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Fintech
Businesses using new technology showing ‘extraordinary interest’ in new controls
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UK for instance, it is still very difficult anywhere for companies to get a bank account if your business has ‘bit’ or ‘coin’ in its name. Banks care about KYC procedures and that you are regulated in another jurisdiction, but that doesn’t fit easily with Bitcoin given transactions are anonymous.
“A lot of people are in the queue to be regulated in Lithuania, Gibraltar and Luxembourg – probably the top three in Europe for crypto currency regulation.”
Matonis declared there were 500 Bitcoin currency exchanges worldwide that “play a vital role, because they give stability, increas- ing liquidity and less volatility; and they give access - effectively a bridge with national fiat currency”. Exchanges in Bitcoin "make money whether the price is going up or down; they are profitable from the start, they don’t need to look at external funding.”
Matonis said: “Bitcoin also allows [exchanges] to operate in unregulated markets, not because it is illegal; it just means they are currently unregulated, so they are in
a grey area, and it overcomes the problem for operators - given Bitcoin is a 24-hour quoted, universal currency - to ensure they will get paid.”
He predicted: “Bitcoin will outlast the Euro. Having a currency exchange within a regulated jurisdiction will be a big advantage.”
Michael Jack Hudson, 30 years old chief executive of Bitstocks, established as a Gibraltar company in April, pointed to new Japanese legislation where retailers have a 10% tax break for use of Bitcoins with the added advantage of having no exchange commission to pay. “It’s in the very early stages, but it is a huge incentive for retailers to start using Bitcoin.”
Central database
To assist with regulation, he suggested estab- lishing a centralised database of companies using the system - “we still have to assign names to customers and although there is need for some financial privacy, if it is on a public system there needs to be some KYC, and it needs to be regulated”. With the addi- tion of crypto currency exchanges, “regula-
tors are going to check compliance of exchanges in the currency”, Hudson assured. Adam Vaziri, a regulatory lawyer and
joint founder in 2013 of Diacle with offices in Hong Kong, London, Isle of Man and the US that design and develop fintech blockchain ventures, as well as compliant Initial Coin Offerings (ICOs), stated: “I’ve been trying to bring business ideas that are extremely dis- ruptive into the mainstream – financial servic- es industries that are safely regulated using this blockchain technology.
Most exciting were “tokens offerings - Initial Coin Offerings (ICOs) - that are the equivalent of an IPO (Initial Public Offering) for a company’s stock, but where the company has not yet traded. “Crowdfunding is the second biggest application of blockchain technology and ICOs are a way to raise money for a new product, leveraged via the public blockchain; roughly five ICOs a month each raise an average US$5-10m and the ICO ‘hot spots’ are Singapore and Switzerland.”
Although ICOs were a new trend, “it is not sustainable to have, for example, US$20m raised [in this way], without any anti-money
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Gibraltar International
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