The FairX company, which promoted itself as a crypto bank, recently announced that it was closing down its operations.
The announcement was made on July 19 by the FairX co-founder through a meandering series of tweets, which cited that the biggest reason as to why he was shutting down his operations was due to lack of finances.
Hello! It’s about time I do an update – the last one of this kind – on where we are in terms of creating a business. Thread below 👇
— 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,” posted the founder, former CTO of IBM Blockchain Financial Solutions Michael Dowling.
Dowling also noted that blockchain might not be such a good idea for banking. He also wished Facebook good luck with its Libra crypto to win the regulatory battle it is currently facing.
“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,” wrote the FairX co-founder.
Dowling concluded that he and his staff needed time to reorganize.
On a technical level, also taking a step back from the crypto ecosystem in general. I think it’s appropriate to wait and see how things start to shape up and identify opportunities to make a great product, that solves actual problems, that creates a sustainable return.
— fairx (@fairxio) July 19, 2019
According to researcher Gitzalytics’s Medium post, the company was intended to run on top of the Stellar blockchain, with the purpose of serving as an “anchor” on the network that would receive fiat and crypto funds and then convert them into XLM tokens.
The co-founder also said that neither VCs or crypto investors seemed interested in the company. In the first instance, he was not able to give meaningful shares to early investors due to banking regulations and he also could not issue a proper stablecoin without centralization.
From all his efforts, Dowling concluded that disrupting the banking sector with crypto costs too much fiat money.
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