Of the 7 bi l l ion people al ive on the planet, 1.1 BILLION subsist below the

internati onal ly accepted extreme-poverty l ine of $1.25 A DAY .

The Economist

Adult population with NO USE OF formal or semiformal FINANCIAL SERVICES

Official Development Assistance

Foreign Development Aid

Remittance flows are LARGE and GROWING

• Average total cost of sending money to Africa in 2013-Q2 11.79 %

• Cost of sending money to Africa in 2013-Q2 2.94 % more expensive than the global average of 8.85%.

• 10 most expensive corridors all intra-African, with 6 of them originating in South Africa.

• Most expensive countries to send money to are those receiving mainly

• from other African countries –Malawi, Mozambique, and Botswana.

• Cheapest markets to send money to Egypt, Liberia, and Somalia.

• Commercial banks continue to be the most expensive type of provider.

• Bank account services are the most expensive method of transfer.

Send Money Africa – July 2013 (The World Bank)

Underdeveloped infrastructure Limited competitionRegulatory obstacles

1

2

3

4

4a

5 6

7

SR

Current Supply Chain

Cost incurred

12

SR

Next Generation Supply Chain (digital treasury & settlement)

Cost incurred

SR

Last Generation Supply Chain P2P Transfers (already possible today)

1

2

3

4

56

7

Prepaid Card Supply Chain

“Virtual currencies promise to benefi t commerce on many levels, from serving

the unbanked to new fi nancial products . I chal lenge our innovators:

devise c r e a ti v e s o l u ti o n s to prevent virtual currency abuse.”

FinCEN Director Jennifer Shasky Calvery

Financial Acti on Task Force Groupe d’Acti on Financière

(FATF-GAFI)Special Recommendation VI

Each country should take measures to ensure that persons or legal entities, including agents, that provide a service for t h e t r a n s m i s s i o n o f m o n e y o r v a l u e , including transmission through an informal money or value transfer system or network, s h o u l d b e l i c e n s e d o r r e g i s t e r e d and subject to all the FATF Recommendations that apply to banks and non-bank financial institutions. Each country should ensure that persons or legal entities that carry out this service illegally are subject to administrative, civil or criminal sanctions.

[x] ANONYMITY product has to dissuade the bad element, never attract it.

[y] COMPLIANCE product and operations cannot be in violation of any applicable laws and regulations (the “form” or “paper” side of compliance).

[z] SUBSTANCE   what is written in their policy must actually be implemented. Businesses must be run with integrity, responsibility and control.

Anonymity = AnathemaAnonymous identification No value limits Anonymous funding

No transaction records Wide geographical use No usage limits

Underground economy

• The Shadow Superpower (Robert Neuwirth, Foreign Policy) System D (“Debruillards”)

• Informal (“extra legal,” “black”) economies $10 trillion in aggregate

• The Mystery of Capital (Hernando de Soto, 2000)

• Mystery failure of assets to serve as capital

• Problem credibility of rights transfer at a distance (i.e., ability to engage in binding contracts)

• Smart contracts jurisdiction-free contracting mechanism

• Distributed asset ledger for everyone, EVERYONE, around the globe

@JuanLlanos

Thank you!