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Tampa Bay's Crypto Community Is Ushering In The New Era Of Finance
Roughly $10 trillion worth of payments — one-third of global transactions — flow through JPMorgan Chase’s payments center in Tampa Bay every day.
Kabir V.
2:28 10th Jun, 2022

Roughly $10 trillion worth of payments — one-third of global transactions — flow through JPMorgan Chase’s payments center in Tampa Bay every day.

Tampa is known as the payments capital for JPMorgan, according to Mike Blandina, managing director and global head of JPMorgan’s payments business in Tampa Bay. Blandina’s tech team in the region works on various projects underway, including Onyx, the bank's blockchain-based platform for wholesale payments.

All eyes are on U.S. banking behemoths like JPMorgan and Wall Street trendsetters for direction on the disruptive and fast-growing cryptocurrency and blockchain industry. But Tampa's bustling crypto startup community shows that you don't need a $12 billion annual tech budget like JPMorgan to drive innovation, and there's an advantage to smallness.

Regulators have yet to provide traditional banking and financial institutions with guidance on crypto, leaving room for startups and crypto entrepreneurs at the forefront of the tech revolution taking over traditional finance.

"There's power in being JPMorgan and there's power in being a fintech," Blandina said. "We believe there are plenty of alternatives to decentralized crypto, and that's not to say we're not innovating on blockchain. But we aren't participating in the decentralized world. We can't."

Startups that have sprung up in Tampa Bay during the crypto boom of recent years are growing into disruptors with multimillion-dollar valuations, and they're planting a flag in the region to put it on the map as an emerging crypto hub. The diversity of players in Tampa Bay’s crypto ecosystem offers a glimpse into how the technology is poised to further disrupt mainstream finance and how traditional institutions stand to benefit.

Like disruptive technologies before it, cryptocurrency incited a frenzy of excitement and skepticism that eventually gave way to experimentation. Crypto change agents acknowledge the shift to a decentralized financial system won’t happen overnight. Institutional backing and the trust that it instills are vital for the incremental change necessary to push the disruptive new industry past the early adopter stage and into mainstream banking and finance circles.

Room exists not just for co-existence but for collaboration.

Building trust from the bottom up

JPMorgan CEO Jamie Dimon sparked a global debate in 2017 when he called bitcoin a “fraud.” Dimon eventually walked back his statements during an interview a year later, saying that blockchain — the technology powering the disruptive new industry — was a promising innovation. By the time of his annual shareholder letter earlier this year, Dimon was touting Liink, the bank’s blockchain network, and JPM Coin, the bank’s digital token that clients can use to transfer U.S. dollar deposits.

While JPMorgan spends $12 billion on tech investment every year, a bottom-up approach — one that’s centered on smaller, community-based banking institutions — is fertile ground for the shift to cryptocurrency and decentralized finance, or "DeFi."

“That’s what’s being missed in a lot of the fintech disruptor conversations,” according to Brian Alvarez-Bailey, the founder of Allison, a Tampa-based startup that provides a way for smaller lending institutions to expand their fintech capabilities without overextending themselves with major tech investments.

Community banks and credit unions possess a degree of trustworthiness that puts them in a prime position as an intermediary between traditional banking and DeFi, Alvarez-Bailey said. But community banks are reluctant to experiment with DeFi because they don’t have the tools to be risk tolerant, he said.

Partnerships with third-party tech platforms and startups like Allison, however, can act as a sort of test kitchen for banks to try out new products and services, gather data and eventually offer DeFi products themselves, he said.

“Allison is just the technology provider, a service inside of the products that banks offer,” he said. As a software as a service (SaaS), Allison’s subscription-based model would allow banks to expand their tech offerings without spending hundreds of thousands of dollars to build a new product, he said.

The platform adheres to regulatory compliance requirements while providing the guardrails around transactions, predictive analytics and other safety features, he said.

Alvarez-Bailey said the institutional backing of a community bank can also lend legitimacy and, by extension, the infrastructure DeFi products need to break into the heavily regulated banking world.

Cogent Bank, a community bank that grew deposits at its two Tampa Bay branches by more than 130% in 2021, is among the first in the nation to leverage a blockchain-based platform as a third-party payment solution. When the bank struck its partnership with TassatPay, the first blockchain-based business-to-business payment platform of its kind to receive approval from U.S. regulators, Cogent’s President Chirag Bhavsar told the Tampa Bay Business Journal that “people think we’re crazy.”

“They say we have a product that frankly nobody is asking for. And I say they’re not asking for it because they don’t understand it. But when [clients] do understand it, over time, they won’t be able to live without it,” Bhavsar said. “Most importantly, TassatPay can be adopted without disruption to our operations.”

Blockchain is the future, he said.

"In the next five or 10 years, this is how money is going to move,” Bhavsar said.

The challenge of applying an outdated regulatory framework to novel technologies like blockchain has been a hurdle for financial institutions that want to adopt the new tech. Bhavsar says the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, and Federal Reserve want to make sure banks are doing their due diligence to ensure they have the appropriate resources, and that partners are vetted and reputable.

The Wild West of DeFi

Cryptocurrency and DeFi — the financial framework underpinning cryptocurrency transactions — are obscure concepts for many. DeFi is equal parts a social movement and technological revolution. Bitcoin, the first-evercryptocurrency, was invented in direct response to the widespread disillusionment caused by the financial crash of 2008 when the hood was lifted on the American economic system.

“People wanted something else to trust,” according to Nuke Goldstein, the chief technology officer of New York-based Celsius Network, which launched an office in Tampa Bay last fall.

Nuke Goldstein, co-founder and CTO of Celsius.

Goldstein said he gets the sense that market researchers at mainstream financial institutions don’t understand the driving force behind cryptocurrency.

“There is a lot of curiosity, and banks are good at finding new yield opportunities, but they don’t understand the social movement of crypto,” he said.

In full maturation, DeFi would be nothing short of a radical readjustment of the current U.S. economy. In contrast to centralized finance, decentralization places financial control with individuals and out of the reach of central entities — banks, regulators and governments.


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