Regulation, Stablecoins, CBDCs and the Everest Platform
CBDCs, stablecoins, regulations are the talk of the town lately, and I’m overdue in addressing how Everest fits into this unfolding landscape. I’ve found that Ian Bremmer’s paradigm of Nation states, Globalists and Utopians is a good lens from which to consider how Everest shapes the future, with whom its partnerships are struck, and how best it allocates resources. Bremmer’s description of the current state of affairs and his economic paradigm are encapsulated in this long but insightful article: https://www.foreignaffairs.com/articles/world/2021-10-19/ian-bremmer-big-tech-global-order
Many of you know that the Everest platform is a full-featured, end-to-end solution that could supply a CBDC solution integrated with privacy-protecting identity, account-based eGov, and two-tier commercial banking (retail and wholesale) — not to mention the numerous Dapps that could benefit from this “atomic layer” including health, education, international development, voting etc. That said, supplying Nation states’ central banks with a software platform is nice for press releases, but typically (a) does not yield recurring, profitable revenue, (b) takes years to implement, and © ultimately fails to achieve the goals of a more open, transparent, decentralized, user-centric society. In 2019–20, Everest worked with a few central banks, governments and associated entities that make up the post-WWII, USD-denominated world order that brought about Web2 — the framework which manifests the current dominant set of rules. And let’s be honest with each other about CBDCs being implemented at scale outside of China with any kind of speed — all the commercial banks in a nation would need to know account balances, names/identities/credentials, transaction history, transaction volume, velocity of transactions and more — and report all that information in a uniform manner to a central bank. Now, think about a large European commercial bank that has 10 different core banking systems, in four different countries, with different reporting, exporting, data formats, etc. It is currently impossible for commercial banks to supply the requisite information, much less in real time, to facilitate a central bank to make decisions about how to run a CBDC, let alone implement a single, unified platform that all commercial banks adhere to. We’re talking at least a decade for design, planning, interagency coordination, piloting and implementing to scale. And this is assuming some entity could actually get all stakeholders to agree.
As much as Everest enjoyed working with many of the brightest minds and most dedicated people who sincerely felt they were solving humankind’s biggest problems, at the end of the day, most still wanted 100% control and oversight over the data and processes involved. Put in simple terms, the Nation state led system typically means the revenue usually isn’t worth the hassle. As much as we may wish for decentralization, governments want to run the nodes, own the software, and to manage user actions and activities. Despite this reality, I still have hope that there is a public/private partnership within which nation states evolve into allowing more self-sovereignty for users, and I expect Everest will partner with nation states on these kinds of terms.
The Utopians on the other hand, espousing lofty goals of total anonymity, complete decentralization, currencies based on fancy, unproven algorithms or non-audited reserves who are approaching existing governance rules (aka: laws) as not applicable to them, usually forget that (a) there is an existing power structure that isn’t going away anytime soon, and (b) there are valid reasons why we, as a collective society, need to know people are not funding terrorists, not paying taxes, trading with money launderers, etc. So, while Everest agrees with many of the Utopian ideas, specifically about user privacy, managing and rightsizing unilateral power structures, higher degrees of decentralization, etc., Utopian tactics to achieve these goals are tantamount to storming the castle. A very big castle with jails, fines, guns, and pain. Bottom line is that these tactics and mentality won’t get us to the promised land of greater user sovereignty.
This leaves us with the Globalists, who, per Bremmer, are increasingly building digital “nations”. Everest’s infrastructure empowers new, digital nations and its organizations, where users are in control of their data, and transact on their terms. Circling back to CBDCs, stablecoins and regulations, positioning Everest in the Globalist camp seems to be the most sensible way to achieve the future we all desire. That is, a CBDC with the central bank controlling all the nodes is effectively a real-time gross settlement payment system, and begs the question of “why blockchain?” On the other hand, a Utopian position of algorithmic or similar stablecoin without identity verification simply isn’t viable in the existing environment, and doesn’t scale for a complex economy or society. Partnering with credit unions, payment companies, and financial institutions positions Everest as THE way to bring millions of users into Web3. And we do it without storming the castle, and without handing over user sovereignty — all the while bringing tangible added value to the end user
Given Secretary Powell’s recent comments allowing privately issued (but regulated) stablecoins, existing EMI and VFA laws in Europe, and 99% of CBDCs going with a two-tier banking approach, Everest is well positioned to thrive in the coming environment. Looking at the paradigm Bremmer lays out, the Nation-state dominant scenario is less likely to occur (a war would need to start for this to come to pass). The Utopian vision, as we’ve seen, ain’t gonna happen on the existing watch. Leaving the Globalist position (a negotiated compromise with existing power structures), as the most viable option to bend the future to justice.
