Shiva Bissessar, BSc (Hons), MBA, MSc

Managing & Technical Director

shiva@pinaka.co.tt

@PinakaTT

www.pinaka.co.tt

BLOCKCHAIN & Digital Financial Services29/11/17

https://ripple.com/insights/kosta-perics-mission-to-reach-the-unreachable/

Digital Financial Services (DFS)

• Financial Inclusion

• Economic Development

• but its not just for the poor

• Expected attributes of any payment system

• Security & Privacy

• Speed & Efficiency

• Scalability

• Digital Identity

Digital Currency, Blockchain & DLT • Decentralized digital currency e.g. Bitcoin (BTC)

Litecoin (LTC)

• Centralized Central Bank issued digital currency(CBDC) & Digital Fiat Currency (DFC)

• The underlying technology of digital currency i.e.Blockchain• Public blockchain e.g. Ethereum (ETH).

• Permissioned blockchain e.g. Corda, Hyperledger

• Distributed Ledger Technology (DLT)

Exploring Digital Financial Services (DFS)

• Authorities would like to increaseparticipation in the digital economy &entrepreneurs bemoan lack ofpayments mechanisms to participatein global marketplace

• In 2016 and 2017 the ITU heldworkshops for the benefit of policymakers and other stakeholders,introducing new concepts of DFS

• 2016 UN ECLAC digital currency study uncovered

longstanding payments system deficiencies in

certain territories

Wire Transfer

Electronic Money

Via external payment providers e.g. Paypal

ATM, P2P, Remittance

Mobile Money(i) Complementary

(ii) Collaborative

Airtime /Credit

P2 P transfer (purchases, international remittance etc.) via MNO & MFIe.g. M-PESA

Utility payment

Remittance e.g. BitPesa

P2P via SMS

Bank Exchange Agent

E-CommercePayment card

Mobile MoneyAlternate Infrastructure

USE

CA

SES,

EX

AM

PLE

SSE

RV

ICES

MED

IUM

CONVERSION POINTS

Enable SMEs to receive payments via payment processors

Digital Currency

E-Commerce

FAMILIAR NOVEL

Money

Via local merchant account + internat’lpayment gateway

P2P transfer e.g. Paym

NFC payments e.g. ApplePay

http

://repo

sitorio

.cepal.o

rg/han

dle/1

13

62

/39

860

Caribbean Digital Currency Adoption

• Caribbean authorities remain focused on weaknesses and this poses a threat to development of digital currency industry in Caribbean

http

://repo

sitorio

.cepal.o

rg/han

dle/1

13

62

/39

860

UK Approach to Digital Currency

• Address weakness: AML controls & BSI consumer protection• Stimulate innovation: £10M for research into innovation of digital currency

http

://repo

sitorio

.cepal.o

rg/han

dle/1

13

62

/39

860

DFS landscape in Caribbean at present

• Some authorities have limited view on mobilemoney

• Some have been more open in working withindustry to develop regulatory classes to allow foroperations

• Potential digital currency exchange services andoffering to do a CBDC / DFC pilot.• Some CBs are only now examining digital currency and

blockchain

• Limited expertise and academic research invarious DFS areas

Opportunities for development of DFS

• Cash in & cash out

• Pay utility bills

• P2P

• G2P

• Merchant payment

• Remittances; domestic & international

• Financing and credit

• Bridge the gap between policy makersand market entrants

• Promote responsible adoption ofblockchain and DLT based systems,advising public institutions and privateindustry on policy, compliance, andtechnology

Objectives

• Industry Building

• KnowledgeBrokering

• Global Engagement

• Increased participation in the DigitalEconomy

• Correspondent bank de-risking challenge

• Central Bank Digital Currency (CBDC) &Digital Fiat Currency (DFC)

• Intra-regional settlement networks

Focus Areas

Exploration of Caribbean DFS• Collaborative approach required

• Financial regulators, policy-makers,

• Innovation and entrepreneurship

• Service provider driven & independentresearch

• Exploration cannot be one-sided

• Alignment with international workstreams

• Capacity building

Ransomware

• Ease of receiving value over the Internet comeswith the cost of uptick in ransomware

• Ransomware takes advantage of systemvulnerabilities and/or social engineering

• Back-up are useful, but not the answer

• Tools exist which can detect suspicious activity onyour device & thwart attempts to encrypt you datae.g. BicDroid, CryptoDrop

Anonymity

• The pseudo-anonymous nature of Bitcoin isoften confused for true anonymity.

• Other protocols now exist with offer greaterlevels of anonymity.

• Tracing transactions is an active field ofresearch.

• Training for authorities, law enforcementshould be given some emphasis e.g.UNODC, Inerpol,

Opportunities for cybersecurity

• Caribbean has proposed/enactedcybercrime & data protection legislation anddigital ID systems

• There is opportunity to develop Caribbeancybersecurity ecosystems

• Examination of blockchain could be withinremit of such ecosystem

The $10,000 question

• Governance remains an issue with discordbetween developers and miners

• Behind the price appreciation is acorresponding decrease in utility asmeans of facilitating payments

• Payments and remittance providers havecited fees, speed and efficiency asrationale in switching to other digitalcurrencies for transactions.

The future…

• Caribbean institutions need to examineeconomic development opportunities inDFS, blockchain & cybersecurity

• A complimentary service provider &independent research approach is advised

• The monetary evolution will take place withCentral Banks at the helm issuing CBDC orDFC

Shiva Bissessar, BSc (Hons), MBA, MSc

Managing & Technical Director

shiva@pinaka.co.tt

@PinakaTT

www.pinaka.co.tt

BLOCKCHAIN & Digital Financial Services29/11/17