Blockchain.com co-CEO and president Lane Kasselman believes Cayman’s early adoption of crypto regulation will future proof its financial services sector from the coming wave of disruption.
Founded in the UK in 2011, Blockchain.com is one of the world’s oldest surviving cryptocurrency companies. It has licences to operate in more than 70 jurisdictions but Kasselman highlights Cayman’s regulation as one of the best.
“Cayman moved early on regulation, which helped build strong relationships between regulators and industry participants,” said Kasselman in a March interview with the Compass. “Cayman offered a suitable regulatory framework and was willing to engage with us. That level of openness from government and regulators was unusual at the time.”
Blockchain.com’s own journey reflects the rapid growth of cryptocurrencies. In 2011, known then as Blockchain.info, its main purpose was to help early crypto users track transactions. But as cryptocurrency adoption became more widespread it began offering wallets to help clients store their crypto assets.
By 2019 more adventurous financial institutions, such as hedge funds, venture capital firms and family offices, began investing in crypto, which led Blockchain.com to offer wallets and custodial services for institutional clients.
Crypto goes mainstream
When cryptocurrencies emerged in the 2010s, they threatened to bypass the traditional finance system, but instead they are being co-opted by it. “Our institutional business mirrors traditional financial services in structure, such as prime brokerage and lending,” said Kasselman.
“The key is to meet customers where they are rather than forcing entirely new models,” he said. “Some innovations, such as NFTs [non-fungible tokens], attempted to create entirely new markets without sufficient demand, which made adoption more difficult.”
Kasselman believes the next wave of financial institutions to enter the crypto space will be big banks. “The largest banks have been developing capabilities quietly and are now entering the market as regulation becomes clearer. Products like Bitcoin and Ethereum ETFs have accelerated that trend.”
With traditional financial institutions increasing their use of crypto, financial centres like Cayman need to adapt. “The same clients who use Cayman structures in traditional finance are now using them for crypto,” said Kasselman. “They expect the same reliability and predictability, and Cayman provides that.” He notes that the combination of solid regulation and location means that Cayman is particularly well-positioned to cater for North American financial institutions moving into crypto.
Cayman has a good head start, but given the constant evolution of cryptocurrencies, Kasselman warns that the jurisdiction can’t be complacent. “Cayman should continue to clearly signal its long-term commitment to crypto regulation. That would give investors and institutions confidence that this is a deliberate and sustained strategy, not just a short-term opportunity.”
