Digital asset exchanges play an important part of the cryptocurrency world today when it comes to allowing users to enter the market place, but the functions of how they will be run will change in the future. This ranges from how they operate and what kind of digital assets they will support.
A diverse panel of leaders from the established financial industry got together during CoinGeek London Conference to discuss the current state of Bitcoin, how it affects their current digital asset exchange business today and moving forward.
The panelists included Roy Bernhard, chief visionary of Bayesian Group; Shawn Dorsch, founder and president of Clear Markets; Teong Hng, director of Global Alpha Trading (Hong Kong); and Gabor Nagy, business development director of OKCoin Europe. The panel was moderated by Jerry Chan, Japan and South Korea Manager of Bitcoin Association.
Education and communication are the keys to be able to discern misinformation
There is a great amount of FUD that propagates through the industry due to it being in its infancy and people capitalizing on this to take advantage to serve their own agendas. Leaders of digital asset exchanges are faced with greater responsibility to have to steer their companies through the mass amount of misinformation that is out there to be able to properly run their business.
Tackling this issue can be complicated, in particular relaying this to the masses which represents retail investors.
Nagy says education is very important and they have established a marketing team tasked with the sole purpose to be able to put the right information out there so that they can inform their customers from “what is actually happening from the inside rather than getting their information from other sources.”
Hng took this a step further and encouraged a reputable organization like the Bitcoin Association to step into the role that current content providers like Reuters and Bloomberg deliver today in the traditional financial world, providing information to the public that is “factual, neutral and reliable.”
Regulatory hurdles are still the biggest challenge to overcome
Proper education and communication will make it easy for the governing bodies to set their regulations.
“If we can solve this communication problem and get the right people educated about the benefits of this technology in this world, then that will lead to people being more confident to setting regulations that allow us to have stability and bankable growth,” Bernhard added to the discussion.
However, the overwhelming consensus amongst the discussion was regulation is the biggest challenge that digital asset exchanges face whilst operating today. There are many hurdles that are still yet to be addressed.
Dorsch said, “Regulatory really is the biggest challenge. An awful number of the regulation that has come out to date was reactive, primarily driven at protecting retail investors from scams.”
This stemmed from the back of the ICO craze in 2017 that lead to customers being defrauded and has led to difficult engagement with regulators.
Mitigating the risk of lost customers funds with custodial solutions
A customer who leaves their digital assets on an exchange today are solely reliant on the exchanges as the trusted third party to secure their assets. There have been instances in the past where this has turned sour, an example being the QuadrigaCX exchange losing $150 million worth of assets of the customers after the exchange owner allegedly died overseas.
Nagy shared his thoughts on how exchanges have gotten to this point, “Unfortunately what has happened over the evolution of exchanges, they have become de facto custodians as well.” This is whilst trying to serve their primary purpose of servicing their customers by having a pool of liquidity and providing a trading venue for price discovery.
Moving away from being custodians and allowing specialists to handle that component could very well be the solution to fix this. Gabor added that they have been seeing a trend over the past year with “a handful of regulatory custodial platforms have been growing” that will provide more security and open the door to institutional money. This trend continuing would be a positive direction for the industry to move in as it seeks to build credibility, trust and attract further investment.
Remaining legally compliant is the only way forward
Bitcoin SV (BSV) has always understood that the only way it will be able to survive and integrate itself into the real world is by remaining legally compliant with their approach.
Hng backs this approach stating, “Rule of law is naturally very important. With BSV and the whole ecosystem protecting it, it will be much safer to employ that than the other blockchains that might not be that white. You have got to be whiter than white to survive in this industry.”
With clear regulatory frameworks currently being developed, all of the exchanges will need to adhere or will face consequences. It is the responsibility of the digital asset exchange leaders to be proactive to drive the solutions to be able to lobby to regulators, or otherwise will be imposed with more unnecessary regulations due to ignorance of governing bodies that will only make running their business more difficult.
To end the conversation, the panelists were asked to go through a speed round listening to various phrases and answer in only one word that best summarises the phrase.
When host Jerry Chan asked the panellists, “Law is law, business first, utility first?”
Berhnard ended the discussion eloquently with “BSV.”
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