FinTech Quantum States

December 17, 2019 Steve 0 Comments

FinTech firms are in a superposition of regulated and unregulated states until they are observed (by a regulator).

For those unfamiliar with the Double Slit Experiment, physicists proved:

  • Reality is not defined until it is observed.
  • What you observe now can change the past.
  • Until an observation, all possibilities are simultaneously true (“superposition”). 

This is the current status of many FinTech firms – simultaneously in two quantum states:

  1. Fully regulated world of traditional banking and finance. The compliance burden is intense, and there is an ever-present risk of missteps that can shut you down (or worse). You’re in the spotlight and authorities are watching. This is your life now.
  2. Shadow world of unregulated FinTech. Skip most of the licensing hassles. Struggle to find institutional clients. Attract customers who avoid AML. Face ever-present risk of accidentally conducting licensed activities or facilitating illegal ones. This is your life now.

Resolution in coming.  Companies are choosing a path, and regulators are forcing the choice.  In Hong Kong, digital asset exchanges will bifurcate soon:  100% regulated or zero percent.

We can no longer simultaneously use the well-lit front door or the shady back door. 

Neither is wrong.  But soon you have to pick one.