Gary Cohn, Donald Trump’s former top economic aide, is now an adviser to a blockchain start-up that hopes to use the nascent technology to overhaul the way banks share credit data.
In one of his first public moves since leaving the White House earlier this year, the 58-year-old former president at Goldman Sachs has joined fledgling fintech firm Spring Labs.
The 20-strong start-up, which has offices in Los Angeles and Chicago, is developing ways to use the blockchain to allow lenders and data providers to exchange credit and identity information more efficiently, in a challenge to big credit consumer companies like Equifax and Experian.
“[It’s] an obvious place to take a very, very analogue industry and digitise it,” Mr Cohn told the Financial Times, labelling the project a “unique opportunity”.
During his time in the White House, Mr Cohn played a major role in the Trump administration’s tax reform package, which was passed by Congress late last year. But he resigned in March after objecting to the president’s plans to roll out steel and aluminium tariffs.
Mr Cohn said that since his departure he had been advising private companies in “traditional industries”, though he declined to provide further details.But he added that he had looked at “a bunch of different opportunities” in the blockchain sector after studying the potential of the technology while in the White House.
While he made clear that he was not an advocate for individual cryptocurrencies, such as bitcoin, he said that blockchain technology was a “huge new invention” that could also be used for smart contracts, or in currency settlement.
“We all know all the inefficiencies of the existing currency world and blockchain clearly helps to eliminate them at some point in the future,” he added.
Mr Cohn will join Bobby Mehta, former chief executive of big US credit company TransUnion, and Brian Brooks, chief legal officer at Coinbase, one of the world’s biggest cryptocurrency exchanges, on Spring Labs’ board of advisers. Mr Cohn also has an undisclosed amount of equity in the company, though it is unclear whether he received the stake through an investment or as part of an arrangement with the company.
“When you look at the two challenges Spring Labs has, one is building the technology. Once you’ve built the technology you’ve got to get it accepted and adopted,” Mr Cohn said, adding that he would use his experience in financial services to help the company tackle the latter.
Blockchain technology allows for information storage and transmission without a central control body. While it is best known for its role in underpinning the exchange of cryptocurrencies such as bitcoin, its decentralised functionality has made it popular with companies seeking to manage large flows of data. However, critics have questioned whether its usefulness has been overstated, and the technology has also been tainted by its association with the cryptocurrency world, which many have warned is vulnerable to fraud.
Under the current credit system, banks hand over customer data to credit reporting agencies such as Equifax and Experian, before buying back aggregated reports from those companies. Last year, Equifax disclosed that it had suffered a massive data hack in the US, affecting 143m clients and raising concerns about the safety of customer information.
Adam Jiwan, Spring Labs’ chairman and chief executive, said his company was building blockchain-based applications that would allow such data to be shared directly between parties in a “highly secure” and “anonymous” way that complies with data privacy regulations.
He added this could “ultimately . . . replace the credit bureaus you see today”.
Set up in 2017, Spring Labs is the brain-child of the founders of Avant, a US consumer loans provider that has originated more than $5bn of loans since it was founded six years ago. In March, Spring Labs raised nearly $15m in seed funding, including from previous Avant backers.
It expects to launch several applications — which may include fraud and identity verification tools — in the first half of 2019 and is also in “deep discussions with industry partners”, Mr Jiwan said.