and highlighted the role of organizations like the Financial Action Task Force and the Organization for Economic Co-operation and Development in establishing these standards.
