We are live from Token 2049 here in Singapore. Joining me is Fahmi Syed, President of the Midnight Foundation. Thank you very much for being with us today.
My pleasure. Thank you for having me.
How about we start with what Midnight Foundation is, what you do, and who you deal with?
The Midnight Foundation’s primary role is to be the steward and custodian of the Midnight Network. The Midnight Network is a Layer 1 which is all about programmable privacy — enabling builders, users, developers, and large institutions to build shielded transactions on a blockchain and then selectively disclose information to further progress the transaction and leverage opportunities.
What is the biggest misconception about the Midnight Foundation here at Token 2049?
We are here to promote the network, talk about what is happening in the network, the partnerships we are bringing to Midnight, and why privacy matters in blockchains — especially with the adoption by large financial institutions and stablecoins. That trend is growing and privacy is going to be the heart of allowing that to really bring liquidity and opportunities into any sector.
Why is privacy so important for banks moving on-chain right now?
Think about how the internet has developed. The largest companies in the world all have one thing in common — how they harvest data, how they use data to advance themselves and become very powerful and successful. The core of that data sits not only in technology companies, but also in financial institutions and other corporations. Trust is the number one asset you have alongside that data. And you cannot control trust or data without privacy.
With Monument Bank — what will tokenised deposits actually change for customers?
One of the largest trends of recent years has been stablecoins — about 80% of transactions in blockchain are stablecoins. As institutions come forward, particularly banks, they will look to use tokenised cash deposits — a digital representation of the cash they hold for their clients on-chain. With Monument, we have a programme whereby the first phase, which has been going live imminently, is to tokenise up to £250 million — roughly $300 million — of their clients’ cash deposits on-chain on Midnight within a private sovereign zone that Monument controls for them and their clients. Phase two is to bring in money market funds, private equity funds, hedge funds, and credit funds — and enable those Monument clients through their banking app to switch from those cash deposits into tokenised assets, all powered by Midnight technology. But for the banking client, Midnight is just a technology layer. They just see a banking app with the yield opportunities.
How do you protect customer privacy while giving regulators the access they need?
This is an important ability that Monument was looking for in a blockchain partner — and the reason they chose Midnight is first and foremost the technology. Midnight enables fully shielded transactions around the data of their clients and their banking information. Their asset never comes on-chain. It is just a cryptographic proof. Monument Bank, through the selective disclosure programmability within Midnight, can then allow viewing keys or disclosures to their clients, to the accounting team, to the compliance team, and if needed, to a regulator.
For banks considering this move — what will actually convince them to go from pilots into everyday use?
Monument will go live — so that will be everyday use. And the nice thing about Monument Bank is that they are embedding this into their technology service which is licensed to other banks — so the scalability is already there for Monument to sell that to their other banking partners. Beyond that, we are having conversations with many large investment banks across the world. What they are seeing is how Midnight has approached not just the fundamentals of privacy with selective disclosure, but also how we think about creating a selection of functions that together empower them — thinking about how the whole can be more powerful than the sum of the parts.
What is the next big milestone for Midnight?
Yesterday we announced the release of Midnight Passport, Midnight Collateral Warehouse, Midnight Private Office Files, and private dark pool trading. These are tools that in traditional finance have enabled identity, KYC, dark pool trading, and leverage financing. We are bringing those same concepts into the blockchain sphere. As we speak to banks like Monument and several others we hope to announce in the future, they see how we are bridging the gap between traditional finance and DeFi. You could always think of Midnight as the VPN for DeFi.
Fahmi, thank you very much for talking to us.
