Billy Barhydt believes that it is possible to circumvent the existing regulations and create a cryptocurrency bank. Billy formerly worked at the CIA as a cryptography expert and is the founder of the Abra digital currency investment firm.
According to Billy, he has accrued vast experience throughout his career in the technology, intelligence and financial services industries. He told Anthony Pompliano on the Off the Chain show that he plans to use this knowledge to create a novel banking model based on virtual currencies.
New podcast episode with @billbarhydt is live!
We talk about working at the CIA, financial services regulation, building on Bitcoin, and where Bill thinks crypto is headed.
Listen and promise you’ll learn!https://t.co/XI09DxviEx
— Pomp 🌪 (@APompliano) November 12, 2018
Indeed, Billy’s knowledge of the financial services industry is expansive. During his time at Goldman Sachs, he was a senior analyst in the department of fixed income research. Also, he headed banking and online business projects when he was working at Netscape. Billy got acquainted with banking regulations at Dodd-Frank where he participated in the drafting of remittance laws.
Now, Barhydt wants to use digital currencies to disrupt the banking sector. The concept is of this innovative model is based upon treating Bitcoin as programmable money. In this regard, Billy explained how his Abra exchange platform converts a client’s fiat deposit into their desired cryptocurrency. The rather intricate process involves a multisig contacts that pit Bitcoin against Ripple. For convenience purpose, the entire process is conducted in the background.
In due course, Billy revealed that Abra intends to introduce a cryptocurrency bank. A crypto bank uses a model that is entirely different from the one used by conventional financial institutions. Instead of a centralized approach, this new bank will grant customers full control over their money. Notably, users can use this platform without having experience in the cryptocurrency markets.
The standout feature of the crypto banking model is that it is not regulated by oversight authorities such as the SEC and CFTC. This is because the bank does not store client assets. Also, the bank will not issue security-based tokens. Rather, the system will be based on smart contracts that are rolled over after a pre-specified timeframe.
Skeptics have been arguing that the aforementioned smart contracts are similar to contracts for differences (CFDs). It is worth noting that CFDs are prohibited in the United States. Concerning this, Billy acknowledged that his smart contracts are actually similar to CFDs, with the exception being that they are not executed using the European approach. Furthermore, Abra acts as the counterparty to all of the bank’s transactions, allowing the institution to circumvent the anti-CFD regulations. Fundamentally, the crypto bank is accessible from all over the world is immune to hacking thefts because it does not hold funds.
In conclusion, Billy mentioned that he does not expect regulators to go after crypto bank's customers because cryptographic keys are not regulated. If actualized, Billy is confident that his creation cam poses real competition to conventional banks.