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AlexanderCarmichael

As part of the Digital Currency Council’s Continuing Education partnership with Inside Bitcoins, the DCC’s VP, Sarah Martin, had the opportunity to interview the thought leaders that will be speaking at the Inside Bitcoins Conference in Hong Kong on May 14-15, 2015. Today, we share an interview with Alex Carmichael, the Managing Director of Promontory’s Singapore office.

Sarah: Tell us about how you got interested in Bitcoin and digital currencies.

Alex: The interaction of technology and finance has long been of interest to me. Before joining Promontory I spent 7 years at RiskMetrics Group where our objective was to use technology to bring transparency to financial markets. We believed that transparency was the antidote to complexity (i.e. risk) and I see the development of Bitcoin and other digital currencies as following a similar philosophy.

Sarah: What are some of the chief issues on your radar at Promontory with respect to Bitcoin and digital currencies?

Alex: Promontory believes that sustainable solutions are those that benefit both the individual company as well as the economy more broadly. A solution that only addresses a short term need will ultimately unravel as other market participants react and rules change. Finding a sustainable way to integrate digital currencies into the traditional banking system is a primary goal for us. We are finding that the overall level of understanding of digital currencies within traditional banking organizations is low, and that is impeding the acceptance of this new technology. The lack of concrete regulatory guidance about the treatment of digital currencies in many Asian jurisdictions is another factor that is creating uncertainty and a natural reluctance to take risk.

Sarah: Are you focused on digital currency risk and compliance issues primarily in Singapore, or are you coordinating with your offices worldwide for a more global view on blockchain technology?

Alex: Our San Francisco office has been working with dozens of digital currency clients for several years but it has only been in the past 6-9 months that we have started to see meaningful digital currency engagements in the Asian region. The modern financial marketplace is truly global and our clients that seek to participate in this space, regardless of their country of origin, very quickly find themselves dealing with risk and compliance issues in multiple jurisdictions across the globe. Providing quality advice and support has required close coordination among Promontory’s network of offices and regulatory subject matter experts.

Sarah: What do you find most compelling about digital currencies and blockchain technology right now?

Alex: We are continually monitoring new technologies, practices and options for the benefit of both our public and private sector clients. Electronic payment technology is evolving quickly to improve the experience of financial transactions. Digital currencies fit nicely into this trend and have the potential to improve the speed, and lower the cost, of making payments.

Some elements of blockchain technology are also interesting from a risk and compliance perspective. For example, the ability to trace transactions through the blockchain offers a new and valuable tool in the fight against money laundering.

On the public sector side, the potential to elevate levels of financial inclusion in developing countries, and with sustainably low transaction costs, is exciting.

Sarah: What do you see as the greatest challenge facing the industry?

Alex: I think that the industry will have to make a collective choice between being a truly independent, unsupervised alternative to traditional banking and gaining mainstream acceptance within a reasonable period of time. I don’t think that digital currencies can grow quickly enough beyond its current niche market without some amount of compromise and integration with the existing banking system, including a degree of regulation. Acceptance by regulators and authorities is necessary to gain the widespread confidence of consumers.

Sarah: What’s on the horizon for you? Where do you plan to focus your time and energy this year?

Alex: Our immediate focus is on helping our digital currency clients to establish themselves in their core markets through the selective adoption of appropriate risk and compliance control programs and educating banking and regulatory partners about what they do, how they do it and why it is beneficial for the overall marketplace. In the longer term, we would like to work with Governments and standard setting bodies to leverage the benefits of digital currency technology to improve rates of financial inclusion in developing economies.

Sarah: Thanks very much for your thoughts, Alex.

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