First Global Credit’s Gavin Smith: ‘There Will Be a Lot of Changes in the Coming Decades Due to Blockchain Tech’
by Diana Ngo
Founded in late-2014, First Global Credit is a finance company entirely focused on digital currencies that lets investors use bitcoins as collateral margin to trade stocks and ETFs on global markets.
Earlier this week, the Geneva– and London-based company announced it has expanded the range of available equities to include shares traded on the London Stock Exchange, a move that aims to provide a greater set of choices to customers, according to Marcie Terman, First Global Credit’s communications director and a founding partner.
The next step, Terman said, will be to offer equity trading from other countries.
BTCMANAGER had the opportunity to catch up with First Global Credit’s co-founder and CEO Gavin Smith, a banking veteran with more than 20 years of experience in the industry, to discover more about his venture, what is coming next for First Global Credit, his views on regulation, and the future of blockchain technology in the banking industry.
“There are going to be a lot of changes in the coming decades due to blockchain tech,” Smith predicts, “and at least part of that is going to be the adoption of public blockchain based currencies.”
On Bitcoin and how it all started
I got involved with Bitcoin where I was working. My specialty is hedging commodity and financial product risk. The developers that worked on the platforms I used were Bitcoin enthusiasts and introduced me to the concepts.
Some of the developers on my team had mined bitcoins early on. Not enough to change a lifestyle, but enough that you could start to think about putting your kid through university.
They didn’t want to spend it but there wasn’t any service to allow them to invest it either.
Because I am always trading equities, we put together an arrangement where they used the value of their bitcoins as collateral and I gave them access to invest on my account, keeping the profits and any dividends received. The arrangement worked really well and it became clear that there was probably a much wider audience for this service.
An idea was born!
On the early days of First Global Credit
We had a vision to provide holders of the digital currency with ways they can make money from their bitcoins. We started out by creating a service made for people who already knew about trading stocks, by giving them a way they can use their bitcoins to make more bitcoins by doing something they were already familiar with. That has been very successful.
In the future, we’ve got plans to create investment opportunities for passive investors, people or companies who don’t want to make trading decisions themselves. They may not be interested in assuming risk with their bitcoins, but they do want a steady return.
In the long run, we see these kinds of services as being essential to making digital currencies a viable addition to the world economy.
On the long-term hairy audacious goal
Easy. We are building a customer-centric business that is going to provide a way for our customers to manage their entire fiscal lives using bitcoins. They will be able to save, invest, pay for things, borrow, get paid and lend all using digital currency. And we will do this on every continent where it is legally possible to do so.
We aim to become one of the creators of the Digital Currency Capital Market and one of the major players within that space.
On the challenges to overcome
One of the hardest things about starting First Global was the need to walk the tightrope between the sentiment of the highly libertarian, early-adopter bitcoin enthusiasts who idealistically believe in the sanctity of their identity and the real-world fact that some kind of regulation is inevitable.
In an effort to be sensitive to the needs of the market, but realistic in our long-term outlook, we have made the decision to provide our customers with privacy rather than anonymity.
For instance, all our customers must undergo Know YOur Customer (KYC) checks and we have policies in place to ensure Anti-MoneyLaundering (AML) requirements are followed. We have coupled this with establishing our business in countries that are sensitive to privacy issues, where we will not be required to provide blanket details on all our customers. If the authorities have a “Person of Interest” and gain a Court Order then we will comply with a request for information on a single individual. But we have decided to avoid jurisdictions that can make blanket demands for all customer details.
On blockchain technology in the banking industry
Banks and governments are not going to gracefully cede control that sovereign currency gives them. But there can be no doubt that the abuses over the past few years by the financial industry and banks have created an environment where the public is pre-disposed to accepting alternatives.
There are going to be a lot of changes in the coming decades due to blockchain tech, and at least part of that is going to be the adoption of public blockchain based currencies. No matter how powerful a business or government, they will not be able to stop the adoption. The question I think is how much damage are they willing to inflict to try to slow the inevitable. This will not be linear. There will be a public face that looks accepting and many, many threads of undercurrent trying to slow progress.
The advantage the public blockchain has is that its nature is the opposite to that of a banking system that takes value from the individual to feed the corporation. Bitcoin and public blockchain levels the playing field.
I am practical about this. We must learn to operate within a legal framework because it will legitimize bitcoin to the public. And First Global Credit from the onset, even though not under jurisdictional control, has operated in a compliant manner. We KYC check our customers, segregate client assets, log every transaction on our systems and provide continuity of service by mirroring our servers in proper financial grade data centers. In a perfect world, that is how all companies would behave; self regulate.
I believe the challenge is to seek out the countries that are bitcoin-friendly and supportive of innovation and change. If digital currency businesses flock to these centers, they will bring commerce and prosperity and will motivate other countries to follow their lead.
On the plans and targets for 2016
We will have a new service launch every other month in 2016. We are working right now on re-engineering our trading platform, which admittedly is quite rudimentary. The new platform will have easy-to-integrate APIs, be MT4 accessible and provide a customized experience for users so that they can set up the graphic user interface (GUI) in a way that makes sense for them.
We will also launch commodity futures trading on the platform. Just like stock trading on the platform the commodity trading will be backed by bitcoin. We are also researching the extension of our acceptance of other digital currencies.