Machine Learning for RIA loyalty and customer engagement; by Morgan Stanley



Wealth management and AI is a natural combination. Standalone Fintechs, innovation labs of incumbents and of financial services IT providers, are all somehow working on this (3 types). There is another war of talent going on this area too. All three types of Financial services providers are looking for Data scientists and competing with all other industries (commerce, life sciences, and manufacturing). The market is tagging experienced conventional quants as AI experts. Public companies (mainly banks) are competing for tech branding.

I realized that I have not written about Morgan Stanley as much as Goldman or JP Morgan. Of course, this is not deliberate. I am well aware of the heads on competition between which of course is accentuated from business media. Look at the headlines during this reporting season and you will undoubtedly get a sense of this short-term pressure that public markets and the quarterly cycles, inflict.

What caught my attention this time about Morgan Stanley, was the release of the new version of the so-called “Next Best Action” system to the 16,000 RIA of MS. This system has been around for several years but as a rule-based system suggesting investment options for advisors and their clients. A system that every single bank with a wealth management offering has and that we all as clients wonder which is “best” (as if that is the right question in the first place since none of these rule-based systems could be customized).

Morgan Stanley’s “Next Best Action” is using Machine Learning to support advisors in increasing engagement. The success of this tool will be measured by its effectiveness to enhance the dialogue with the client whether it is through in-person meetings, phone calls or pure digital channels.

Like me, most of us are sick and tired of emails with pdf attachments of several analysts covering Alibaba (that I care about accumulating) and not knowing how to make sense of that. All of us, are realizing that only because of KYC stringent requirements, advisors look to incorporate our life events and goals into an investment proposal. Morgan Stanley’s “Next Best Action” system is using ML to advise clients on what to consider based on life events. For example, a client had a child with a certain illness, the system could recommend the best local hospitals, schools, and financial strategies for dealing with the illness. The system monitors and learns from the reaction of the client to the “Recommendations” and based on the client responses, improves the quality of ideas each day.

In a way, the system thinks for the advisor on a daily basis and presents relevant information and continuously improved recommendations. The advisor has a choice and can send customized emails and texts to clients. The system in a few seconds finds the clients’ asset allocation, tax situation, preferences, and values.

The system is empowering the advisor and this is where the potential of widespread adaptation lies. Never forget that tech adoption is always more of a cultural issue rather than a technical one. In machine learning, the more the system is used the better the next best actions are.

If the community of the 16,000 Morgan Stanley advisors make the “Next Best Action” their ally, then MS will have an edge and a loyal army taking care of their clients.

This is not about disintermediation. ML can build loyalty for the intermediaries servicing clients and at the same time offer continuously better advice to end clients.

This not some version of robo-advisory focused on best on-boarding and low fee execution. It is enhancing a hybrid wealth management offering in a way that offers a cutting-edge (value) to those using Morgan Stanley as a platform provider (i.e. the advisors) and the end clients.

Morgan Stanley has established its tech center in Montreal – Montreal Technology Centre. It has grown to 1200 tech employees focused on innovation in low-latency and electronic trading, cloud engineering, cybersecurity, AI/machine learning, and end-user technologies.

Barron’s reports that it took MS about 6yrs to develop the “Next Best Action”. The main KPI is customer engagement.  The other five variables monitored are: cash flow, brokerage business volume, new advice clients, the level of banking business, and account attrition.

Morgan Stanley draws from million conversations to build its AI

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

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Blockchain Weekly Front Page: Top VCs investing during crypto bear market


Last week our theme was “Bridges across the Chasm to the Pragmatists.”

Our theme for this week is “Top VCs investing during crypto bear market.”

For more about the Front Page Weekly CXO Briefing, please click here.

A new study published last month, showed an increase in VC funding in cryptocurrency and blockchain projects. Almost $4 billion was raised during the first three quarters of 2018 by cryptocurrency and blockchain startups, a 280% increase compared to 2017.

Last year, ICOs raised $5.5 billion, but during 2018 we’ve been seeing a shift to private sales. Initial Coin Offerings have slowed down. In April 2018, we had 129 ICOs raising around $600M, down from 215 and $1.2B in December 2017. In terms of dollars, we see a similar downward trend, excluding Telegram‘s private sale and the year-long EOS ICO.

The cryptocurrency industry has realized that raising money from professional investors, like venture capital, hedge funds and other strategic investors can offer more advantages, in comparison to small retail investors. Also, ICOs have become an expensive proposition, with legal, marketing, and advisory expenses. Venture-funded private sales can cover expenses, before the ICO sells its token to raise cash for the company.

The potential impact of blockchain technology spans far beyond digital currency. With the security tokens heating up, traditional investors are acquiring tokens outright with pre-sales, SAFT contracts, and taking equity positions in blockchain companies before an upcoming ICO. Pre-sale rounds are held before public ICOs, offering discounted tokens to early investors.

While both traditional fundraising and ICOs have pros and cons, traditional investors have always been a great way to raise funds, as startups are put to the test to meet the standards and scale in order to go to the next level. While public ICOs have democratized how startups raise money, retail investors that participate in ICOs can be more demanding, seeking to make a quick buck on their investment.

Blockchain is attracting huge investment, with the big boys all over the place.  Household names like Andressen Horowitz, 500Startups, Future Perfect Ventures and angels like Tim Draper, Naval Ravikant, Roger Ver, and Barry Silbert have shown a continued and growing interest in funding blockchain projects. Some, like multi-billion dollar VC Andreessen Horowitz announced a new $300 million fund, specifically focused on digital assets like cryptocurrencies and blockchain startups.

In an interview to CNBC, Albert Wagner of Union Square Ventures said: “Investors are rationally pouring a lot of money into this sector, because I think people are seeing the winning blockchain here might be worth a trillion, or a couple of trillion dollars.”


Earlier this month, CryptoKitties raised $15 million to build more blockchain cats. The investment was led by Venrock with Google’s GV and Samsung Next joining in.

Coinbase added another $300 million of investment at a valuation of over $8 billion, to accelerate the adoption of cryptocurrencies and digital assets. The round was led by Tiger Global Management, with Y Combinator Continuity, Wellington Management, Andreessen Horowitz, and Polychain also joining.

StarkWare, an Israel-based blockchain specialist which commercializes a zero-knowledge proof system, raised $30 million from high profile names within the cryptocurrency ecosystem, including Consensys, Coinbase Ventures, Intel Capital, Pantera, and Sequoia.

Most VC companies are looking for ways to get their feet wet. While traditional investors understand that cryptocurrency can be a rollercoaster ride, they also understand the opportunity cost of ignoring cryptocurrencies and blockchain is just too high. In a blog post last November, Russ Wilcox a partner at Pillar VC summed up well: “Today’s blockchain is like the Model T: an early, crude product that marks a profound change to come.”

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

We are about to enter the Cambrian explosion era of Security Token platforms


This post is written by Sheldon Freedman, a fintech and funds lawyer at Hassans in Gibraltar. Security Tokens is a big, complex subject that requires legal, technical and commercial  knowledge. We found that rare combination in Sheldon Freedman, member of the Bars of New York, Ontario (Canada) and Israel, former FINRA-registered representative, and asked him to write a 4 part series, because Daily Fintech’s job is to explain complex subjects in an engaging way. This is the second post. Tune in (subscribe by email) to get the the rest of the series over the next 2 weeks.

Editors note: we are pleased we asked a lawyer to write these posts.  The technology is already here. The need has been here for a while (entrepreneurs want an easier way to raise early stage capital). With the crazy ICO market of 2017, the pendulum swung too far in the opposite direction, making it a lousy deal for investors and in many cases an illegal transaction. Maybe with Security Tokens we get the balance about right – quick easy capital raising that is legal and with adequate protections for investors. What is needed to make that happen is a) easier compliance with securities regulations b) an ecosystem of service providers who will help investors to separate the wheat from the chaff (find the quality offerings). That is  more about law and finance than technology, although the tech platform that empowers those securities lawyers and finance engineers will likely become dominant.

Bitcoin is an electronic currency built on blockchain, secured by cryptography.  Ethereum is an open-source, public, decentralized platform on the blockchain supporting the deployment of centralized applications.   Ethereum was created in 2015 by former Bitcoin Magazine co-founder, Vitalik Buterin, and Gavin Wood. 

Ethereum was built as a decentralized platform for the sole purpose to construct an electronic currency, which anyone could use.  Early adopters suddenly discovered by late 2016 that tokens could be created on Ethereum.  Now in 2018, a revolution is underway to tokenize all types of the trillions of dollars of assets, from pure financial assets (equity, debt, derivatives) to real estate to paintings to intangibles like copyrights by creating and exchanging tokens having the characteristics of securities.  The revolution is being waged by finance engineers, securities lawyers and blockchain technologists.

Ethereum innovated “smart contracts”.  Smart contracts are computer protocols that define the terms governing contracts and automatically enforce contracts in effecting transactions over the blockchain, creating certainty, transparency, decentralization and disintermediation of facilitators like legal advisors, notaries, escrow agents. “Decentralized applications” now provide for payment, operational crowdfunding platforms, gambling, and identity verification systems.  The “Ethereum Virtual Machine” is a runtime environment for smart contracts – a giant environment a giant environment for building bigger and more powerful smart contracts – allowing any user or developer to create applications.

Editors note: there are other platforms for running Smart Contracts but it is fair to say that Ethereum is now the standard against which competing platforms are judged.

Once security tokens are created or issued, the main principle is ownership: the purchase and exchange.  Thus the era of security tokens spawned by technological innovation is largely the domain of financial actors, and, accordingly, subject to the regulation of financial services, the most stringently regulated industry in all countries. Many industry experts estimate the development of tokenized securities now commencing is an elemental mix of 20% technology innovation and 80% regulatory compliance innovation.      

Todays’ security token issuing platforms primarily run on Ethereum, such as Polymath, providing end-to-end processing including management of the security tokens.  The Issuance and exchange of securities tokens can be effected by anyone utilizing existing platforms.   The adoption and proliferation of security token issuance and exchange are currently delayed by the enormously complex barrier of developing efficient securities compliance solutions.  In the weeks and months ahead, many state-of-the-art platforms are scheduled to launch which will provide vastly improved functional integration and automated, high-level compliance. 

Editors Note: the final post in this 4 part series will focus on where the puck is headed.

We have lived many decades under strict regulation of consumer banking, where banks effectively had a monopoly on centralized consumer finance from money transfer to savings accounts to credit cards and loans.  Disruptors such as Revolut and TransferWise have innovated with advanced, integrated technology and complex compliance mechanisms to breach barriers enabling the displacement of banks from consumer finance for the first time. Though barriers in the securities industries are much higher, they will likely be overcome by the innovation of technologists and financial service crowdfunders tokenizing securities.  Fuelled by the enormous scale of injected capital generated by crypto currency, these innovators will leap over traditional securities industry players, with Main Street disrupting Wall Street.

Editors Note: news about new securities token platforms will be emerging soon. The Daily Fintech model is to offer insight on public domain information, so we will wait until they are announced. This post gives you the context to understand these upcoming announcements.


Next week’s post will look at various jurisdiction regulatory regimes that govern the issuance and exchange of security tokens. Stay tuned

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

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Finastra’s Open Banking Readiness Index – DBS takes Asia top spot


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Finastra recently released their open banking readiness index along with a report  on how banks in Asia have performed against certain criteria. Its not surprising that of the five dimensions that Finastra has set for open banking readiness assessement, DBS bank have topped two. DBS, in my view, have been one of the more innovative banks.

The assessment was done across Banks that together constituted 60% of assets in Asia, so its a fairly good indicator of where banks are.

Now a deeper dive into the index and the criteria:


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APIs are the future, and we have heard that time and time again. The key pillars of the frame work are focused around how banks have prepared to

  • Adopt APIs
  • Integrate with Fintechs and other third parties
  • Manage and mine data internally
  • Monetise data
  • Be innovative

These are fairly broad criteria to assess the readiness across various aspects of producing, managing and sharing data around the value chain. The coverage, in my view, is comprehensive. And purely based on the framework used, it can clearly be replicated across Europe and other parts of the world, to see who the global leaders in open banking are.

On the breadth of coverage, I would have liked better insights on standardisation across APIs. Open banking is great, but when there are some standards that banks can agree on amongst themselves, and conform to them, that would help downstream firms and systems consuming their data.

However, the depth of the assessment is really what could be invaluable. Each of these pillars have left some points unanswered. Let me go through some points I would have liked to have better clarity on.

While adoption of APIs internally and externally is a key metric, I believe awareness around open banking is pretty low amongst the consumers. Shouldn’t readiness factor-in the efforts that banks have put in to raise awareness amongst consumers?

The following are the points that API adoption assessment covers. While this report is all about the readiness of banks for open banking, adoption should lead to something meaningful. And that would be customer uptake.


Also, establishing partnerships with Fintechs and integrating are broadly covered. But what we define by partnerships need to be clarified.

Many startups that are approved for open banking have access to Banks’ APIs. But are still miles away from doing anything meaningful with it. Again, the end customer is forgotten here.

Banks have more to do than follow up with these downstream businesses and ensure end customers are benefited. But regulatory framework that approved these Fintechs to use Banks APIs, should have taken some kind of customer metric as a criteria- to me that is readiness where the entire value chain is considered.

One argument is that, it is a pure bank readiness report, and has nothing to do with customers. But there are times where the report talks about integration with the developer community, apps builders, and also with third party service providers, so why not customer uptake too?

For example, the number of live third party applications that actively use a bank’s APIs could have been a good metric.

Another point on the data readiness of banks, where data security and governance are key criteria. In all my years of experience with systems in banks, I know the quality of data is generally very poor. I have worked in environments where a highly critical report has 150,000 manual adjustments in its underlying data. And this is so common place – at least used to be, not long ago.

If banks automate data of poor quality using APIs, and claim readiness over data security and API infrastructure, that would be like lipstick on a pig.

There is no point in securing, sharing or making business decisions on low quality data. This problem is generally amplified in parts of a bank where there are lingering legacy systems. While accuracy of data is taken into consideration, when banks are tested for data readiness, data quality will need to be the number 1 criteria.

It almost feels like the framework has allowed the most topical data problem (information security) as the number one criteria – to me, it is not.

Data monetization models are well thought through. However, how some of those models would help create better (cheaper) products for the end consumer is something banks should start thinking about. And more importantly, how those monetization models will be communicated to the customers in a transparent fashion, is pretty critical in a #facebookIsDead era.

In summary, the report does a great job of providing a view of how open banking can drive innovation within banks. While I have pointed out some minor areas across the framework used, my biggest criticism is that, the customer seems to have been forgotten even in this report – yet again.

Readiness can be about infrastructure readiness, process readiness, or business model readiness. But the so-what needs to be the final readiness score – it has to be about how soon it will benefit customers.

Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a podcast host.

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Insurtech action from China

Actions around China

The Theme last week was Tech giants are serious about insurance

The Theme this week is Insurtech action from China. The Chinese market is a fast growing one for InsurTech. It can be enlightening to see, compare and learn from the Chinese market. We look at 3 news stories illustrating this theme. These stories illustrate actions made by China, from China and for China.

For more about the Front Page Weekly CXO Briefing, please click here.

For this week we bring you three stories illustrating the theme of Insurtech from China.

Story 1: Insurtech is the future infrastructure of insurance, says ZhongAn CEO

Extract, read more on Reinsurance News:

“A joint report by the recently-launched Fintech Research Institute of China’s largest online-only insurer ZhongAn and the financial advisory firm KPMG claims insurtech will enable a more efficient, compatible, balanced and humane insurance ecosystem.”

This is more like a perspective by China (Zhong An), but it is a perspective based on actions in motion. Zhong An has been building its multi-industry ecosystems including auto service, consumption, financing etc. since its founding. Ecosystem is all about partnerships and collaborations, and InsurTech is the core of those partnerships.

Story 2: China’s Attention to Israel Smart Vehicle Market Creates Insurtech Opportunities

Extract, read more on The Times of Israel:

“The Chinese auto industry is yearning for smart-car technologies. In December 2017, the National Development and Reform Commission, China’s chief economic planning agency, revealed a three-year plan highlighting the development of the smart cars industry as a national priority. Without a doubt, by 2020 one in every two new cars sold in China, the world’s leading car market, will be an intelligent one.

Despite popular hype pertaining to autonomous cars, most people don’t understand how highly dependent these cars are on a sense of place. This means that if the map the autonomous car is relying on to navigate is wrong, then the autonomous vehicle is bound to make mistakes as well. French mega insurer AXA for example, is one of the many car insurers tackling this issue.”

The causality chain is a little long here. In short, the promotion on electric cars in China can create new business opportunities for auto insurance and InsurTech can be a big part of it. This is actions from China.

Story 3: Munich Re strikes Insurtech partnership with Plug and Play in China

Extract, read more on The Intelligent Insurer:

“Munich Re has partnered with Plug and Play, a Silicon Valley-based accelerator and corporate innovation platform, to collaborate with emerging Insurtech startups in China.”

Actions for China. Munich Re has been cultivating in Chinese market for a long time. Plug and Play just started its InsurTech program in China this year. They are tapping into Chinese InsurTech from all aspects from accelerating startups, sharing innovation with incumbents etc.

As a market, China has great potential both in individual business and corporate business. As an innovation base, Chinese InsurTech is equipped with mobile Internet features. Either way, it is an attractive destination for global insurance industry.

Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.


Is cryptoeconomics the key to better DD on ‘hard basket’ investments?

The more I think about due diligence, the more flawed I realise it is.

Not because the act of due diligence itself is a bad idea – it’s not – but more that the process and steps that are taken to achieve it are so outdated and inefficient.

As an example, let’s consider a pension fund, who decides to invest in a mid-size businesses in the airport space. They might choose to do this as an experiment, or because they are being encouraged from a political/social perspective to deploy more capital into the business sector, as banks retreat. Rather than hand out the cash to private equity, this one they do direct.

In this instance, there are likely to be a few consistent factors.

  • It is highly likely the pension fund has never invested in the space, therefore has no internal due diligence experience
  • We can imagine the ticket size will be relatively small, compared to traditional investments
  • The cost to upskill the internal investment team, or hire consultants will impact ROI more than traditional listed equity investments, harming the deal optics

If we assume the project was run well, then once due diligence is completed, some very good and useful intellectual capital will now exist inside the fund. However given it’s not every day an airport goes out looking for investment, that intellectual capital is likely to sit unused, gathering dust.

Not terribly productive.

But surely there is another way? I mean, if AirBnB can help us rent out spare rooms, is there something similar that could help a fund ‘rent’ out its knowledge?

And if we take this one step further, who’s to say the investment team needed the knowledge at all in the first place – could they have simply rented it from others to start off with?

Investing in businesses is often deemed a due diligence problem. It’s getting worse, as the rate at which new business models are emerging is increasing, and digital complexity is compounding. The gap between traditional bankers and even fintech lenders, private equity firms and VCs will continue to grow – so long as we keep the same in-house model of due diligence. No man is an island. Or more aptly, no fund.

I think there may be a solution, powered by the crowd and underpinned by cryptoeconomics. There is a powerful collective wisdom in the market, that simply needs to be structured in a way that aligns incentives correctly throughout the entire process.

For those more complex, finicky deals, that just fall into the ‘too hard basket’, there must be a better way forward.

I will be in London from the 26th of November to 29th. If you would like to connect drop me a line on Twitter, or connect with me on Linkedin!

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

Welcome Marcus to the rebranded Goldman asset mgt division and to the UK

I can’t believe that it is already 2 years from the launch of Marcus from Goldman. I wrote about it Nov 2016 in Will Goldman become a verb? Watch the Marcus ads!

  • The consumer pays a fixed interest rateon the loan (which includes a profit margin for Goldman). It has no complexities (APRs and all the usual hidden in a credit-card type of arrangement).
  • It is simple and clear. No fees for late payments.
  • It is transparent and simple! No credit-score changes! There is nothing hidden, no optionality (hiding misunderstanding and potentially Goldman outsmarting the user).

My right hand, Gaston Greindl, briefed me last week on Marcus. Goldman has decided to add a dedicated loan specialists workforce who deliver live, personalised support to client, which goes well beyond the flexibility already offered on the platform to choose payment dates and payment options to fit their payroll schedule.

During the first year of Marcus – by the end of 2017 – Marcus had more than $2.3 billion in loans ranging from 12 months to 4 years.

The deposit part of the business – Online Savings Accounts for retail – is FDIC insured, no-fee again, and offering rates higher than the national average. During the first year of Marcus – by the end of 2017 – Marcus had more than $17 billion in deposits.

After extensive research and surveying, Goldman found that customers preferred to speak with human advisers for their borrowing and savings inquiries. So, all of Marcus calls are answered by loan or deposit specialists, improving the customer experience.

What caught my attention this time around, was the Barron’s article about Goldman Sachs moving Marcus into its asset management unit, which will be renamed the consumer and investment management division. Previously, Marcus had been part of Goldman’s investing and lending division.

I always talk about Fintech towards serving your existing customers in ways not possible before. Goldman has been fearless in experimenting with new business models in serving customers and in acquiring new customers. Over the past decade, Goldman has been an investment bank that wasn’t shy to get a banking license after the subprime crisis; has opened its proprietary IP to its Buy side clients (read more in my contributing chapter in the WealthTech Book ); and has acquired 37 Fintechs already making it the No.1 bank in Fintech investments (as of end of 2017)


Marcus was born in a neighbourhood catering to the basic consumer banking retail needs. Goldman now feels that it can and should be integrated in the next generation wealth offering of Goldman in the US. No fees, human advisors, flexibility even for the very basics: online savings and personal loans. This makes sense as product lines are blurring. Clients don’t want to have shop for their financial needs in 5 different places. Integration is the name of the game. Goldman is moving gracefully in that direction.

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While Marcus is being integrating in the US in the wealth offering, at the same time Goldman is launching Marcus retail in the UK. It started just a month ago and up 50,000 customers signed up in less than two weeks. UK residents can deposit from £1 to £250,000 – and withdraw their money as many times as they like, with no fees or charges. Fully digital onboarding plus customer service with a specialist available. Now this can’t be great news neither for the challenger banks nor for the high-street banks. Marcus has a brand name and offers an interest rate of 1.5% (for the first year), which is well above the UK average of 0.6%. The Marcus account rate drops to 1.35% the 2nd year. The closest easy access savings rate is currently 1.41%, offered by Yorkshire Building Society.

Expansion in Germany was also announced in May but there is nothing talked about since.

Marcus in the US has built a loan book that is not even 5% of the $72billion loan book of Goldman. It’s value is not the amount of loans or their margin. It is the new retail customers and moreso it is the learnings that Marcus is offering Goldman Sachs’ so that they can enhance their wealth offerings with consumer best banking services (deposits and loans) which means below cost and with human specialist customer service.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Blockchain Weekly Front Page: Bridges across the Chasm to the Pragmatists


The Blockchain Weekly Front Page is a CXO level briefing. Our mission is to serve the mainstream business community by selecting one major theme in the Blockchain Economy each week and three news stories to illustrate that theme. This is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world, in your email inbox each Monday at 7am CET. 

For more on the format please click here.

Last week our theme was “Cryptocurrency markets shrug off loss of confidence in Tether and equities correction.”

Blockchain and cryptocurrencies are in the early adopter stage. But it looks like we are getting closer, a lot closer to the point of Crossing the Chasm. Early adopters of a new product or technology are separated by a gap from the majority of users, but a recent story from HTC, is one of the signals that shows that the industry is reaching this point.  When we cross the chasm, we will start seeing a rise in the number of easy to use tools, aimed to every day consumers.

Well, Blockchain mobile phones are here! The HTC Exodus 1 will be the first blockchain phone, to bring dApps to consumers.

Past news about one exchange or another being hacked, is driving everyone to seek out solutions, in order to make cryptocurrencies safer. The new HTC phone will make it a lot safer, making it harder for someone to rip you off. It lets people store their blockchain data on a secure enclave. Cryptocurrency assets will be stored on a separate partition from the Android operating system, to improve the security of the crypto assets. Android phones pose security risks, to a wide assortment of malware and other threats.

The HTC phone will also come with a Social Key Recovery functionality. This will allow users regain access to funds in the case they lose or forget their private key. Users will be able to split their key among three to five people they trust. While uses won’t need their help to assign transactions, they will in the case they lose their phone.

The Exodus 1 will be able to run decentralized applications (dApps) and programs that operate on the blockchain. Also, the phone will be able to work like a node on  Bitcoin or Ethereum.

While we are still far and away from usable dApps, but if blockchain is going to go mainstream, we will need to see the widespread adoption of dApps. This is exactly what needs to happens if are to the realize the full potential of cryptocurrencies.

Stablecoins have been making the news in recent months.

Another important story this week is that Coinbase added support for Circle’s stablecoin. Last week we talked about Tether and other stablecoins and whether they will be able to hold their pegs over time.

This is the first time Coinbase has supported a stablecoin. Coinbase customers will now have the ability to purchase, receive, sell and send USDC tokens on

One of the unique twists to this story is that while customers can trade Bitcoin or Ether for USDC, exchanging USD/USDC will be risk free. Users will be able to buy 1 USDC for $1 or sell 1 USDC for $1, with no fees.

This is an important step, that opens up so many possibilities.

The use of stablecoins, like USDC or Tether, make it easier to send, store and use in dApps,. Stablecoins on exchanges let traders protect their portfolio, by easily exchanging their positions to safer crypto, that are not volatile. The USDC and other stablecoins are better suited for e-commerce, as merchants and consumers can use the digital currency without worrying about token price volatility. The support of USDC by Coinbase, will potentially draw more new investors and drive cryptocurrency use for payments.

The government of Kenya announced it will use blockchain to distributing new government-funded housing units, as part of its Affordable Housing Big Four Agenda. The new housing project, will publicly fund the building of 500,000 living units and use blockchain to fight corruption, theft and misuse of public funds.

Kenya is one of Africa’s leading countries regarding blockchain and cryptocurrency development. The Kenyan Distributed Ledgers and Artificial Intelligence Task Force was established earlier this year to focus on blockchain and how the technology could be utilized to improve outcomes in the public sector. The group includes local blockchain startups, experts, researchers and members of Kenyan regulatory bodies.

In many parts of the world, governments are responsible for providing basic and affordable housing. Blockchain provides an easy way to allow users to securely transfer the assets between parties and facilitates easy audit of user accounts.

The crypto industry is booming and expanding like never before. While cryptocurrency markets down by almost 65% since the beginning of the year, and skeptics say we’re in a bubble, there just is so much activity everywhere around the world. Still, much more remains to be done.

When the technology becomes less visible and more usable, we will be able to better communicate the values people will get from cryptocurrencies and blockchain. We are close to crossing, but we’re not there yet. Either way, crossing the chasm is not the end, but the beginning.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Introducing a 4 part series on Security Tokens by Sheldon Freedman from Hassans.


Editors note. This post is written by Sheldon Freedman, a fintech and funds lawyer at Hassans in Gibraltar.  Security Tokens is a big, complex subject that requires legal, technical and commercial  knowledge. We found that rare combination in Sheldon Freedman, member of the Bars of New York, Ontario (Canada) and Israel, former FINRA-registered representative, and asked him to write a 4 part series, because Daily Fintech’s job is to explain complex subjects in an engaging way. This is the first post. Tune in (subscribe by email) to get the the rest of the series over the next 3 weeks.

A blockchain token is a unique digital token created on a blockchain as part of a decentralized software protocol.  Some tokens function as digital currencies, like Bitcoin.

A utility token is digital coupon or ticket redeemable by the holder for a good or service.  A utility token, or user token or app coin as it is sometimes called, can entitle the holder upon redemption to a cup of coffee, an advanced medical device or admission to the World Cup championship game.  A utility token functions in a closed system according to the token economics designed for the system.  For more on utility tokens, please see this chapter in The Blockchain Economy.

Though utility token prices may fluctuate in value as demand for the redeemable goods or services fluctuates, utility tokens do not provide holders with, or relate to, ownership or assets relating to the entity issuing the tokens other than the redeemable goods or services. Security tokens, also known as securitized tokens or tokenized securities, are a digital investment asset with security aspects that do relate to ownership or other assets. For more on security tokens, please see this chapter in The Blockchain Economy.

Security tokens are blockchain-based value tokens that provide holders with value relating to investment assets, which may include rights in the issuing entity such as rights to voting, equity ownership, debt, derivatives, real estate, dividends, profit sharing, buy-back options, cash flow – anything related to assets or performance of the issuing entity, or any real-word asset. The spectacular promise of blockchain and related decentralizing technologies to support the reliable recording, trading and mass adoption of security tokens will undoubtedly lead to the digitization of securities becoming adopted on a massive global scale that will revolutionize finance – limited only by the imagination and daring of financial engineers.  Security tokens will have the advantages over conventional securities markets of:

  • functioning 24/7 at low transaction cost
  • high liquidity
  • rapid settlement
  • great market depth
  • automated compliance
  • transparency
  • asset interoperability (different types of assets in same wallet)
  • continuous expansion of design space for security contracts and unlimited varieties of features. 

Security tokens are programmable by sophisticated architectures deploying rapidly-developing mechanics, employing dramatic efficiencies to process large capital pools.

The versatility and seemingly limitless varieties of deployment of security tokens suddenly presents the world’s regulators with a new digital security asset that they are only beginning to understand.  Securities regulators, in their perceived role to protect the investing public (and economies in general), establish regimes of disclosure, registration and reporting to regulate the viable issuance and exchange of securities.  Understanding how security tokens markets and smart contracts function – and the complex ramifications elicited thereby- is obviously requisite to regulating them. Some notable small, nimble jurisdictions in Europe, Asia and the Caribbean have been vigorously investing since 2015 in studying and establishing early regulatory blockchain finance-related frameworks to capture early leading industry activity, while the major national jurisdiction are in the committee stages in the process of deciding what to do about the coming golden age of security token innovation, which will be no less revolutionary than the invention of the railroad. 

The United States Securities & Exchange Commission has taken the view that security tokens are securities fully subject securities regulation. Thus, the issuance and exchange of security tokens in the United States is subject to registration or must come under an exemption from registration (typically, exemptions pertaining to investors deemed sufficiently sophisticated to analyze the risks and merits of an investment, or of sufficient means capable of sustaining losses).  Other major jurisdictions are taking note of the United States position, some following, others embarking on their own regulatory reforms to address regulating of security tokens.  Since blockchain infrastructure is trans-jurisdictional and anonymous, there is an added dimension of the need for global cooperation, and for the involvement of agencies that regulate much more than securities:  banking, taxation, anti-money laundering, anti-terrorist and other crime financing, tariffs and trade finance. There is not an industry that will be left unaffected by the advent of security tokens.  From mining to pharmaceuticals to retailing to aerospace – security tokens will play a role.  The ability of small investors to participate globally will democratize investor bases. Tokenized funds and other collective investment schemes will emerge to attract passive investors.

Over the next three articles we will examine how the global security token “rails” are being laid to provide for the imminent securities token global express train. Dozens of fabulous companies are building rails of scalable, standardized, interoperable token solutions ushering in a Golden Age of securities innovation.  We will survey the many platforms available and being built for the launching and trading of security tokens.  We will also analyze the regulatory approaches major jurisdictions are taking to the challenges of regulating security tokens, taking notice of existing laws and trends. 

The schedule of the other 3 posts in this series is as follows:

  • 3rd November: Platforms for launching Security Tokens.
  • 10th November: Jurisdictional and Legal issues related to Security Tokens.
  • 17th November: The current state of the art in Security Tokens and where the puck is headed.

Tune in to receive the rest of the series by subscribing to Daily Fintech by email.

Bernard Lunn is a Fintech deal-maker, investor and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

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Brazil’s Moeda – The cooperative network for Women Entrepreneurs on Cryptos

Its a bit counter-intuitive when we tag a country (Brazil) to a crypto start-up. While the operational capability for Moeda is currently based in Brazil, the entire world can invest into their projects using the MDA token.


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Moeda was launched in 2017 at a UN hackathon with a view to address the UN’s Sustainable Development Goals. Their vision is to facilitate capital for social entrepreneurs who have had challenges financing their business via the traditional banking system. With their platform, where they bring the community of social entrepreneurs to the world stage, investors across the world can invest in projects, while having complete transparency on the project details.

This year Moeda have onboarded 18 projects involving family farming cooperatives in Brazil. They are also developing the Moeda Seeds App that will help global investments to arrive. In Q2 this year Moeda moved its transactions to IBM’s Hyperledger fabric composer.

In the past 18 months, Moeda have made significant progress not just in Brazil, but across other neighbouring countries.

  • They opened up operations in Uruguay and became the first blockchain firm in a free trade zone.
  • Moeda’s CEO Taynah Reis, joined Brazil’s Parliamentary Special Committee on the legislation of virtual currency.
  • Moeda presented their proposition at the UN General Assembly on Sustainable Development Goals Impact Zones.
  • In Jan 2018, Moeda started funding its first set of projects for rural Brazil
  • Taynah has also spent time with UN leaders, Nobel Prize winner Muhammad Yunus, and several top world organisations including the World Economic Forum, where they showcased and validated their business model
  • More recently Moeda implemented a fiat pegged token (MDABRL) to be used in its ecosystem.

One of the projects that Moeda have taken on board their seed programme is that of Divinia. For more than 10 years, Divina from Cooperval produced and sold frozen fruit pulp, vegetables and baked goods to schools in Formosa, Goias. The group now wants to boost production and increase their income.

For the financing of the expansion, Moeda developed a Seed Project focused on the Baru, a traditional chestnut from the region. Through this project the cooperative in partnership with a local beer company will produce 1500 bottles of Baru nut beer. Moeda have helped them establish the partnership, in marketing the product and with the entire business plan to ensure investors make returns. This project, thats planned to go on for 4 months, will give investors a 10% return within that period.

Moeda are also working with a group of women that focused on 21 local projects from more than 8 states in the region developing 25 value chains pertaining to extractivism, agricultural extractivism and traditional family farming, including the Babassu palm production chain.

These are some inspiring coming out of the blockchain world, and for people asking for real world implementations of the technology, all I would say is, look at the emerging markets – its all happening there.

Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a podcast host.

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