Arturs Ivanovs is the founder of FIC Network, a blockchain infrastructure for the fixed income markets.
Ivanovs, whose previous work in EU fintech regulation led him to start FIC network, says that quite often, financial executives concentrate too much on innovation in the front office and overlook the potential of increasing efficiencies in the back office.
It is important to remember that every increase in the back office efficiency leads to higher profit margins and increased shareholder value in the long term.
By utilizing blockchain technology, operations costs can be reduced through automated execution, less human errors, and eliminated “trust agents.”
The four most important reasons that Ivanovs says banks should be partnering with blockchain- powered marketplaces? Speed, transparency, accuracy, and cross-border accessibility.
You created FIC Network, why do you create another blockchain instead than using Bitcoin or Ethereum?
Capital markets do not need a complicated programming language on-chain such as on Ethereum. What it needs is a high transaction throughput and ease of integration, which the FIC Network ’s blockchain infrastructure can deliver. Bitcoin as of now is unsuitable for our application in the fixed income market.
FIC Network technically uses its own blockchain with the Stellar Consensus Protocol (SCP). This allows us to have our own development roadmap without being at the mercy of Ethereum’s scaling dilemmas. Our blockchain has faster transaction processing than Ethereum’s blockchain.
Can you explain to us more about the reasons why your blockchain improve “Speed, transparency, accuracy, and cross-border accessibility” compared to banks?
Currently fixed income transactions settle within two business days after the execution date. This amount of time is extremely long compared to what’s possible with the FIC Network.
Fixed income transactions on the FIC Network, regardless of the base currency, will settle almost instantaneously. Through the use of smart contracts, all details of a transaction will be made apparent to both buyers and sellers, creating more transparency and reducing the amount of hidden data that may significantly affect the risk of a fixed income asset’s future cash flow payments.
Additionally, through the structure of the FIC Network, a fixed income asset can be priced and paid for in different currencies without affecting the settlement time. This greatly improves the ability of global fixed income trade amongst counter-parties needing to trade in multiple fiats and/or cryptocurrencies.
You are also an advisor of the Turing Funds, what’s the difference between this exchange and Binance or Bitfinex? Why the decision to open a new exchange when you have so strong competitors?
The Turing Fund is a crypto focused, investment fund; and it is not an exchange.
However, speaking of exchanges and competition, FIC and similar companies believe there are significant inefficiencies in the financial markets, specifically the fixed income market. More new entrants addressing these inefficiencies will result in more competition for FIC, but it’s not a winner takes all market; competition is a good thing in the startup space.
As more companies enter the market, it will eliminate inefficiencies, and result in increased supply and demand, increasing the size of the overall market.
We predict these companies can successfully compete and co-exist while reshaping the fixed income market.
You are an expert in fintech regulation in European Union. Do you believe crypto needs to be regulated to succeed?
Generally speaking, regulation can be very beneficial. Regulation can create rules that punish deviants, rewards good actors, and overall, makes a marketplace safe. In doing so, regulation can help attract a greater audience of buyers and sellers, and this can contribute to a growing and thriving economy.
We are most concerned with how much regulation is needed in the crypto space and does that regulation prohibit and exclude good actors, who would otherwise contribute to a growing and thriving economy.