Introducing Bering Waters Ventures’ Investment In Shyft Network
Bering Waters Ventures presents Shyft Network, a decentralized protocol focused on solving some of the most challenging problems in the field of identity and trust.
The acceleration of e-commerce and Decentralized Finance (De-Fi) has led to a shift from transactions being conducted in-person to being performed virtually and increasingly anonymously. This has introduced the challenge of determining a counterparty’s credibility.
In Web 2.0 this was performed by trusted intermediaries in a highly rigid point-to-point structure. However, it is an outdated model that concentrates power with a few entities and runs contrary to the modern paradigm of decentralization. That model also does not work in the field of Decentralized Finance where all parties operate anonymously. Banks are designed around being able to fully identify their counterparties and are therefore locked out of participating in this space.
For decentralized commerce and finance to truly become successful, there needs to be a more dynamic mechanism by which parties can come together to transact and share information about participants and therefore create networks of trust.
Bering Waters Ventures assesses Shyft Network as a pioneering RegTech startup serving as the missing link in this ecosystem.
Shyft Network enables identity verification, validation, and the sending of credentials and other data across multiple different blockchains and networks while meeting KYC and other data privacy requirements, including European Union’s GDPR or California state’s CCPA requirements.
There are three major challenges in the digital identity space where Bering Waters Ventures sees Shyft Network’s capabilities as impactful to the industry:
i) Providing a solution to emerging digital asset regulatory requirements as governments increasingly port anti-money laundering regulations from the traditional fiat world into the digital asset realm
ii) Enabling traditional financial institutions to participate in Decentralized Finance — something regulated entities cannot do today owing to lack of counterparty information (i.e. Know Your Client data) and provenance of funds
iii) Establishing digital identity schemes at a national and international level that do not rely on intermediaries, such as banks, and are ultimately more inclusive as they also serve underbanked communities.
Evolving Digital Asset Compliance Landscape
Meeting emerging regulatory requirements in the digital asset space is a key challenge that the industry is struggling to address effectively.
While digital assets have historically escaped the reach of government surveillance, with the introduction of the Travel Rule by Financial Action Task Force (FATF), an inter-governmental global money laundering and terrorist financing watchdog, cryptocurrency exchanges and cryptocurrency wallet providers are now required to exchange identifying information of digital asset senders and beneficiaries and to guarantee the accuracy of that information.
The operations of this process have been left to the industry to handle, which is problematic given the lack of standards or data-sharing infrastructure. Without a coordinated response, numerous solutions have emerged; some suggesting bilateral sharing, others suggesting an establishment of a rigid network of industry participants playing the role of trusted entities.
Bering Waters Ventures believes that the future of Travel Rule data sharing is through modern technology paradigms like Web 3.0’s decentralized protocols.
Shyft Network has already made a name for itself in the travel rule space; The company has established the Veriscope Governance Task Force which represents a Travel Rule-focused collaboration with some of the industry’s largest global liquidity providers, involving over 30 exchanges. The Shyft Network team has augmented its board with leading experts in the Travel Rule including FATF’s former Executive Secretary, Rick McDonell, and former Head of the Canadian Delegation to the FATF, Josee Nadeau.
Shyft’s decentralized network supports a Travel Rule compliant system by enabling participants to determine what information, with prior consent from the data owner, they wish to share with their counterparties for trust to then be overlaid. Bering Waters Ventures believes that, in addition to solving the essential issues mentioned, Shyft Network´s approach provides an unparalleled level of flexibility and eliminates the need for industry consortia and intermediaries.
Traditional Financial Industry Participation In Decentralized Finance
De-Fi has been growing rapidly and currently stands at a market capitalization of $52bn. However, to date many traditional financial institutions have not been able to move into a decentralized space due to De-Fi’s inherent pseudonymous complexion which creates an entry barrier and a challenge in validating identities and the nature of transactions.
The strict requirements of traditional financial institutions and the value De-Fi participants attribute to anonymity lead to a conflict of interest, and limit the expansion of the DeFi’s space. Shyft Network aims to solve this issue by enabling parties to opt in to information sharing, meaning that parties benefiting from outside liquidity sources can share data across a decentralized network on a secure bilateral or multilateral basis, while others continue to operate with full anonymity.
Bering Waters Ventures believes that providing traditional financial institutions with tools that enable them to participate in the De-Fi ecosystem will be a catalyst for the next phase of growth in this space.
Building Sovereign Digital Identity Schemes The Right Way
Digital identity schemes will provide significant benefits by streamlining the processes which citizens use to access digital services and perform transactions online. Decentralized technology has the unique ability to deliver a low-cost infrastructure where entities, governments and individuals can collaborate to build identity solutions. These solutions do not depend on singular institutions and can be more inclusive than existing platforms which require governmental identification such as passports and drivers’ licenses, of which financially marginalized countries and citizens lack.
Shyft Network is designing groundbreaking solutions in this space. The team is in phase one of a digital identity collaboration with the government of Bermuda which aims to provide IDs for enterprises and citizens to operate with public services. The solution seeks to build a nationally recognized framework of e-IDs to streamline public services and company transactions while reducing fraud.
A Long Term Thesis To Drive The Industry Forward
Decentralized identity is a space which has been evolving for a number of years and will continue to do over the coming years. Bering Waters Ventures believes in the importance of foreseeing the future, with a portfolio of multi-year strategic investments in organizations that are seeking to create impactful long-term change to the evolving space of decentralized networks. Shyft Network is one part of the extensive ecosystem Bering Waters Ventures actively supports.
About Bering Waters Ventures
Founded in 2019, Bering Waters Ventures is one of three businesses that form Bering Waters Group. The Venture arm focuses on research-heavy innovations in the blockchain and cryptocurrency space. It identifies and supports companies and entrepreneurs of various types and sizes, from undervalued projects to leaders in its sector. Its mission is to provide value to projects through its services and solutions offered across three companies of the Group and to leverage its extensive network of global investors in the areas of funding, market strategy, and development support.