As the crypto market continues to follow a sideways course, veteran banker John Vasquez is not keeping an eye on the charts. John Vasquez says that while there is a lot of fear and uncertainty about regulation in the market, the long-term developments from the pipeline are good signs for the crypto industry and shares the altcoin projects he is betting on. We have compiled the shares of the master banker for Kriptokoin.com readers.
Three factors that could change the course of banks, according to John Vasquez
States like Texas, Arizona, Wyoming, Florida, and New York are pushing to become crypto hubs. At the federal level, the Joe Biden administration is reportedly preparing an executive order to task federal agencies with regulating cryptocurrencies. John Vasquez comments, “When I hear things like this as an investor, it’s positive for me.”
If it’s a systemic threat to the economy, they know they can’t stop it. So first they will resist it, they will sue and regulate it, and then they will join it.
On the banking front, Vasquez notes that the growing interest in crypto will mean banks have no choice but to adapt. Traditionally, banks make money in three main ways: capital market income, interest income, and fee income. Vasquez says all three could soon be questioned.
JPMorgan, the largest bank in the US, posted a record-breaking $48.3 billion profit in 2021. Citi and Wells Fargo also had a strong year, in part due to lucrative investment banking fees. However, Vasquez states that their performance is most likely due to the liquidity created by loose monetary policy and low interest rates, which he says are unsustainable. The master banker cites three other factors that could change the course of banks:
The stock market is in a slump, potentially slowing sales, trading and brokerage services. First, cryptos have also dropped drastically along with stocks in the latest hedging environment, and volatility could increase trading volumes. Second, customers are not entering banks as much as they used to. Third, customers are increasingly turning to decentralized finance.
“Banking system focused on opportunities from crypto integration”
Meanwhile, exchanges like Crypto.com and Coinbase have announced that customers will be able to deposit government and employer paychecks on their exchanges. Referring to the U.S. Currency Control Office, Vasquez makes the following assessment:
This tells me that banks are in a feverish rush to stay up to date with Blockchain, working with the OCC, which has already been approved to hold cryptocurrency. They just need to put the documents together, apply to the OCC.
“So what I see in the big picture is that cryptocurrencies, Blockchain, stablecoins will be part of our ecosystem,” says the veteran banker, no matter how much DeFi develops, most customers will still want a trusted party to have oversight of their finances, and that’s it. Therefore, he focused on the opportunities that will come from the integration of the banking system into the crypto sector.
Vasquez says Blockchain technology creates a great opportunity for banks to move money faster, and its lower costs will allow them to create better fee structures that benefit customers and profit margins.
Altcoin projects and advice invested by the master banker
First, Vasquez believes the rails built for the banking system are deeply intertwined with the Ethereum Blockchain. Legacy firms like JPMorgan, UBS, and Mastercard have invested heavily in ConsenSys, a protocol that supports blockchain-based financial infrastructure on Ethereum.
Vasquez focuses on continuously increasing his position on Ethereum. He says he averages the dollar-cost every month getting into crypto and owns an Ethereum miner. The next focus is on ISO 20022 compliant cryptos. This is an international messaging system for global financial institutions, first introduced in 2004. With full integration in effect by 2025, it aims to replace the SWIFT system and standardize messages between institutions.
Among the altcoin projects that fit into this upcoming system, Vasquez says he has invested heavily in Ripple (XRP), Stellar Lumens (XLM), and Algorand (ALGO).
Each platform potentially benefits the global financial system. XRP is an institutional fund transfer system, currency exchange and remittance network. Vasquez says that although he is facing an ongoing battle with the SEC over whether the securities are available, they are already used globally. Steller Lumens is an open source and decentralized protocol for transferring fiat money from digital currency. Algorand aims to accelerate the convergence between decentralized and traditional finance.
Finally, Vasquez suggests taking a look at Quant (QNT), a payment validator token. While he hasn’t invested in it, it’s something his team is investigating. This crypto is also ISO 20022 compliant. While that doesn’t mean institutions will use these platforms, Vasquez notes that when regulation comes to town, ISO 20022-compliant cryptos will likely outperform other altcoin projects.
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