The tokenisation of everything
Over five years, Circle has created an app-based peer-to-peer payment network using blockchain, which means more liquidity and no commissions. It is one of the leading players in the over-the-counter market for bitcoin trading, and has an app for buying crypto, Circle Invest.
“We believe blockchain smart contracts will allow people anywhere to digitalise any asset. That’s tokenisation,” says Flament.
Take a beautiful painting you can’t afford. “What if you could have fractional ownership of a piece of art? Tokens will make that possible.”
Blockchain, by its structural design, reduces transaction costs through an undisputable record of ownership. Security tokens allow for the release of illiquid assets into liquid marketplaces. With no middle person and using a smart contract for legality, tokens lower the cost of global transfers.
“In the near future, we may live in a world where people from all corners of the globe trade everything from fractional ownership of a piece of art to a down payment on a flat.”
So the future will upend our classic definition of value? “Yes.”
Farmers, founders, investors, you name it – one of the big benefits of tokens is that they provide access to money from both sides of the table. Investors who perhaps lack connections will have a bite of the pie. Entrepreneurs who want to retain control of their ventures will have a dynamic way to find capital.
“We’re tapping into ways to move money,” explains Flament. “Share it, trade it, invest it across borders, between currencies and among friends.”
What’s blocking blockchain?
As with any rapidly-evolving innovation, there are potential blockers.
The first challenge is regulation. “There is little clarity on the vast and diverse range of crypto tokens that are emerging,” notes Circle’s CEO Jeremy Allaire.
Watch Allaire share his take on the tokenisation of everything
Worldwide, regulators have intensified their scrutiny of online fundraisers known as “initial coin offerings” (ICOs) and crypto exchanges. In July 2017, the US Securities and Exchange Commission (SEC) cautioned that some coins issued in ICOs could be viewed as securities. Trading them would have to comply with federal securities laws.
Circle is helping craft relevant global regulatory frameworks. From the SEC in the US to the UK’s Financial Conduct Authority as well as policymakers in Japan, China and Korea, the fintech unicorn is collaborating to shape best practice. “Our aim is to be open and consistent,” says Flament. “We want to educate but also ensure that consumers (and societies) are protected.”
Blockchain technologies have no borders, which presents a nuanced challenge. Financial inclusion is, it appears, in direct tension with economic programmes such as Donald Trump’s America-first philosophy, and Brexit. “Having fragmented societies is the opposite of what we’re trying to do,” clarifies Flament. Leaders at the G20 summit in July 2017 recognised the fact. Building an inclusive global digital economy that’s secure and accountable to the world’s citizens requires decisive steps and cross-border economic cooperation, it reported.
The second challenge is going mainstream. “If you want to buy crypto right now, good luck,” quips Flament. “It’s too complicated. At Circle, we’re trying to make things simple, easy and transparent. Who even needs to know that something is using blockchain technology at all?”
Flament’s point is this. When we send emails, do we care how it lands in someone’s inbox? Do we need to know the code behind it? Right now, technical know-how is the ball and chain to adopting this technology at scale.
How diversity values help
Today, Circle trades more than US$2 billion (£1.4 billion) in crypto each month. The engine behind the fast-growing firm is a senior leadership team that puts diversity high on the ledger sheet. “If I’m building a team, I want that team to be diverse,” notes Flament, who has been a driving force behind three hiring programmes.
The first was launched to attract and recognise women in finance. Circle UK became the original fintech to sign the Women in Finance Charter in July 2016. The charter is a HM-Treasury-led initiative that invites firms to sign their agreement on working together and building a fairer industry.
“According to Hewlett Packard research, women will only apply for a job if they are 100% qualified, whereas men will apply even if they are only 60% qualified. Fintech is a mix of the predominantly male finance and technology sectors, meaning we get fewer applications from women. To equalise the hiring process, we’re working to combat bias through rigorous reviews, and by educating our teams on the power of diversity.”
Second is a programme known as VETS (Veterans Employment Transition Support programme), launched by Barclays in 2015. It is designed to offer two-way value: supporting ex-service people in the workforce while simultaneously making the most of their unique skills. Just 22% of veterans feel their current employer fully recognises their experience, according to research. Yet military skills – leadership, adaptability, discipline – are much-needed capabilities in a pacey work environment such as fintech. “Veterans have so many amazing skills, like a risk and security mindset. We want them in our workforce,” says Flament.
Third is a collaboration with Colorintech, a non-profit founded in 2015 by technologists and engineers who, frustrated by a lack of diversity, decided to make Europe “the most inclusive tech hub in the world.”
“Diversity is at our core,” says Flament. “If the people who build our products are not representative of the people for whom we build them, our products will have a biased view.”
Circle’s values have business value, she explains. “Our values and creating value are interlinked. Inclusion at work helps us contribute to building a globally inclusive economy.”