This is the second in a series of two excerpts. To read the first, click here. To hear the full interview, click the Youtube link.
It’s no secret that the world is in the midst of an epic quest to properly regulate cryptocurrency. The SEC of the United States reportedly submitted what the Wall Street Journal referred to as “scores of subpoenas” last week as part of a larger effort to create a regulatory framework for crypto.
Regulatory efforts are also underway across the pond. While no major action has been taken in the UK (yet), lawmakers are collecting data and working to design a regulatory structure of their own.
The government isn’t the only entity working toward crypto regulation, however. CryptoUK, a self-regulating body whose main goal is to “improve industry standards and engage policymakers”, was formed earlier this year. The entity consists of six crypto firms: eToro, Commerce Block, Coinbase, CoinShares, BlockEx, CEX IO, and CryptoCompare.
Finance Magnates spoke to eToro’s Managing Director, Iqbal Gandham, who also happens to be the Chairman of CryptoUK.
What is CryptoUK?
Iqbal explained that the regulatory association came about to fulfill a need for regulatory leadership in an industry that was practically created overnight. “CryptoUK came about after we witnessed the unprecedented industry growth and general increase in [crypto] awareness in 2017.”
“Several leading companies within the industry in the UK decided that now was the appropriate time to formulate a self-regulating body so that we could provide uniform service to customers moving forward,” he added.
He explained that CryptoUK was formed to act as a medium for educating regulators and the general public about cryptocurrency: “There was a lot of misunderstanding, and we wanted to try to raise awareness and actually work with the regulators, the government, et cetera.”
CryptoUK is intended to be something “which the masses and the wider audience in the UK would understand in terms of what crypto is, how we want to regulate it, and what the best practices that we as organizations choose to follow.”
CB is one of only seven UK crypto companies forming a self regulating crypto trade body -CryptoUK- standing alongside eToro, CoinBase, CoinShares, BlockEx, CEX IO & CryptoComparehttps://t.co/WTuQue4J3U@CoinSharesCo @eToro @coinbase @BlockEx @CryptoCompare @cex_io $CBT #BIP175
— CommerceBlock (@commerceblock) February 13, 2018
CryptoUK’s Code of Conduct is Targeted Toward Benefits for End Users
“At this moment, [CryptoUK] is designed to benefit individuals,” Iqbal explained, although it’s clear that ensuring safer practices when it comes to user policies improves the hygiene of the industry at large.
“We have a 12-point Code of Conduct,” he said. For example, “a couple of those points are: ‘have we onboarded customers properly? Have we done the correct checks to ensure that they understand what type of risk this investment is?’”
Iqbal added that CryptoUK ensures that users understand the risky business of cryptocurrency investments by “following the standard Know Your Customer (KYC) requirements.”
What Lies Ahead for a British Fintech Industry Outside the EUGo to article >>
Of course, “we also say that we need to carry out anti-money-laundering checks to make sure that anybody using our platforms is not using them for illicit activities.”
Security of digital assets is also a point on CryptoUK’s Code of Conduct: “We also want to secure customer funds, so we will try to maintain ninety percent of cryptocurrency that we hold in cold storage so that they’re not connected to the internet.”
Essentially, “the majority of them–if not all of them–are related to protecting the end consumer.”
Crypto Regulation in the EU is “Very Fluid”
CryptoUK is hoping to provide Europe and the world with a solid framework for what so many consider to be an esoteric and elusive industry. Iqbal explained that he believes that “the status [of cryptocurrency regulation] in the EU–as with any country in the world right now–is very fluid [at the moment]. I think they’re waiting to see a reaction from other organizations and other countries.”
In particular, “I feel that they will be looking at regulating what we call the ‘on-ramp’ and ‘off-ramp’ (which we’re completely supportive of)–so, when customers use fiat to buy cryptocurrencies or sell cryptocurrencies in exchange for fiat–to regulate that aspect of it. I think that’s a fantastic starting point.”
CryptoUK’s Role in EU Regulation
Iqbal explained that CryptoUK is hoping to form supportive relationships with regulatory associations that may appear throughout the world: “There are rumors that there’s going to be global associations being formed, and CryptoUK is happy to support these organizations.”
However, as one of the first of these regulatory bodies, CryptoUK is hoping to position itself on the razor’s edge of regulatory innovation: “I’d be happy to say that we’re taking more of a leadership position on [cryptocurrency regulation],” said Iqbal, rather than a reactionary position to the current regulatory climate.
Iqbal continued to say that the UK’s political position as a global financial powerhouse also strengthens CryptoUK’s position in the global landscape:“If the UK is currently the center of world finance, there’s no reason that we shouldn’t be the center of this industry also. We’ll be disrupting finance in [more than] one way, shape, or form.”
Changing demographics of cryptocurrency investors from ‘Shoreditch crowd’ to mainstream investors on @eToro in 2017. An interesting insight into self-regulation group CryptoUK from @IqbalGandham #londonfintechconference pic.twitter.com/nWfnny5BPg
— Adam Hunter (@adamhuunter) March 7, 2018
“f CryptoUK can help work with regulators in the UK to form a regulatory framework,” he continued, “then there’s no reason why the European countries can’t adopt that.”
The Future of Crypto in the UK, the EU, and the World
When asked what global role crypto will play in the future, Iqbal explained that “everybody says that it’s gonna democratize investing, that it’s gonna change the way that we do cross-border transactions–[those are just] a few ways, but I think that the underlying technology (blockchain) has a lot to lend to other industries, such as insurance, property, et cetera, where you really need to maintain records which are immutable.”
For all those watching the ups and downs of crypto, remember every idea which failed during the first dot-com boom eventually became a success. So sit back and relax, no one knows what’s going to happen except the technology is here to stay.
— Iqbal V Gandham (@IqbalGandham) January 17, 2018
“I think that in the short-term, it’s definitely going to disrupt finance. How it disrupts it? I think that’s like asking me how the internet was going to disrupt communication twenty years ago. I don’t think we’ve even seen how cryptocurrencies are going to disrupt finance and the world of money.”