As more tech companies latch onto the crypto currency bandwagon, what does this move mean for the adoption-rate of blockchain? And would you say this is a positive step?
It’s definitely a positive indicator, yet we are only in the beginning. Cryptocurrency is just one of the many use cases for blockchain. This technology has numerous existing and potential applications across a wide range of industries. Surely, you’ve heard the expression: “data is the new oil”. Blockchain technology enables data storage and transfer in a decentralised manner, which is both transparent and at the same time encrypted. The high level of security is especially relevant for industries like healthcare, logistics and IoT. Blockchain technology is an infrastructure layer on top of which our digital economies are being built. In terms of value transfer, this particular technology allows transactions to become cheaper, efficient; transparency is yet another critical component, through which blockchain technology reduces intermediaries to the benefit of the counterparties.
In the last decade blockchain technology evolved into an essential part of our digital infrastructure, with benefits being observed across the entire economy. It’s no surprise to see companies like Samsung investing heavily in this area, and we expect many others to follow in the years ahead.
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How will this increase of adoption affect other bitcoin vendors in the industry?
As a digital asset exchange, we see impressive growth in the market and a lot of innovation, in both technology use case and digital asset based financial products. Though our sector is still developing, the industry’s priority should be expansion across the board, which will in some part be driven by recognised brands entering the space. Competition in our sector is healthy: more quality providers eager to build awareness of cryptocurrencies as an asset class are a benefit to all. A rising tide lifts all boats or in our case – more adoption means more liquidity. We believe that in the long-term, exchanges that provide exceptional user experience, access to a wide range of digital assets and financial products and above all transaction and storage security will prosper.
With the likes of Samsung, Facebook, and the upcoming consumer app Bakkt, will there be a need for greater regulation as (and if) cryptocurrency and blockchain use become the mainstream?
We are already seeing regulation around cryptocurrencies and digital assets evolve. This year the European Union has introduced a new Anti-Money Laundering Directive which incorporates digital assets, requiring digital exchanges to register with their local regulators. Lichtenstein ratified its Blockchain Act, whereas Switzerland has amended its financial regulation to include digital assets. And in the US, a new bill was recently put before Congress that seeks to provide clarity around different categories of digital assets, with guidance on which regulators should be overseeing cryptocurrencies and tokens.
Digital asset regulation is still in its early stages, but it’s certainly something we will see develop over the coming years. Governments need to figure out how to regulate and tax digital assets as investments in the sector and transaction volume continues to grow. With crypto sector becoming more mainstream, companies, involved in the crypto industry should welcome this as a sign of market maturity.
How do you see the future of crypto regulation playing out in the next five years?
We are seeing positive developments already – it’s an emphasis on regulation that can counteract any fraudulent behaviour in the market and is focused on anti-money laundering and Know Your Customer protocols. We will see the requirements becoming more stringent, and rightly so. It is an essential part of building investor confidence in the market, safeguarding both retail and institutional investors.
We also hope for regulation that encourages innovation, helping unlock the true potential of blockchain, enabling a shift towards more assets being held and transacted digitally. This would go beyond owning and using cryptocurrencies, to holding all sorts of assets through digital securities or tokens. It’s important to remember – regulation exists to provide protection, it is also one of the most important levers which support innovation. We believe regulators understand this and wish for positive developments in this area.
As you’re based in Liechtenstein, how do you think Europe is placed at leading the regulation for crypto currency?
Europe has emerged as a leader in both, regulation of crypto currency and blockchain technology build-out. We launched Bittrex Global in Liechtenstein because of the unique regulatory environment. With Blockchain Act coming into force at the beginning of the year, this small Alpine country introduced a pioneering regulatory framework for digital assets which allows any underlying asset to be ‘tokenised’ without the previously required complex legal workarounds.
Bittrex Global is the first exchange to be regulated under the terms of the Act, and we believe it gives us an important competitive advantage, as we seek to become the most secure and innovative digital assets exchange. Liechtenstein is currently leading, but it is far from being alone in Europe. Other countries, including Switzerland have also put a strong emphasis on supporting the crypto economy. The EU and the European Digital Single Market also means there is the opportunity to create frameworks and protocols that can travel across Europe, supporting adoption and innovation at scale.
Do you have any thoughts on the possibility of Apple following suit and adding a crypto wallet to the iPhone? What would this mean for the sector?
Apple Pay has already announced its interest in cryptocurrency. Apple has also released a crypto-focused toolkit for developers which some see as an indicator for a development of a crypto wallet in the nearest future.
Whatever form it ultimately takes, it’s hard to see Apple not doing more in the blockchain space. Apple is yet another tech company pivoting into financial services. There is an increasing demand from its users to provide products and services which support ownership of digital assets. Given that Apple’s competitors, Samsung and HTC are already providing crypto wallets for their customers, it’s safe to assume Apple will follow suit.