1. Banks & Bitcoin Andres Kitter

2. Banks & Bitcoin Impact to the financial ecosystem "Bitcoin is truly radical, Cryptocurrency, more broadly, is a truly radical, truly revolutionary, fundamental breakthrough in computer science, completely different way to do transaction processing, potentially a replacement for a very large amount of the status quo, but has the big chicken-and-egg challenge.” -Marc Andreessen 2

3. Banks & Bitcoin Impact to the financial ecosystem „As an immediate response, the EBA therefore advises national supervisory authorities to discourage credit institutions, payment institutions and e-money institutions from buying, holding, or selling virtual currencies. While this response will mitigate risks arising from the interaction between virtual currency schemes and regulated financial services, it will not address risks arising within, or between, virtual currencies schemes themselves“ - European Banking Authority 3

4. Banks & Bitcoin Impact to the financial ecosystem “Why has disruption….not happened in finance? There’s a very straightforward reason: Regulation. If (Bitcoin) wants to take retail deposits, they will have to change their culture.” - Anshu Jain, co-CEO of Deutsche Bank 4

5. Banks & Bitcoin Challenging environment Banks operate under strict surveillance of the supervisory organisations: Local level – FSA, FIU, CB International level – ECB, EBA, FATF, FinCen, IRS. Anti money laundering (AML) and know your customer (KYC) controls are intensifying. Correspondent banks are looking very closely with whom they are making business with. Transaction businesses, like payment processing, are often low margin and high risk services: BNP Paribas recently fined 9 billion USD violating US sanctions HSBC was fined 1,92 billion USD AML charges in 2012. 5

6. Banks & Bitcoin Challenging environment While considering the businesses, banks only work with companies where business practices are well established and transparent and companies pay detailed attention to the KYC and AML procedures. Positiive cases: 6 & &

7. Banks & Bitcoin Leveraging the technology Underlying technology offers new opportunities Cheaper and faster payments and remittances Smart contracts Distributed databases Emerging services on top of blockchain Payments and settlement systems - Falcon, Stellar, Ripple. Bitcoin cards – Xapo, BitPlastic Decentralised governance - Bitnation Ethereum 7

8. Banks & Bitcoin Leveraging the technology LHV crypto currency wallet: In cooperation with ChromaWallet AB Based on the colored coin technology Phase I - P2P, P2C payments 8