FairX, a company planning to bring crypto-based banking services, on Saturday announced the termination of its operations due to lack of funds.
In a series of consecutive Twitter posts, Michael Dowling, the founder of the company, detailed the company had been struggling to raise funds for the last 14 months.
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.
— fairx (@fairxio) July 19, 2019
Mentioning the plan of the company, the announcement stated: “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.”
Per Dowling, the company did not get the attention of venture capitals or crypto-focused investors. Though some other investors were interested in the company, banking regulations barred him from issuing preferred shares to initial investors, while the company failed to create a stablecoin without centralization.
Stablecoins in crisis?
Though once engaged in bringing crypto to banks, Dowling now believes that Blockchain might not be the best solution to streamline banking services. He revealed that the cost of disrupting the banking industry with blockchain solutions is massive.
He also targeted the future of stablecoins and pointed out the flaw of the fiat-pegged coins in banking.
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.
— fairx (@fairxio) July 19, 2019
Established in March 2018, FairX was aiming to Leverage Stellar network to built a banking platform that could take both Stellar token and fiat and convert them in any other digital token.
Though since April, the crypto market has been recovering from the year-long bear, many crypto-related businesses are closing their operations due to lack of funds or regulatory uncertainties. Most notably, four crypto exchanges in India terminated their operations this year.
