The Role of Compliance in Crypto

Blockchain Leaders Insights Podcast

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Welcome to this enlightening episode of “Blockchain Leaders Insights,” where we delve into the transformative world of blockchain technology and its profound impact on compliance and financial services.

In this episode, Lory Kehoe, Chairperson of Blockchain Ireland and Ross O’Leary, Co-chair of the Communications Working Group, Blockchain Ireland guide us through an in-depth discussion with Cara Hennessy, Cofounder and Director of Compliance at Provenance, whose journey from a finance background with KPMG in Dublin to the forefront of blockchain innovation is nothing short of inspiring.

Cara’s story is a testament to the power of adaptability and foresight in today’s rapidly evolving financial and technological landscapes. Her experience, spanning across various sectors, has given her a unique perspective on how blockchain can revolutionize compliance and fight financial crime.

In this episode, Cara takes us through her ground-breaking work with Provenance, a platform that leverages blockchain for compliance and regulatory purposes. She illuminates how Provenance is not just a tool but a pivotal step in applying blockchain technology for practical, real-world problems.

We dive into the complex yet fascinating world of on-chain analytics. Cara explains how this aspect of blockchain provides unprecedented data analysis and transparency, opening new doors in understanding financial transactions and their implications.

Furthermore, Cara offers a global perspective on the regulatory landscape of blockchain. She discusses the varied approaches and complexities in regulations across different countries, highlighting the importance of understanding these nuances in the global context.

Cara’s journey and insights underscore the transformative potential of blockchain technology. Not just as a tech tool, but as a catalyst for innovation in financial services and compliance. The episode wraps up with a forward-looking discussion on the future trajectory of blockchain in these sectors, painting a picture of a world where blockchain is integral to compliance and regulation.

Join us in this engaging and informative episode as we explore the intersections of blockchain, compliance, and innovation through the experiences and insights of Cara Hennessy, a true leader in the blockchain arena.


Gerry Cross

Gerry Cross

Cofounder / Director of Compliance - Provenance


Lory Kehoe

Lory Kehoe

Chair of Blockchain Ireland

Ross O’Leary

Ross O’Leary

Co-chair of the Communications Working Group, Blockchain Ireland

Key Insights

  • Cara Hennessy’s Diverse Background. Cara’s journey, starting from financial services with KPMG in Dublin to her engagement in blockchain technology, highlights the importance of diverse experiences in understanding and applying blockchain in various sectors.
  • Blockchain’s Role in Compliance. The episode emphasizes how blockchain technology is increasingly significant in the realm of compliance, offering innovative solutions to long-standing challenges in this field.
  • Impact on Financial Crime. Cara discusses how blockchain can be a formidable deterrent against financial crime, enhancing the capabilities of financial institutions to monitor and act upon suspicious activities. Effectively providing transparency and traceability that traditional systems lack.
  • The Evolution of Provenance. Cara’s co-founding of Provenance marks a significant stride in blockchain utilization. The platform’s focus on leveraging blockchain for compliance and regulatory purposes showcases the practical applications of the technology.
  • On-Chain Analytics Explained. The episode offers insights into on-chain analytics, elucidating how this aspect of blockchain can provide unprecedented levels of data analysis and transparency.
  • Regulatory Landscapes Across Geographies. Cara provides an in-depth look at how different countries and regions approach blockchain regulation, highlighting the complexities and varied approaches in different regulatory environments.
  • Adaptability in Finance and Technology. Cara’s career trajectory exemplifies the need for adaptability and forward-thinking in the rapidly evolving intersection of finance and technology.
  • Blockchain as a Catalyst for Innovation. The discussion underscores blockchain’s potential not just as a technological tool, but as a catalyst for broader innovation in financial services and compliance.
  • Future Trajectory of Blockchain in Compliance. The episode concludes with thoughts on the future role of blockchain in compliance and regulation, suggesting a trajectory where blockchain could become integral to these sectors.


In conclusion, the “Blockchain Leaders Insights” episode with Cara Hennessy is a resonant narrative that captures the essence of blockchain’s potential in reshaping the financial compliance landscape. Cara, through her vivid recounting and insightful perspectives, bridges the gap between the traditional financial systems and the emerging decentralised frameworks.

The conversation concludes by reinforcing the importance of adopting blockchain technology as a robust tool against financial crime, while also stressing the need for continuous learning and adaptation in the face of regulatory evolution. Cara’s journey and Provenance’s mission underscore the critical balance between innovation and adherence to compliance, setting a precedent for future endeavours in the blockchain space.

For more detailed insights and future discussions, follow our podcast series for the latest in blockchain thought leadership.

Today's Guest: Cara Hennessy, Cofounder / Director of Compliance - Provenance

Cara started her career with KPMG (Dublin) in the business advisory practice, followed by a 15-year tenure in Cayman financial services as a fund accountant and subsequently manager of RTA at Close Brothers (now Intertrust). Later on, she joined DMS Governance where she spent ten years transitioning through various roles, including Finance Manager, Senior Financial Analyst, Head of Internal Audit & Director of Compliance. Cara worked across

numerous sectors and jurisdictions, funds fiduciary, corporate services, bank and trust, insurance, pensions, and also managed the internal audit process for the European arm which included AIFM and Manco licensees. Cara volunteered with THE Cayman Islands

Government, for three months, on AML focused FATF remediation initiatives, and then spent a year as the Director of Compliance at Conyers Law firm and Conyers Corporate and Trust Company. Most recently Cara has held the position of the Director of Compliance

for a fintech focused Fund Administration, Fiduciary and Corporate Services Group, who are emerging as one of the digital asset and crypto-fund service leaders in Cayman.

Connect with Cara on LinkedIn
Learn more about Provenance
Connect with the Provenance on LinkedIn

[00:00] Podcast title introduction

[0:13] Lory: Hello and welcome to Blockchain Leaders Insights brought to you by Blockchain Ireland. My name is Lory Kehoe, Chair of Blockchain Ireland and I’m joined today by my co-host Ross O’Leary. Ross.

[0:24] Ross: Thanks Laurie. I’m Ross O’Leary. I am the co-chair of the communications working group at Blockchain Ireland. I’ve been involved with Blockchain Ireland since about 2018.

[0:33] Lory: In today’s episode, we’re talking all about compliance and how blockchain technology can play a key role in fighting financial crime. And no better person to discuss that than Ms. Cara Hennessy, who is the co-founder of Provenance and also their director of compliance. Cara, you’re very welcome.

[0:51] Cara: Thank you, Lory. Thank you, Ross. I’m delighted to be here and delighted to support Blockchain Ireland, the initiative. You know, we’ve been following closely over the years and now even more so kind of getting to meet in person and interact with the community now that we’re here on the ground in Ireland with Provenance. So thank you to you all for inviting us.

[1:10] Lory: Super. Well, thank you very much. Let’s jump straight in, we’d love to know a little bit more about you and if you could give us, yeah, a little bit of an overview of your career journey to date.

[1:19] Cara: Yeah, sure. Well, obviously Irish born and bred from Bantry, West Cork. Started my career off in financial services with KPMG in Dublin. Um an incredible training ground there um always wanted to travel so very soon after i qualified um I headed for the Cayman islands and there were jobs aplenty when I arrived in the Cayman islands in 2006 there were 600 banks there and I remember reading that statistic going there expecting Cayman islands to be this huge metropolis but obviously banks in the sense that i had in my head uh retail banks your banks bank of Ireland’s it was not the same um you know your hotel or wholesale and class B banks. But went to the Cayman Islands in 2006, started off my career there working as a fund accountant and then transitioned into the head of RTA and was working for Close Brothers, which is now InterTrust. Very soon after I arrived in Cayman, and this is kind of, I think, a very Irish thing to do. I’m big into sport and I was big into rugby at the time. And through my rugby connections, I got offered a job at DMS Waystone. And they said they needed somebody who was quite strong willed and who was able to talk. And I’ve kissed the Blarney Stone many times, so I kind of fit the bill. And so I started with DMS, which is now Waystone Group. And I spent an amazing 10 years there. I started off as a finance manager and then I transitioned to the head of internal audit and risk. And then I was director of compliance. And during my tenure at DMS, it grew exponentially in all different industries. We grew in Europe. They have now a massive footprint in Ireland, you know, and great support from Ireland, from the likes of the IDA. But I used to be over the AFIM, the USITs, the funds, the regulated directorship services, insurance company, banking, pensions company. And I used to be responsible for compliance and internal audit, particularly in those years. And I very much enjoyed it as part of my career. and it’s kind of led me to where I am today, very much enjoy the entrepreneurial and growing element of business. I like to be kind of involved in a lot of different aspects, not just, you know, a particular role, but overall business growth, team growth, service line evolution and taking risks as well, even though I’m coming from compliance, but I actually am probably by character somebody who also takes risks and I understand the commercial side of, and that’s So I think I speak well to people who are in business because I understand the other side of the coin. I’m all about building a business, but I understand intimately the requirements to be operating in a regulated sense. So after 10 years at DMS slash Waystone, I moved on and was Director of Compliance for a period at a law firm in the Cayman Islands. And then my last role before I joined, before I launched Provenance was Director of Compliance at a fund admin. And this was a start-up funded man, again, the space or the sandbox that I love playing in, where we get to the thing about a start-up as well as you get to do things day one, the right way you’ve learned in other, you know, situations or jobs or with kind of legacy systems, how things should maybe not be done, or how things could be done better. So when you start something new and afresh, you get to design it in the way that you know will be most efficient, most beneficial to your client base. And for me, probably the biggest value or the biggest, the thing I enjoy most about having founded Provenance is designing the culture of work, the value system that we adhere to. And it’s not just words on a wall, but it’s actually something that we live every day within our team and how we interact with our clients. And the blockchain space has been tremendous for that in fostering, you know, I’m all about collaboration. You know, the person coming in the door day one might have better ideas than I have. We’re all about engineering people’s confidence, not engineering, fostering people’s confidence, allowing them to engineer ideas that they have had maybe from their childhood, maybe from their teenage years. And for me that has been the most rewarding element of launching Provenance is designing a company that is, fit for purpose and is somewhere that people are happy to go every day and are motivated to turn up so that’s been my journey and then I guess my logistical journey um. Launched provenance two years ago and actually the Provenance was ultimately in my previous role as director of compliance at a fund admin in the Cayman islands we I was tasked with, operationalising from a Cayman from Cayman aml perspective a tokenised fund so the first tokenised fund in the Cayman islands now with that they were termed an administered fund as opposed to mutual fund they had 17 000 investors and for us for me coming from a traditional fiat compliance background, it was like, whoa, this is very significant departure from what we’re used to seeing. There’s no, globally, there is no precedent or clear guidance on exactly the A to Z of how to do this. So at that point, I called on Blockchain Association Cayman and the chair of Blockchain Association Cayman, Petri Bassoon, and another member, Ramona Tudvranka joined with me and the company that I worked for. And we collectively worked on the operationalising of that tokenised fund. And that was two years ago. And, you know, we successfully put in place, you know, obviously there’s departures from, you know, when you’re looking at a NAV, a net asset value calculation for, you know, a fund that is smart contract blockchain-based, it can be real-time and most fund admins are just set up to do at most daily NAVs cutting. So there was all that side of it. There was like, how do you take the feeds from the exchanges, from the custodians? And then from my side, it’s like, how do you do KYC, KYB on that volume of investors and how do we perform this? And in my experience, traditionally in the Cayman Islands and beyond that, compliance has been done and I think COVID again has impacted this. But traditionally, it’s been done quite manually, you know, looking for certified copies of documentation. But when you’re dealing with a retail level blockchain ecosystem of a fund like that, you might be having transactions like in the regulated space, you have funds that are 100,000 plus and you’ve accredited investors. When you’re dealing on the retail side of, you know, of ASP, you could be dealing with transactions of $500. Therefore, if you were to commercially do a KYC in the manual sense, your man hours, your woman hours are going to cost you more than that 500 transactions. So you have to think differently about how you do it. You have to still operate in the regulated space. It’s, after all, a regulated entity within the Cayman Islands that has AML obligatory requirements. But that’s where you bring in the risk-based approach. That’s where you look to, you know, FATF and what they’re putting in place for a travel rule. So, yeah. So in that experience of the fund admin setting that up, we started looking around the market and seeing that a lot of traditional service providers were not yet opening their doors to engaging with crypto. And we thought, you know, this has to be catered for. DLT, blockchain, is not going anywhere. You know, there’s a lot of hype in the market. But for us, it was kind of like, we need to see the wood for the trees that you’ve got to separate the price of Bitcoin from the value of blockchain. The price of Bitcoin is like any market. It’s up, down, stable, not stable, you know, influenced by market fluctuations. The value of Bitcoin is not. It’s entirely separate. And it’s not going anywhere. Were um so we decided to take the risk and um meet the market where it was at and we’ve gone from there so yeah and then going back to my point sorry um logistically I was based in the Cayman islands provenance was initially a Cayman launched company um we’ve since pivoted um and provenance is now headquartering in Ireland and Europe I moved back to Ireland delighted to be back principally for family reasons, but also to launch provenance. And, you know, we are globally agnostic. We have a significant footprint in Africa, mainly in South Africa. So we’re working with markets there, working with regulators globally, and very excited to see the ecosystem evolve here in Ireland. There’s lots of lots of really positive momentum.

[9:52] Lory: Fantastic. OK, and thank you. That was, you know, definitely a great explanation as to, you know, who you are and also the gap in the market and where provenance fits in. If I can take a quick step back. So back in 2006, was it the lure of sunshine that made you go to Cayman or what was the driver opportunity?

[10:12] Cara: Great question. My undergraduate was international business and languages at DCU. Went to university in Barcelona for a year and from a young age, I was quite independently minded and liked the idea of travel. Always always loved the idea of working with languages. And I thought, you know, at the time I looked at jobs, you know, Australia, London, and it came and appealed to me at the time. Actually, I do remember having a strong feeling of, oh, I can just pop across to Cuba for a weekend, a long weekend and, you know, visit these other Central South American countries where I can practice my languages. So that was a big part of it. Also, you know, work was plentiful in the industry that I I was in, in financial services, you know, I had a number of opportunities. So it was that, you know, opportunity and travel, I think, were the principle. You know, there were jobs in Ireland as well, but I wanted to explore more.

[11:04] Ross: So can you tell us a little bit more about the goals of Provenance and I suppose where your role at Provenance fits in to achieving those?

[11:14] Cara: So, again, when we launched Provenance initially, our target market or our thinking was mainly around serving as AML officers to regulated funds that invest in crypto. crypto. So for Cayman Fund, it’s a statutory mandatory requirement to have an AML compliance officer, a money laundering reporting officer and a deputy money laundering reporting officer. Again, the majority of firms were not in a position to provide those functions for funds in crypto because they hadn’t yet evolved their, let’s say, their own risk assessments, their internal risk assessments to risk assess a crypto fund or to ask the appropriate questions in terms of, you know, are you an ERC-20? What kind of whitelisting do you do? Do you accept subscriptions in kind? Are you taking crypto in and out of the fund? So we spent a lot of time researching and developing those due diligence documents and queries and expertise. But what’s transpired is actually, has been really interesting. That is a big part of our business is the regulated fund outsource compliance officers to regulated funds in the Cayman Islands. And actually, sorry, again, Again, we’re jurisdictionally agnostic. I speak about Cayman a lot because that’s my 17 years residential experience. But we’re Cayman, BVI, Bahamas, Bermuda, Africa, Europe. We’re jurisdictionally agnostic. But what has transpired, in fact, what’s becoming a bigger part of our business is the on-chain analytics. So we work with some fund admins who… You have a lot of crypto natives who are significantly wealthy and have had these assets for many, many years, and they’re holding them in private wallets for obvious reasons. You know, people have been before and since FTX even more so sceptical of, you know, custodying. I think there’s many, many amazing custody solutions out there, but there’s still this kind of native, you know, reluctance in certain instances. And these native crypto investors or private wallet investors, they are motivated to diversify their assets into regulated funds and other investments. However, a lot of doors are closed to them. And so we work with certain fund admins who will themselves accept in-kind contributions from crypto if you come through an exchange. So if you come through a regulated exchange and the fund admin has done their due diligence on the exchange to say they do a certain level of KYC, they do transaction monitoring, then we can accept that passport into the funds wallet of this, you know, crypto subscription. However, there are those who don’t want to go through an exchange. So again, globally, there’s no precedent for this and there is no regulatory guidance on how to do this. So what we did at Provenance is we collectively, we had, we have six co-founders who are deep experts in law, tax, audit, blockchain, web3, DLT across the spectrum and all have at least 17 years of professional experience. And collectively we came together and applied thought to say, what could be an industry best practice here? So first of all, we put. We agreed with the fund admins, obviously, you know, it goes against kind of some of the core tenets of blockchain. You have to identify. It’s not going to be an anonymous situation. Cara Hennessy is presenting with my private wallet. I have to provide my due diligence documentation. I have to be verified, whether it’s electronic verification system, of which there are a plethora now, or through the manual certifications. So I identify, I’m identified by the fund. Then we use on-chain analytics software, such as Chainalysis, Elliptic and TRM, and they’re phenomenal, phenomenal tools. And like for me, that’s been the biggest game changer. And I can talk about that more further. But you use these on-chain analytics tool to screen my wallet and it can depend on the company, the country, the country’s national risk assessment. Like every, as prescribed by FATF, every country and every regulated financial service provider in that country has to take into account their national risk assessment. National risk assessments look at the full, you know, landscape of financial service providers and they say anything to do with crypto, for example, is medium to high. When you are doing your risk rating of taking on a crypto client or a transaction, you have to consider that in your risk rating. So you have have to achieve a certain level of due diligence. So the three components that we proposed for this kind of industry best practices, the KYC or KYB, because mostly in regulated situations, I don’t invest as Kara Hennessy, I invest through my company. And often companies can be multiple layers, complex structures, trusts, LLCs, limiteds, and various partners, GP, LP, different structures. So you’ve got to go all the way through the structure to get to the ultimate beneficial official owner or the controlling party that holds greater than 10%. So you do that component. That’s what all traditional fund admins do today or banks or anybody else. Then the second component, as I said, is the on-chain analytics. Take the wallet. And this is the beauty about on-chain analytics and how it helps to combat financial crime is how forensic it is. As a, through Hennessy and Company, I invest $100,000. When you’re doing traditional fund, traditional fiat fund, source of funds verification, all you’re doing is saying Cara Hennessy sent €100,000 from Bank of Ireland account. That gets the tick box green light because it’s come from a regulated financial institution in a country deemed as low risk for money laundering, terrorist financing, saying proliferation financing and it’s in my name and you have KYC on me. However, when you do source the funds verification on a wallet, it brings you back to source. It brings you back to the on-ramping. If you’ve interacted and companies can deem, we do different levels of screening, basic, which is oftentimes used by the DAOs, right? DAOs are not technically in scope for money laundering, but they’re choosing to self-regulate because they don’t want to be interacting. And when it comes to sanctions, everybody is liable.

[17:31] Lory: We’ll come back to explain what a DAO is. Sorry, keep going. Sorry.

[17:37] Cara: But so in terms of the on-chain analytics, it can go all the way back to kind of the source and the level of when you see a reactor graph that comes out of, you know, for example, chain analysis, the level of detail. It’s like this big spider graph, but it goes through all of the transactions and firms like Chainalysis identify illicit activity. It can be, you know, dark web, you know, in Cayman, for example, gambling is illegal. It can go to gambling, identifying any activity that is in your profile of high risk activity and you identify that. Sometimes firms only choose to do one hop over, but a lot of firms go all the way to source. So you’re going as money hops over, I’m transferring to you, you’re transferring to an exchange, you’re transferring, you’re holding different assets in that wallet.

[18:24] Lory: So sorry. So the standard is being, I guess, set and being used due to the underlying technology provides a greater level of transparency as to source of funds, origin of the products and who they’ve touched in comparison to.

[18:40] Traditional finance or TradFi?

[18:42] Cara: Exactly, exactly, exactly.

[18:44] Lory: Do you think that is known, you know, amongst the broader traditional financial services, you know, industry and by government and by regulators?

[18:54] Cara: That’s a great question. I think there’s definitely a level of awareness, but I think there’s also a, perhaps still the misnomer that, oh, well, it’s still anonymous. It’s like, no, no, when you’re entering into the regular space, you think of it as like, And like, I know it could be anonymous, but I’m presenting to you in the regulated space to say, I’m declaring who I am. I’m declaring my wallet. I’m giving you my KYC. I’m giving you my wallet to check I’ve not interacted. And now the third piece, I just want to go back to in terms of what we use for the on-chain analytics. The third piece that will actually speak to your question as well is that, so we have screened the wallet. Let’s say there’s no risks. And I actually have come across probably more instances of high-risk situations, I certainly have, in doing on-chain analytics and forensic analysis than ever through any fiat. Like the biggest kind of risk alert you get with fiat transactions, it’s coming from a bank in high-risk jurisdiction. That’s ultimately it. I don’t see where Kara Hennessy’s or Hennessy & Company’s funds came from ultimately. You know, I’m relying on the bank’s AML controls. In this, I have full view of what you’ve been doing on-chain. But the third element, when you look at a private wallet, is like, okay, so you know who I am. You have all my KYC and my company’s KYC. You screen my wallet. I have no bad interactions. But the difference between a private wallet and a custody wallet is a private wallet key, it’s like a USB key. I could hold my key. I could have my key written down on a piece of paper, which is ultimately some of the safest ways of keeping your private key. But I could give my key to some bad actor. I could sell my 4 million of assets for 5 million. And somebody who’s a bad actor over here now has control of that. I’m presenting to the fund that I own the private wallet. I’m presenting that my KYC is, but somebody else has control of that. So the piece that was missing that we worked hard at to figure is how do you verify ownership? How do you verify that me, who you’ve got KYC on, owns and controls the movement of those assets? So what we’ve devised in that process is we have two ways of doing this. We get on a call with the investor and they show their passport. We see that they have access to that wallet. We never see their private key, but we see that they’ve access to that wallet. We then on the call come up with a nominal value microtransaction. So we’ll say transfer, you know, the value, the equivalent value of $8. Do that into the funds wallet on the call. So we see, and that’s one of the greatest things as well about blockchain is when you’re seeing, you know, when you’re clearing a subscription, it can take how many days to clear and you’re waiting and you’re watching the bank. And this you see in real time. And we can do, if we’ve cleared the individual, if we’ve cleared the wallet for Monchain Analytics and we have a low risk rating and the microtransaction goes through and we verify the private, you know, car has access and is controlling that wallet, we can get them to do the full 500k subscription there and then. So it’s happening in real time. But we do that with our clients, investors. We get on the call. So we’ve verified ownership. We’ve verified who I am and we’ve screened me for PEP sanctions, adverse media. I’ve not robbed a bank, etc. So we know who I am, the person. And ultimately you take that holistic view because one on its own is not going to tell you the full picture, right? You need to look at what’s my profile? You know, where did my wealth come from? Am I a 20 year old living in the mountains? How do I, then do I have $5 million too? Or am I fronting? So, and this is the one thing in compliance that I’m so, you know, people tell me I probably stand on my soapbox a bit too much about, but I’m really passionate about and I hope to, again, encourage people in the industry and I hope to have the opportunity to speak with students as well, you know, through Andrew Quinn and Pat Edu. About compliance and about, taking an analytical approach and a logistical approach. And when it comes to compliance, honestly, you cannot underestimate the importance of a gut instinct. Like I can often look at an application for business and tell it within 10 minutes, this is not legitimate. This is not authentic. There’s something called the sniff test. You know, any collection of certified documents of a certified memorandum or certified incorporation document, they’re so easily falsified nowadays. I really need to get behind the understanding of the nature of the business. Where do these people come from if it’s an on-chain protocol? What’s the white paper telling me? What’s the legitimacy behind the, that’s one of the key considerations, the principles behind this project or this development or this fund launch? Who are they? Where do they come from? What’s their track record? And that gives you the holistic view. And we did have the opportunity to to present our proposed best in practice subscription and kind control mechanism to a regulator, to the head of a VASP, head of AML, head of securities and head of policy. And, you know, we had no objections to what we presented. Again, there is no regulation, but we are so keen to, you know, and I think, Laurie and Ross, this is so much of what you do, encouraging public-private participation all the time. You know that’s why blockchain moves so rapidly is because the level of sharing and open source and collaboration we all move along collectively if we if we if we grab on to that and you know. If we were to wait for the full step A to Z, you know, guidance map of how to do this, the technology will have gone beyond us. And it’s better now to work with the regulations that we have to right size and work diligently to use the technology, the experience and knowledge that we have of the regulatory requirements to work with it and help the technology be as compliant as they are. And there are so many great examples like we’re working with a DeFi lending platform that is a VASP approved licensee and have an amazingly robust, you know, control framework in place. And, you know, my hope with Providence, going back to an earlier question, is to encourage service providers along the road, you know, not having to understand everything from the A to Z of DLT and blockchain and, you know, the numerous coins and tokens, but understand how it may impact your business in the future, your client’s business. What are they asking you about? And don’t be afraid of it, you know, and take it, I say to our team, take it piece by piece. You know, there’s lessons to be learned from your children playing Roblox. Roblox, they’re living in that ecosystem. They’re living, you know, buying clothes and buying, I know, superpowers and other things like our children. That’s part of it, right? That’s part of living in the space. I think one of our in provenance one of our I think most impactful training sessions that we did with our team and our team are made up of legal compliance, crypto specialists on-chain analysts but one of the best things that we did was a practical training session going through a session with each of them to set up a metamask so we did a group session, webinar and say okay we’re going to set up a metamask we’re going to transfer ETH you’re going to set up Uniswap account and then off you go but like it wasn’t off you go we went through step by step And like, Think about a small element that you want to understand a bit better because it’s huge and it’s not just daily changing, it’s minute changing. But, you know, there’s only specific ways and that’s how I approached it. When I was starting off here, I was only coming at it from a compliance KYC. How is it affecting my KYC? How am I going to clear this with the regulator in the Cayman Islands? And focus very keenly on that. And then bit by bit, it’s in your daily life. And, you know, we’re learning by this, by sharing, always. always.

[26:39] Ross: You mentioned there the kind of the speed of movement of the blockchain industry. And I feel like that is often something that might scare away regulators or traditional financial institutions. How do we bridge that gap as an industry and kind of build that level of understanding that by using blockchain technology, you might actually have more insight into levels of compliance or KYC than you would by using a legacy infrastructure. Where does that level of education come from, especially from kind of a crypto native industry going towards regulators and traditional finance?

[27:16] Cara: Another great question. I think that’s kind of twofold. One thing I’ll say is that so far I was on a webinar with Central Bank of Ireland last week or the week before. And again, very encouraging to see their sandbox regime rolling out. And again, I think there’s a lot of active participation. And I was fortunate last week to be at an amazing event in Cork Opera House, the Irish Funds Forum, where the Minister for Finance actually spoke. And somebody, the moderator referred to it like, this is like a rock concert because it was standing room only. The trains were full from Dublin coming down to Cork and it was great. As a Cork woman, I was like, this is was brilliant.

[27:59] Ross: I’m sure Michael McGrath was thrilled.

[28:00] Cara: Oh, it was so, it was an honour to hear him speak. But again, there was great, like the minute, and I was sat beside somebody from the Department of Finance, and there was great kind of open dialogue and willingness for industry and the regulator to get together, share and collaborate. And again, that, you know, one of the main reasons we moved home to Ireland is the European framework, the regulatory framework. You know, globally, MICA, MICA, I say MICA, is being heralded as the most robust framework and people are very excited about it. Now, I think that it’s got its own intricacies and, you know, across the various countries within the EU. However, it is being heralded as very strong and I think… One thing I’ve noticed coming back to Ireland is, and it’s always been the case, we are the land of the scholars. We are very academic. We are amazing at setting policy level. But now where we need to really step up the game is bringing policy into operation. And I’ve been saying to our clients that have had their VASP licenses approved, principally in the Cayman Islands, there’s now 18 VASPs approved in the Cayman Islands. There’s 11 in Ireland, for example, as a comparative. And what I’ve been saying to our VASPs is, OK, we have the VASP application approved now. We have your license. Now is the time we have to double down and operationalise everything because we have these incredible policies that we have to comply with, whether it be AML, whether it be evaluations, custody, marketing, all of these things. But how on your day-to-day are you doing that? How are you training your team to do that? And I would encourage the regulators to come and visit those licensed applicants and see how they’re doing it. Because at the end of the day, the regulators have to build supervision techniques. How do you supervise a VASP? You have to understand how they operate in order to write the test plan to see if they’re fulfilling their obligations. So, again, I would say, you know, regulators knock on the doors, you know, like the sandbox kind of idea, but, you know, have those open forums saying, okay, we’ve set these policies in your application, you said you’d apply it, now show us the standard operating procedures. And that’s a lot of what Provenance were busy doing, translating policy into actual meaningful work.

[30:16] What systems do you need to put in place?

[30:18] What control mechanisms? What considerations? You know, how is it different for investors?

[30:25] There’s a lot of, you know, nuances to taking on this kind of business. And then again, I think for regulators and for crypto sceptics, I think a big part of the puzzle is looking at one of my favourite examples is, again, a company that I met through the Cayman Islands. They’re NASDAQ listed reinsurer, fifth largest in Florida. And they issued a tokenised offering. Now, for anybody who is sceptical about tokenisation, this is something that you can see in real world historical financial performance, right? I can see, I understand what reinsurance is, right? I understand how that model works. I understand how it makes money and how that business model works. I can see this company’s historical performance and their NASDAQ results and such. And now this is just another offering. It’s just another way to hold that. And I think more projects like that, another project that is remarkable in the Cayman Islands is a scroll for crypto property real estate transactions. So like a broker for transacting, executing transaction real estate deals in the Cayman Islands using crypto. Seeing those kind of tangible, that you can really wrap your head around is a great starting point as well, you know, for a regulator to say, okay, show me an industry that I’m already supervising, that I can then translate the pieces that, you know, need to go from traditional regulation to crypto or blockchain, rather blockchain.

[31:59] Lory: And in terms of adoption, how does Cayman differ than Ireland? And I guess the EU more broadly, Are we seeing, you know, more companies being more active, the government being more active, the regulator being more proactive?

[32:13] Cara: Yeah, well, I think there are some remarkable participants, obviously, Blockchain Ireland. And for me, you know, I, you know, obviously miss the Cayman Islands and I had an amazing 17 years there. But I’m so happy to be home in Ireland and the level of authenticity, the level of networking I’ve been able to do through remarkable contacts I’ve made here. You know, it’s just, you can’t beat the Irish character. But I would say in Cayman, Cayman has been extremely progressive in opening the doors and taking the time to review VASP applications. Then Cayman is a smaller environment, right, as in it’s a very, you know, closed community. You know, in Ireland, we’ve got, you know, the European influence. We’ve got very kind of highly competitive jurisdictions within Europe. So it makes it there’s a couple of more kind of challenges. But I see Ireland as being being very progressive, very progressive. And the realisation is there. Again, like I said, the Minister for Finance, Owen Fitzgerald, Owen Motherway, all of these people, you know, are fully embracing it, fully acknowledging it should be on everybody’s agenda, on board agendas. Discuss but it has to be. There’s still there’s still a level of conservatism here for regulatory and reputational risk. And, you know, again, reputational risk is massive nowadays because, again, of the FTX, even if you take yourself outside of scope for AML, if you’re doing a new protocol, like if you’re in a community and you’re issuing a grant, right, you’re putting out an RFP to say we need somebody to project manage the communities, the board ape communities, treasury. Treasury like if you award that contract to somebody on behalf of your community that is you know bad actor that looks really bad so reputational risk is huge in in this area as well but i would go back to the point and encourage service providers chip away a bit at a time you know again in the fund it’s a bell curve or there is a trajectory that you can take off you know start off with training start off with signing your teams up to blockchain Ireland, Join them on LinkedIn. See the updates. Have the dialogue going. Find out if there are persons in your company who are interested. Like I always interview, when I interview people to join Provenance, you know, it’s not a prerequisite for many of our roles to have crypto experience. But do you have any interest? You know, would you like to learn about it? There may be people who do and want to put their hand up and encourage that. And, you know, bite off a small piece at a time. And I think that’s how we go about it. Encouraging, you know, the regulators to work with the service providers who are putting their hands up, make the sandbox effective. And yeah, and again, with Mika, I would hope, because a lot of people are looking to Ireland and Europe, wider Europe and Luxembourg, obviously. And there is already, you know, significant players here, but there is a great opportunity here. For Ireland here, commercially, you know, jobs wise. Yeah.

[35:22] Ross: Obviously, with Mika, I think there’s 83% or thereabouts of G20 countries and, you know, kind of mainstream financial hubs are now regulating crypto across the world. We’re seeing more and more of it happening in the developing world as well. Where do you see the crypto regulation and the broader industry going in 2024.

[35:47] Cara: Yeah, interesting. And actually just touched on a point when you talk about regulated, not regulated. Interesting, like Nigeria has the top rate of adoption. Like, you know, and we can’t get away either. I haven’t spoken about it at all because it’s not an area I focus on work-wise. But, you know, again, another of the core tenets of blockchain is banking the unbanked, is the democratisation, is the fractionalisation, is giving people who would not or otherwise have access to financial markets access. You know, they may have the investment mindset, the skill set, the desire, the savings, be they minimal savings compared to somebody who’s going in as a credit investor, giving those persons access to this financial system, which is remarkable. And we’re seeing that in, from my experience, in Africa massively, where, you know, supermarkets you’re purchasing, you’re seeing real world applications. And that’s really, really exciting. And that’s one side of it. It’s not the side that I personally currently work on, but it’s a side I’m personally hugely advocating for seeing that democratisation. In terms of obviously the spot ETF market, approval has been significant and that you know and I’ve heard from many players, there is an institutional wave of investment waiting to come into the space but there’s still the regulatory risk needs to alleviate a certain amount so.

[37:13] Lory: Yeah what are they waiting for surely with the passing of the the etf is now not the moment.

[37:19] Cara: Yeah um that’s a great question and i would encourage as a compliance professional I would encourage i would agree with you um, You know, again, I guess there is, you know, and in certain companies, there are certain hierarchies, let’s say, in institutional organisations that take quite a while to break down, to break through, right? Because you’ve got through numerous layers, numerous, you know, stakeholders within an organisation, and you have to get all the buy-in from certain levels. There may be a buy-in here, but it may take a longer while to go through the echelons of approval. approval. So, but I do see, you know, with ETFs, that’s obviously a big move and hopefully we’ll see, you know, outside of Bitcoin, see evolution there as well. You know, we’ve obviously seen great, a greater uptake on enforcement actions, you know, Binance, et cetera. And I think we will see, obviously with the US elections, right, the US, the US has been, you know, challenging in terms of, you know, you have primarily a lot of the decision makers based there, a lot of the ingenuity and a lot of the engineering and the enterprises coming from the US. But the regulatory uncertainty is, you know, is holding people back. And that’s why we actually, frankly, the Cayman Islands has seen an influx of human capital movement to the islands physically for the regulatory certainty and the setup. And, you know, Cayman Islands have a great regime in in terms of economic substance. So a lot of practices or companies have benefited from relocating. So hopefully we’ll see. A crypto blockchain friendlier approach, you know, in a new administration. So that’s what I would say. And again, that’s hopeful. But in order to get there, cannot promote heavily enough public, private and private, private participation again through forums like this. You know, and even I was I was looking at I’m sure, Ross, you have a you have even more significant agenda than I. But looking through, you know, conferences that are going on this year, I think it took me, I can’t remember how long it took me to go through the vast list of conferences that are happening. And again, I think it’s a difference I’ve seen in coming back to Ireland. And, you know, I went to an amazing event in London, Women in Digital Assets last year. It was phenomenal seeing a lot of really, really great events that actually have meaningful action coming out of them that are very significant and very important. And again, you know, it’s interesting to see in Ireland as well, you know, since COVID and beyond, the remote working conferences now are an excellent opportunity to get together and collaborate in person and energise in person. So, yes, hopefully more regulatory clarity. I would love to see an uptick in the VASP applications. Applications, you know, I’ve seen some very interesting projects that you would love to see come to market that are, and it’s a challenging position to be in, to be in that long waiting game, you know, not fully operationalised because you’re waiting for this. But again, it’s down to skill sets.

[40:38] Ross: I would have a somewhat selfish question for Blockchain Ireland, but how would you like to see provenance work with Blockchain Ireland and how would you see that relationship going forward?

[40:51] Cara: Yeah, well, as I said, one of our co-founders is the chair of Blockchain Cayman and Blockchain Cayman has done a tremendous job for bringing the community together. I will often say that I might turn up on a client call and because some of these projects are so new, I’ll often be faced with a project or a situation that I’ve not yet encountered, that I have no precedent for I don’t have a client other that has this. This scenario and I will be saying that’s perfectly fine we are custom we are bespoke we will find in our ecosystem somebody to bring in and introduce to you who can solve for you that problem and it’s in that it’s in learning off each other in the traditional finance world there there has tended to be a lot of you know siloed approaches as in you know a lot of secret sauce, conservation preservation whereas I feel we all benefit hugely from sharing you know what’s your expertise versus what I know and so I would love to for provenance to support blockchain in that and also maybe branching out into eco groups like women and digital assets. I’m very passionate about working with younger people and not just about blockchain or not just about compliance but about coming into the working world. You know I know when I entered the working world after university I didn’t have a clue and I was just you know very low in confidence and I feel like young people step out you know step out into your confidence day one and own yourself. I am I’m also very passionate about entrepreneurship. I very strongly advocate. I’m very grateful to Ireland in the ecosystem or to Ireland in general, how we support entrepreneurs. Very fortunate to be working with Enterprise Ireland. Really, like I was actually really excited because when I was younger, I actually wanted to work with Enterprise Ireland.

[42:34] So we’re very excited about that and the great work that they do. And as I said, IDA supported the huge development of Waystone in Ireland. Ireland. So with Blockchain Ireland, we would support, we would be available to any members for information sharing, call us, ask a question. If you want us to give a demo, if you want us to do training, we want to contribute, we want to give back. And that’s part of why being a blockchain as well, it’s bigger than, it’s not just a job. It’s about the future and it’s about making you know and in compliance sometimes you don’t get to do a lot of that or you’re working in regulated funds so for me it’s exciting to be able to give back in whatever way I would have made a terrible teacher but I will share any information that I have it would be very good to display Thanks Gareth look two quick.

[43:25] Lory: Questions to close out so do you have a favourite podcast or an audio book you like?

[43:31] Cara: Okay, this is an embarrassing question for me. I, okay, I’m going to, I’m going to blame my commute. For 17 years, as I said, I lived in the Cayman Islands and the Cayman Islands is roughly 22 to 22 miles by 10. So my drive to work would never be longer in traffic than 15 minutes. So I never had time to listen to a podcast on a commute. Then I work a lot of hours. So podcast is something that since I’ve come home to Ireland, any dinner I go to with my friends are always talking about podcasts. So I’ve recently started, you know, listening and I would listen. I do a lot of reading and I do a lot of article research. And but, you know, Conan O’Brien Needs Friends is one. It’s completely just like coffee with friends or it’s like overhearing a conversation, just a bit of banter.

[44:17] Ross: The top five percent, top point five percent of listeners last year.

[44:21] Cara: So also I’m not that bad at picking podcasts because I don’t know, honestly. And it’s something I’m taking literally since I turned up today and meeting my friends. I’ve got a long list of podcasts to tune into. And it’s obviously, you know, a great way to learn. And I’ll be traveling back to Cork on the train today, so I’ll be sure to listen.

[44:42] Lory: Fantastic. If people want to learn more about you, Provenance, and maybe some of the events that you’re running, where’s the best place to go and follow you and learn more? Yeah.

[44:52] Cara: So obviously our website, you know, on our team, we don’t have marketing, business development, sales or any of that. So we just, we’re just, we’re just, you know, organically contactable. LinkedIn we do use. LinkedIn we use to post kind of articles of interest and we are active on LinkedIn. But otherwise we’re, call us or email us. Our emails are on the website or on LinkedIn. And obviously then, you know, with our clients, we’re Slack, Discord, WhatsApp, whatever, whatever means you want to correspond with. But that’s pretty much pretty much it for now. Yeah.

[45:27] Lory: Super. Well, thank you very much for your time. It was fantastic having you with us.

[45:30] Cara: Thank you so much. Lovely to meet you.

[45:32] Ross: Thank you so much.

[45:33] Lory: So we hope you enjoyed that episode with Cara Hennessy from Provenance. Three quick things that I certainly took away from our session today. So number one, I think despite the industry, the importance of finding a gap in the market, which clearly Cara, her colleagues and co-founders have found with Provenance, which is all about converting policy into meaningful actions and outcomes for their clients. So that really kind of struck me. me. I also really liked another area that Cara mentioned, which was separating the price of Bitcoin with the value of blockchain. That really struck a chord with me and I’m sure is the same for everybody listening and watching. And then last, but by no means least, really is how blockchain is working at a technology, at a fundamental level to fight financial crime. So a lot more, I guess, on this series and in future series on that topic. But thank you for watching and listening and see you again soon.

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