Kathleen Moriarty Speaks with Structured Credit Investor on Blockchain Market Impact
Corporate partner Kathleen Moriarty was quoted extensively in Structured Credit Investor on the potential uses of Bitcoin as well as the real-time distributed ledger system that Bitcoin was built on, called blockchain.
On Bitcoin being ruled a commodity last month by the US CFTC, Kathleen noted that "[The ruling] has boosted interest in the idea of using Bitcoin or another cryptocurrency in the capital markets."
She also noted the push to create something domestically and find trading instruments that mirror what already exists.
Moriarty added, “In the US, most market participants have been unable to become involved in offshore derivatives market. I believe replacing mortgage depositories with blockchain technology may be a step too far for the market, because not much is treated as sacrosanct, but mortgages are one of the few products that investors might really push back on. However, there is a lot of talk about the potential for this to work - and certainly with contracts, such as auto car rental, I think it could do."
On the topic of technology centers’ concerns around regulation, especially 'know your customer' (KYC) and anti-money laundering (AML) regulations, Moriarty commented, "The US Treasury has taken a keen interest in developments and its Financial Crimes Enforcement Network (FinCEN) has said that in the US, if you are exchanging Bitcoin for fiat, then you are in the money transmission business. That means complying with anti-money laundering and 'know your customer' legislation."
She added, "However, while I may not know your name if I trade with you, blockchain is only actually pseudo-anonymous. I will not know who you are, but I will know your reference number. In fact, FinCEN has said that, compared to cash, this should be fairly easy to trace."
Moriarty concluded, “When I started looking at this subject a couple of years ago, the only people connected to Bitcoin was the Silk Road. Now the banks are getting on board and there are more legitimate users becoming involved."
Read the Structured Credit Investor article here (with subscription).