Regulation or freedom?
This is one of the most debated topics of 2018. So we decided to talk about it with Olga Feldmeier, one of the most well-known women in the crypto sector.
She’s most famous for her proactive position about the industry’s regulation
We met her during the Blockchain Cruise event, where she participated in a panel discussion regarding crypto and ICO regulation with Bobby Lee and others.
While Lee had a strong position against regulation and KYC procedures, Feldmeier defended the need for a strong and more precise crypto legislation.
Starting from this topic, we interviewed her to better understand her idea and position about the regulation issue.
Hi Olga, thank you for this interview. We listened to your speech about regulation on the Blockchain Cruise. Can you please let us know more about your thoughts on this matter?
Hi, thank you for this interview. Well, financial authorities and crypto exchanges ask people to register, this allows for legislation, it’s sort of like at a stadium, now there are controls at the gates in order to check everyone, so that only people with the ticket can get in. The thing that is happening with crypto now is that more and more exchanges become legal entities and authorize financial players. They will have to apply these rules to fight against money laundering and to have less criminal activities in the cryptocurrency space. And this is good.
You mentioned that regulation helps protect investors…
With investor protection we are touching a little different topic, here we are actually speaking about ICOs. The way they were done two years ago was without any KYC, no identification and no procedures against money laundering. Unfortunately, this is still happening, for example in those cases where exchanges are not doing KYC. Money is being laundered from dirty sources through their companies, and this is actually what we don’t want to have in our space.
So, if a company registers an ICO, investors need guidance. When you go and start your ICO, you need to create a whitepaper, that is a prospectus which gives the information about the business and the company service behind it. But, unfortunately in many situations does not go in-depth. And this is why we are talking about investor protection because within those ICOs there is not enough information for contributors to be able to judge the level of work involved in those undertakings.
Now if you move into the space of security tokens, which are shares of a company, and if you issue those shares for public sale then you’re back to traditional regulation that we’ve had for many years; there will be high requirements for companies that issue those kinds of tokens, there will be a higher demand to be public, and companies will have to give investors information. It all leads to investor protection in a sense, those investors will be able to make informed decisions.
Again, this is a good thing, this is why I’m a big proponent of more regulation in the crypto space. So that it will help us to move away the shadow and morph into understanding that the ICO is just a new form of funding, it is a global crowdfunding way to invest in companies and this is great because today we have the internet, and everybody can get informed about opportunities overseas, it’s a great new development, the democratization of access to finance. We can do it, we just need to do it in legal framework.
So, do you believe we don’t need decentralized exchanges? Would it be a problem?
Every country has a different approach to KYC, AML and investor protection, and they’re not harmonized between countries, they are quite different, so in a legal sense there is no way for companies to just accept it, but the whole idea of decentralized exchanges is about this borderless investment platform where it doesn’t matter where you are on-boarded and I think it’s a great idea. The biggest problem for regulation is how to do it. How can we acknowledge and accept each other’s standards? How can we explain KYC to users? Today there’s no solution to that. In the future maybe, in 3 or 5 years we will have identity on the blockchain thanks to smart contracts, so wallets will be able to interact directly with other platforms. This would be a very fundamental change that needs to happen on different sides.
You talked about Japan, according to you, how should the states behave towards cryptocurrencies?
Financial regulatory authorities in each country have big challenges to overcome now: how to deal with cryptocurrencies. Basically, for them, the fundamental question is, do they find new categories or do they just say, “well it’s another form of money”, and here different governments go different ways. I think Switzerland is one of the most progressive countries that acknowledges this technology, there are also some countries that are not suitable for cryptocurrencies. Another country that is acting well regarding regulation is Liechtenstein, it is currently one of the best places to be active if you’re in financial services in the blockchain space.
What do you think about Bitcoin maximalists, is it a good thing for the community to be so divided?
I think it’s quite normal, there are people in this industry that come from all the different sides, I mean originally there were developers and cyberpunks and so on, truly libertarian and ideologically driven people, but now these things are changing, we’ve been in this space for ten years, bitcoin exists since 2008 and the people who started it are still there, you saw them on that panel, they still think that the only way forward is outside of regulation, outside of law, but you know, you also see that this technology gets adopted by financial institutions and that companies like SMART VALOR and many other companies are applying for legal status. You want to be a legal company because it is not possible to scale and have big operations outside of the legal system. If more and more people like me join the space and help regulators and authorities to work out the way how they should approach the business, we are kind of changing the trajectory of this industry, we are moving more and more into more legal, more regulated space, which I think is good, but you saw the panel, there are other opinions.