In our previous blog post, Igniting Innovation at SPARK ’23, we captured day one highlights at the second annual Fireblocks user conference. Read on for key highlights from the second day of sessions at SPARK ’23.
Product Advancements in 2024
Idan Ofrat, Co-founder and CIO at Fireblocks kicked off day two with exclusive insights into the Fireblocks roadmap, product advancements, and where the platform is going in 2024.
He discussed Fireblocks’ evolution from serving the early institutional adopters and crypto native firms to becoming the most comprehensive development platform powering the leading financial institutions, fintech, banks, and consumer brands building the next generation of financial infrastructure.
Security is the cornerstone of what Fireblocks represents today. Initially, our focus was safeguarding crypto-native firms, predominantly concerning the security of their customers. However, as the industry evolved, so did our challenges and solutions. We’ve expanded our security layers to encompass diverse use cases like DeFi, tokenization, staking, and payments — necessitating a dynamic approach to security. We are relentlessly enhancing our security capabilities and continuously integrating new features to meet the evolving demands of our customers.Idan Ofrat CPO & Co-Founder
Banks and Financial Market Infrastructure
The Role of FMIs in Driving Tokenized Financial Assets
Financial Market Infrastructures (FMIs) worldwide are taking their first steps toward digital assets, understanding where and how they can leverage blockchain to enable a broader digital asset ecosystem. Here are the key takeaways from the conversation.
The role of FMIs
- As business models and technology evolve, FMIs must evolve simultaneously.
- FMIs must rethink their value propositions to evolve to add value, warrant the fees, etc.
- FMIs must maintain relationships with regulators and elevate regulatory authority. Some will move to offer regulatory compliance as a service.
- 2024 is going to be the year of execution.
- Regulation will mature across the globe.
- Actual issuance that is fully on-chain.
- Short-term commercial leading with cash on-chain will be a new use case.
Session: Digital Payments are Everywhere – Now What?
Digital asset payments have become increasingly accepted. An esteemed panel of experts discussed where they are seeing growth and what needs to happen to advance digital payments across the globe. Here are some of the key takeaways.
Digital assets payment adoption in key markets: Setting up a business entity in Hong Kong, China, is fast and offers immediate access to multi-currency bank accounts. These accounts can hold up to 14 currencies and offer real-time settlement. This robust fiat infrastructure provides significant flexibility in financial operations. The supportive stance of Hong Kong regulators and the responsive adaptation by banks further enhance this geography, making it an increasingly attractive market. There’s also excitement in Latin America, driven by extensive trade between China, Asia, and Mexico. This trade creates numerous real-world use cases where cryptocurrencies, with their cost and speed, can provide considerable value.
Considerations to improve digital asset payment adoption: To accelerate adoption in the rest of the world, banks must be on board. Being a licensed PSP doesn’t reduce the dependency on the banks. Education needs to happen. Additionally, stablecoins can expand what we do from a speed and availability perspective and improve the efficiency and timeliness of payments. Demand from Fortune 500 companies will also accelerate adoption and influence regulators to get on board.
What will we see in 2024?
- Expansion of blockchain-based payments and USD settlement into more geographies.
- USDC payouts for disbursements.
- Global conversations and collaboration around crypto payments.
- Additional use cases beyond trading, like payments in ESCROW.
- Better clarity from other regulators.
How the biggest brands are going from Web2 to Web3
Corporations and retail brands are actively exploring creating Web3 experiences for their users, who are primarily Web2 natives. An expert panel discussed the complexities of bridging Web2 and Web3 and how companies can create seamless, user-friendly experiences. Here’s a summary of the informative discussion.
- People use Outlook or Gmail to share and communicate seamlessly in Web2. Web3 operates similarly, providing shared rails for everything else, including finance, identity, art, and assets. The key difference? It integrates financial incentives into these connections.
- Web3 is programmable in nature and enables developers to build extraordinary ecosystems similar to the Internet, revolutionizing how value is transferred.
- The idea of shared rails speaks to the essence of human interaction between local and global networked communities. Blockchain articulates that in new and innovative ways, offering transparent communication and integration within these diverse ecosystems.
Influencer brand adoption challenges
For influencers, their personal brand is a mini enterprise with executive staff to run massive multi-million dollar brand deals. During the peak of NFT adoption, there were accessibility gaps. The brand teams were not experienced in blockchain, and education was needed. Equally important was the fan experience, as any confusion or difficulty could potentially harm the brand’s reputation. Following the NFT boom, many brands are offering Web3 experiences to crypto-natives in a bring-your-own-wallet approach.
Solving accessibility issues
- Web3 companies did the work to acquire users but realized they were giving them away by leveraging the bring-your-own-wallet approach.
- Startups want to create experiences where users don’t need to think about wallets and, instead, use a wallet as an onramp to shared crypto rails.
- Innovation and adoption will happen faster when technology is centered around people’s passions and interests. Gaming and communities are great examples of users willing to take the extra steps to adopt and learn these new technologies.
- Innovators must create useful applications that matter to people in other areas outside of finance to amplify adoption.
Latin America Trends and Movements
LATAM Rising: The Latest Trends and Advancements in Digital Assets
The LATAM market is booming, with increasing corporations expanding into digital assets and Web3. A panel of trailblazers from Brazil, Colombia, Mexico, and Peru took the stage to discuss the latest observations and movements in the market and what to expect in 2024. Below are the key takeaways from the panel.
Latin America stands out in the digital assets arena due to three key factors: widespread adoption, lower regulatory hurdles, and the active exploration of use cases being tested with large financial and banking institutions. This combination creates a dynamic environment, transforming the region into an innovative sandbox for experimenting with digital assets rather than focusing on high-transaction volumes.
Spotlight on Brazil
- Brazil is the leading country in LATAM innovating on the blockchain.
- Much will remain the same in traditional finance, but the technology that traditional financial institutions engage with and utilize will change.
- Financial instruments and money will go on-chain.
- The wallet is becoming the new bank account.
- International payments leveraging stablecoins are on the rise.
- On the regulatory side, the Brazilian Central Bank will soon release a public consultation for virtual asset service providers (VASP) regulatory framework, aligned with international standards.
While Brazil is at the forefront of blockchain innovation in LATAM, the collaborative and pioneering efforts of Mexico, Peru, Colombia, and neighboring countries are making progress and are equally vital in shaping the region’s technological landscape.
Regulatory and Compliance
The Real-World Impacts of On-Chain Identity and Compliance
On-chain identity brings many benefits. However, transparency comes with complexities and considerations such as regulatory guidelines, technical obstacles, and compatibility with off-chain identity. A panel of experts took the stage to discuss the road ahead for tokenized data and digital identity. Here are some key takeaways.
- Regulatory challenges with on-chain compliance: On the off-chain side, challenges include institutions trying to onboard users, KYC, handling private and personal data, GDPR, etc. On-chain identity has another set of issues, including determining who someone is and what country they are in. We can use tools like transaction monitoring, but we don’t have a holistic view of who wallet holders are. The challenge is bridging the gap between the two ecosystems. Understanding who a person is while providing context is critical.
- Countries defining decentralized identity solutions: Today, 98% of Estonia’s citizens have digital IDs. This has allowed their country to manage public funds, waste reduction, fraud, and abuse and identify programming that meets the needs of its citizens. Examining the technology’s micro components and the broader impacts of well-constructed and well-designed digital identity projects is important. Today, India and Nigeria are taking the first steps toward digital identity.
- Changing the paradigm of identity: Today, the rules are set up so that financial institutions are responsible for handling the compliance of their consumers. They focus on the relationship between their institution and each customer. In the future, we can build toward something that will focus on the individuals’ identities and the ecosystems they belong to, providing context for who they are.
- Decentralized ID for user acquisition: Companies should embed capabilities or services for someone to check in or share their identity to get access to a service. Offering a unique set of services that allow users to share their identities with other groups or communities, i.e., social media. Identity needs to be a value add.
Day two of sessions and workshops were filled with highly informative content, offering insights into market trends in payments, Web3, and FMIs and looking at countries adopting blockchain at scale. Stay tuned for the final blog post in this series to learn more about what customers said about the conference and how to sign up for early access to SPARK ‘24.
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