Lack of funds shuts down Stellar-based crypto bank FairX
|- FairX founder Michael Dowling explained that the company has been struggling for the last 14 months.
- Dowling also shared his skepticism of fiat-pegged stablecoins
FairX announced this Saturday and they are terminating operation due to lack of funds. The company was planning to leverage the Stellar network and build a banking platform that could take both Stellar and fiat and convert them into any other digital token.
Michael Dowling, FairX founder, explained through a series of tweets that the company has been struggling for the last 14 months.
“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.”
Regarding the plan of the company, he tweeted:
“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.”
Dowling said that the company wasn’t receiving any attention from venture capitals or crypto-focused investors. While some other investors were interested, the company couldn’t issue shares due to banking regulations.
Dowling also shared his skepticism of fiat-pegged stablecoins:
“This dematerialized bank deposit would act, in many respects, similarly to a stable coin, except a stable coin this was not. A stable coin, by its definition, is not an asset that can settle transactions between banks in the context of, say, ACH or CC transactions.
A bank deposit, however, is. Stablecoins are doomed for failure for a couple reasons - but the main reason is because the bank deposit a stable coin points to is not owned (legally) by the token holder - its owned by the stable coin issuer.”
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