In a Twitter thread so winding that it should have been a Medium post, the founder of FairX, a so-called crypto bank, announced the company was shutting down. The tweetstorm, posted on July 19, offered a complete rundown of the problems facing a modern crypto-banking solution. The biggest problem? He ran out of cash.
Let me start right off the bat by telling you our original goals of creating a licensed national bank is unfortunately failing. The immediate reason is simply a lack of funding – for the past 14 months we’ve been on a tear trying to raise money.
— fairx (@fairxio) July 19, 2019
“Ultimately, our business model was simple: introduce a new, licensed, fully regulated national bank, modeled as a financial market utility, that would work with individuals and banks to create a dematerialized bank deposit, denominated in USD. The bank was Frank Financial,” wrote the founder, former CTO of IBM Blockchain Financial Solutions Michael Dowling, apparently without irony.
Further, the Dowling noted that blockchain might not be the best solution for banking. He did, however, wish Facebook and Libra well in their effort to turn things around on the regulatory front. “I really do wish Marcus and his team all the best of luck. I wish Marcus had chosen…ANYONE…other than FB to partner with. I wish he had tried this at PayPal, which has a reputation of actually following the rules to get things done. Pretty sure they will require a bank license,” he wrote.
In the end, Dowling said he and his team needed some time to regroup.
TL;DR: couldn’t fundraise, need to switch directions, we’re really sad about it, some of us need a well-deserved break and time away from the industry to collect thoughts. C'est la vie.
— fairx (@fairxio) July 19, 2019
The company planned to run on the Stellar network, and was to become an “anchor” on Stellar that could take in fiat and crypto and convert them to tokens on the network, according to researcher Gitzalytics.
Dowling noted that neither VCs or crypto investors liked the company. First, he was unable to give preferred shares to early investors because of banking regulations and he also could not create a proper stablecoin without centralization, a bugbear to the crypto whales. In the end, Dowling said, it cost too much fiat to disrupt the banking industry with crypto.
The upside? Visitors to the FairX website are now treated to the tiniest of smiles:
Image via FairX.io. Car image via Shutterstock.