Ripple, Cryptocurrency and the Blockchain all came in for a hammering in the UK Parliament earlier this week. Representatives of Ripple were there to state its case for inclusion within the UK’s financial services, but clearly those opposing cryptocurrency were having none of it.
Cryptocurrency supporters believe that Ripple is the “honor student” of the cause, the one “most likely” to achieve mainstream, global acceptance and usage, proving beyond doubt the benefits blockchain technology can bring both big business and the financial markets. So, it came as a bit of a shock to hear blockchain technology and Ripple described as “pixie dust” and a “distracting fad” with “nothing to offer financial services”, according to one Martin Walker, who ironically was formerly employed within blockchain technology.
It’s not unusual for people in positions of authority to take shots as the likes of Bitcoin, although usually it comes from a person with a professed lack of knowledge of the subject – Warren Buffet for example, or those business people who fear cryptocurrency might affect their careers. What is unusual however, is for someone who clearly does know about blockchain technology and is fully aware of Ripple and its capabilities to still put forward such a hatchet job. One can only wonder at Mr. Walker’s underlying agenda.
What Was The Occasion?
The occasion was a HM Treasury Select Committee debate which was held in Parliament over two days earlier this week. British MP’s (Members of Parliament) were debating the potential risks and possible benefits that digital currencies hold for consumers, for businesses, and for the Government. Also up for discussion were the possible benefits that blockchain technology might bring to the UK’s major banks and financial institutions as well as the Bank of England.
Arguing the case for cryptocurrency, Ryan Zagone (pictured), the Director of Regulatory Relations at Ripple, the world’s 3rd largest digital currency, told the debate that while “there’s a lot of hype around the technology right now” blockchain allows us to “validate, store and synchronize information across many different parties more securely and efficiently than we have done before”.
On how cryptocurrencies such as Ripple might help businesses and governments, Zagone said: “The payment space is quite outdated. A cross border payment usually takes about two to four days – Ripple can do it in four seconds.”
Zagone’s defense also included quotes such as:
“We focus on cross-border payments where to date privacy was a painful process. Cross-border payment would take two days, you wouldn’t be able to track the payment and you wouldn’t know the fees upfront. So, it wasn’t until two days you’d find out how much was taken out as a fee.”
“You could literally mail a box of cash and have better tracking and certainty than you would sending it through a bank. We recognized a key pain point in cross border payments that was limiting consumer’s use if they were sending it back home and it was also becoming a key limit to economic growth.”
Who Is Martin Walker And What Did He Say?
Martin Walker’s current position is the director of the non-profit Centre for Evidence Based Management. Previously, Walker (above right) had been a product developer at blockchain consortium R3. Despite clearly being aware of the benefits offered by blockchain technology, Walker seemed to go out of his way to attack it and belittle any potential benefits it could offer finance, business and political government. Here are some of Walker’s key quotes:
“There’s a big problem in the blockchain world with confusing ‘could’ for ‘is,'”. All that it takes to make a credible idea into a fad is people just switch off their brains and stop thinking. Over 20 years in and around the banking industry – blockchain is a fad, but I have seen many fads in my career. If 10% of what I’ve heard in my career had come true, we would have these amazing banks that run for £1 a week.”
“You need someone to provide the liquidity to be able to change into and out of Ripple. And holding Ripple, a currency which has seen its price drop 80 percent and then back up 100 percent in the course of the last two months is just not credible. So, putting cryptocurrencies into the financial sector is a huge source of risk.”
“I would just urge the committee that we do not repeat the mistakes that have been made over and again of getting blinded by the word innovation, particularly relating to financial products.”
What Was The Outcome Of The Debate?
Regardless of Martin Walker’s negativity, the general opinion among the cryptocurrency community was that the debate will still bring the finance and digital currency sectors closer together. Walker’s comments seemed deliberately out of step with the recent actions of banks and financial institutions, plus major corporations like Samsung who are keen to bring blockchain technology on board. If anything, those MP’s in attendance may feel that the UK is in danger of being “left behind” if it follows Mr. Walker’s advice.
CryptoUK is a self-regulated organization whose job it is to represent the cryptocurrency industry. CryptoUK have already set out plans for HM Treasury to make cryptocurrency investment a regulated activity. Plans would include HMT replicating peer-to-peer finance legislation, thus bringing cryptocurrency platforms under the authority of the Financial Conduct Authority (FCA).
The head of CryptoUK, Iqbal V Gandham said:
“Introducing a requirement for the FCA to regulate the ‘on-off’ ramps between crypto and fiat currencies is well within the remit of HM Treasury. Based on our analysis, this could be achieved relatively easily, without the need for primary legislation, and would have a huge impact, both in reducing consumer risk and improving industry standards.”
“This is an approach which is already working well in other countries, who are now taking the lead over the UK, for example in Japan and Gibraltar.”