MEXICO – A Mexican government-approved mobile application allows 20,000 migrant workers in the United States to pay their bills at home via the Stellar network.
This is what says Marco Montes Neri, the creator of the application Saldo, which is based on stablecoins backed by a peso. "Stellar has created a set of protocols and a set of standards to manage all these regulatory requirements," he said, adding:
"If you want to touch money to real people, you really have to play ball with the regulators."
This theme was discussed many times at the Stellar Meridian conference this week in Mexico, bringing together about 350 people, most of whom were building on Stellar. The adoption of financial rules seemed to be a defining theme; Facebook's "make fast and break things" was not the mantra.
"We've always wanted Stellar to be useful to people," said Jed McCaleb, creator of the cryptocurrency in 2014. "It will always come back to some kind of regulatory situation … we will not avoid it. "
McCaleb is currently Technical Director of the Stellar Development Foundation (SDF) at a time when the blockchain-based global payments race is becoming increasingly crowded. In 2012, McCaleb co-founded Ripple, which is now focusing on cross-border credit transfers, but in recent months the Libra Facebook project has pushed discussions on cryptographic remittances under a regulatory microscope.
The advantage of Stellar is that it is already there and moving – with an integrated compliance layer just above the protocol itself. This allows users to connect to a common set of customer knowledge (KYC) and anti money laundering (AML) standards.
Neri said it made Stellar useful for a company like his, unlike Ethereum, for example.
"In other great books, this layer does not exist yet because it has not been the focus," Neri said. "You can build it, but the problem is that it's not compatible with another project that wants to do the same thing."
SDF CEO Denelle Dixon says she does not just want to help people cope with regulation. she wants to talk to decision makers and show them why blockchain technology allows the world to be more orderly. Dixon says:
"We really need to focus on getting more regulators involved."
Cole Diamond, CEO of CoinSquare, a cryptography center in Canada, told the Meridian crowd that "the majority of us have gone ahead with our regulators.
Diamond said his company had actually left a lot of money on the table based on the laws of his province. While other Canadian exchanges collapse, he does not regret it.
"I can not overemphasize the importance of doing it," said Diamond.
Wirex's Pavel Matveev, a start-up for the worldwide transfer of crypto-to-fiat value, told Stellar fans together: "It's pretty risky not to be regulated."
Although no one disputes that governments tend to be extremely slow. Amit Sharma, CEO of FinClusive Capital, who is creating a service compliance platform, urged founders to proactively approach their ideas with decision makers.
"Because, by nature, innovation exceeds regulatory authorities," Sharma said.
Ernest Mbenkum, founder and CEO of Interstellar Wallet and Exchange, gives hope. "Governments, they can not resist forever," he said. "At the same time, they will want to be able to control it. It's an interesting dance.
How central banks see it
Nation-states could adopt crypto with worrying consequences for the industry: placing currency fiat on a chain of blocks.
"If central banks decide to issue a CBDC (digital cryptocurrency of the central bank), it will be in the form of token and delegate," said Francisco Rivadeneyra, research advisor at the Bank of Canada, Tuesday morning. A delegated CBDC means that partners will help the bank manage the consensus and track payments in a similar way to blockchains like EOS and Libra (as currently envisaged).
Linda Schilling, professor of financial economics at the Ecole Polytechnique de Paris, said:
"The rise of cryptocurrencies has, in some ways, pushed central banks to think about competition."
She believes that central banks understand that if cryptocurrency is to be adopted globally, it would allow the citizens of a nation-state to evade central bank policy. Users who could use cryptography for much of their economic life would be protected from the bank's plans for managing inflation or economic growth.
But if central banks beat cryptography companies too much and take control of peer-to-peer payments, a huge amount of data will go to what ultimately political institutions are.
"By getting closer to the central bank's money, you are moving much more towards an economic model such as Facebook, Google, etc.," she said. Among other things, power appointees would have far too much information about voters, dissidents and their political rivals.
Of course, the proposal that most prompted central bankers to gesticulate is Libra, the cryptocurrency proposed by Facebook in June.
It turns out that Libra basically has the same vision as Stellar: speed, low fees, financial inclusion, easy chip creation. Very familiar themes for McCaleb fans.
"It's fair to say that all the noise associated with Libra has had some kind of negative effect," said Wirex CEO Matveev.
For his part, McCaleb told CoinDesk that he thought Mark Zuckerberg and his Libra lieutenants did not really understand what they were embarking on.
"Their approach seems a little arrogant, at least from an outside point of view. The way they announced this seemed a bit premature.
McCaleb said that Libra was not decentralized enough and that he did not think that the founding partners would ever decentralize it completely, even though he admitted that he was biased. Libra is trying to build on a large scale essentially the same global payment network that SDF has already put in place.
But Mbenkum, the founder of Interstellar Wallet and Exchange, argued that Stellar's advantage in reaching unbanked people was not his cryptocurrency, XLM. It is rather the system of "anchors", stellar jargon for companies manufacturing tokens backed by assets on the network.
"Stellar, bitcoin, this is the first wave. The next wave is asset-backed chips, "said Mbenkum. He sees huge potential in dozens of new chips based on real things. People in emerging markets do not understand abstract things such as cryptocurrencies, said Mbenkum.
"People understand tea. People understand sweet potatoes, "he said, and they will understand something that promises the future delivery of such products. "This is where the world is heading into emerging markets," he said.
McCaleb also has hope, even though he knows that progress is slow. He referred to the Saldo peso supported stablecoin and another anchor point in Nigeria, which is slowly seeking to attract crowds by helping people get in and out of money.
McCaleb seemed actively reluctant to overestimate everything, but he proposed:
"It seems we are on the eve of those things that make people's lives better."
Lisa Nestor, Senior Strategist, Stellar Development Foundation, and Stellar Founder, Jed McCaleb, Speak at Meridian 2019, Photo by Brady Dale for CoinDesk