Resilient systems are essential in the crypto industry just as people would expect banks to have the highest level of security measures to protect their assets. This enlightening panel underscores the significance of security, transparency, and education in the endeavor to restore trust.
Panelists include Léa Narzis, Core Engineer at Parity Technologies, Carlos Fragoso, Principal Subject Matter Expert at Maltego Technologies, Thanos Tsavlis, Co-founder & CEO of Cyberscope, Gabi Urrutia, VP of Security at Halborn, Yasir Qayam, Co-Founder & COO of KwikTrust, and Michael Fasanello, Crypto Compliance Officer at AnChain.AI.
Thanos emphasizes the importance of securing technical systems to prevent smart contract exploits. He suggests that the best defense is a combination of securing smart contracts and education. Only by implementing both measures can mainstream adoption be achieved.
Gabi emphasizes the importance of educating clients about security. He argues that people often overlook the importance of security until a security breach occurs. Security is paramount; he thinks this is the first step to establishing trust.
“While we are here discussing the technology and how we can leverage it, it’s down to us to build the reputation, do the right things, and have a longer-term vision.” – Yasir Qayam, Co-Founder & COO of KwikTrust
Léa, Carlos, and Thanos discussed the importance of building trust in the crypto space.
Education on Security is Essential to Restore Trust
Yasir envisions a free space without governmental intervention, but he acknowledges that we are currently in a transitional phase (Web2.5) and not yet prepared for full self-custody. As he explains, “When something goes wrong, we still need someone to be mad at!”
Carlos states that humans are the ones implementing technology, and it’s the people that can be good or bad. It’s thus crucial to continue building secure tools and providing education. Educating both companies and users is vital to increase awareness and empower users to prioritize security in the crypto space.
“Technology is not the problem, humans are. A system based on trust is trustless. Humans are the weakest part of the chain, unfortunately.” – Gabi Urrutia, VP of Security at Halborn
Panelist Gabi Urrutia explained how they help clients establish secure systems and why security is key to restoring trust.
Can Regulations Help to Build a Safer Space?
On one hand, Michael acknowledges the role that regulations can play in driving mass adoption as customers may feel more comfortable trusting the crypto system.
However, considering the flip side of the coin, he raises concerns about overreactions and hasty bans by legal entities. He advocates for collaborative efforts to educate governments about the advantages of blockchain technology.
“It’s a whole new ballgame for people. We’re literally seeing the law being built in real time. I don’t think I’ve ever been in a part of something that’s so new and exciting, it’s fascinating!” – Michael Fasanello, Crypto Compliance Officer at AnChain.AI.
The increasing adoption of artificial intelligence (AI) and the ongoing discussions surrounding regulations are two important factors shaping the future of crypto market-making. How will policymakers’ decisions affect the crypto industry? How is the crypto industry using AI?
A very enlightening discussion took place during the 8th European Blockchain Convention with Joseph Hall, Reporter at CoinTelegraph, Guilhem Chaumont, Co-Founder & CEO at Flowdesk, John Murillo, Chief Dealing Officer at B2Broker, Patrick Heusser, Chief Commercial Officer at Crypto Finance AG, Stef Wynendaele, Head of Commercial Strategy at Keyrock, and David Tunian, Head of Business Development at WhiteBIT.
How Is Crypto Market-making Different From TradFi?
In a cocktail party analogy, market makers are the party planner that manages the risks, provides the necessary support for participants to enjoy themselves, and handles the logistics of the event. They play a crucial role in maintaining order and stability in the market.
Market makers in the crypto industry are more open, transparent, and willing to cooperate compared to players in traditional finance. In TradFi, market makers operate in a highly competitive and fast-paced environment where speed determines performance. However, the crypto market is more decentralized and fragmented. Crypto market making is often offered as a service and the risks are shared among several different stakeholders. Market makers need to collaborate to manage risks and advance the market.
“I’d rather have a collaborative approach and not an “Us v.s.Them”. At the end of the day, the market will decide what is most efficient and the market will decide what’s most interesting to have on the balance sheets. So let the market decide, but we have to do it together!” – Stef Wynendaele, Head of Commercial Strategy at Keyrock
The panel “Market Making is Key for a Crypto Market Recovery” at the EBC23.
Regulations Can Help Bring the Industry Forward
All panelists acknowledge the importance of regulations, but clarity, transparency, and optionality are the key elements that they hope regulations can bring.
“I’m actually looking forward to regulation and clarity. It will at least be clear about what are the rules and the boundaries. It will help the market be more liquid and more people be comfortable going in. I’m really looking forward to it!” – Patrick Heusser, Chief Commercial Officer at Crypto Finance AG
Despite being supportive of regulations, Patrick believes that there should be two parallel ecosystems in the crypto industry. One is the decentralized ecosystem where users can trade any token without restrictions. The other is a system for users who may not want to manage their wallets. He envisions that the decentralized system will be the innovative one that helps make the traditional system more efficient.
“In the end, it would be very Darwinian. The actors that are bad and not transparent will be mechanically excluded from a business perspective and those who bring value will obviously have more business and they will make progress.” – Guilhem Chaumont, Co-Founder & CEO at Flowdesk.
When looking at the quantitative market-making and technical perspective, a lot of machine learning and AI technologies have been implemented for years.
Patrick also views AI as a potential support for crypto businesses as the technology can be used to follow updates on multiple protocols, monitor blockchains, and evaluate risks in smart contracts, which are time-consuming and challenging if done manually.
However, Guilhem thinks it’s very unlikely that AI will disrupt the crypto market-making in the next five to ten years. The crypto market is heavily fragmented and there’s a lack of ground infrastructure and a high necessity for less scientific discussion and cooperation, so he thinks it’s hard for AI to make groundbreaking innovations in the short term.
Watch the full panel to learn more about the future of crypto market-making!
This legal panel delved into the European Union’s new legislation, Markets in Crypto Assets Regulation (MiCA). This panel features six distinguished speakers: Robert Kopitsch, Secretary General of Blockchain for Europe, Justine Scerri Herrera, Partner of MK Fintech Partners, Ernest Lima, Partner of XReg Consulting, Joachim Schewin, Principal Economist at the European Commission, Przemyslaw Kral, CEO of Zonda, and Jonathan Turnham, Partner of Travers Thorp Alberga.
MiCA Comes Down to Individuals and Collectives
To kick off this panel, Joachim Schewin delves into the European Union’s new legislation, Markets in Crypto Assets Regulation (MiCA). He explains that the starting point of MiCA is individuals. Everyone has various identities to engage in different collectives, and MiCA exists to empower these bottom-up decentralized initiatives.
“The starting point is never regulation. The starting point is also not crypto. The starting point is how we see the world and how we see individuals and collectives.” – Joachim Schewin, Principal Economist at the European Commission
MiCA takes on a bottom-up and liberal approach and it contains three main pillars. First, MiCA is a regulation that excludes regulations on DeFi, DAOs, and NFTs because they don’t see significant risks or they consider the industry too premature to be regulated. Second, MiCA has reversed the proof of burden of utility tokens. National regulators will have to prove a project is against the laws, instead of another way around. The third main element is about setting rules for stablecoins.
The audience listened to the panel discussing regulations and MiCA at EBC23.
Challenges and Unknowns Are Along the Way
Operating in Malta, Justine has a generally positive opinion of the MiCA regulation, such as regulating centralized players and providing fair and transparent rules for trading venues. However, she also recognizes that there may be some confusion and ambiguity in how the regulation will be carried out.
Justine specifically expresses her concerns about the restrictions and market disruptions that MiCA may have on stablecoins. Justine hopes that the bigger players in the stablecoin market, such as USDC and USDT will apply for authorization under MiCA, but she also acknowledges that there are many uncertainties that will need to be addressed as the regulation is implemented.
Ernest hopes that MiCA can serve as a benchmark for other jurisdictions to follow. He argues that the fragmentation of regulations in different countries is making everything difficult and more complicated. He understands that the regulation is catching up worldwide, but it is difficult for it to keep up with the fast-evolving sector and all the different business models and services being offered.
Meanwhile, Jonathan argues that the cryptocurrency industry is complex and diverse, so he sees the need for a base layer foundation for regulation and a global standard that prevents regulatory arbitrage and weak points in jurisdictions. He believes slow and steady progress is necessary to identify pinch points and build a solid foundation.
Panelists discuss crypto regulations, especially MiCA, at EBC23.
Education and Collaboration Are Critically Important
In order for regulations not to impede crypto businesses and innovation, Przemyslaw, Ernest, and Justine all believe that training and education are key to dealing with the challenges and that regulators need to be trained and educated in order to properly regulate the sector.
Joachim thinks it’s important for players in the crypto space not to view regulators as ignorant and unwilling to understand the industry. He shares that the European Commission has launched the European Blockchain Regulatory Sandbox, and will host 20 blockchain startups annually so that the private and public sectors can work together. Collaboration between regulators and the private sector will be necessary to establish sensible regulations that embrace blockchain technology’s potential.
“At the end of the day, 10% of the problems that you will ever face with a regulation is the text of a regulation, 90% of your problems will be how people interpret the regulation.” – Joachim Schewin, Principal Economist at the European Commission
A large crowd attentively listened to the panels at EBC23.
Keep the Hope Up and Build Something Meaningful
Imaging the future, Justine predicts that big players like USDC will wait on the sidelines to see how MiCA plays out before deciding to opt for a license and authorization. Meanwhile, there will also be regulatory arbitrage within certain jurisdictions.
Facing these uncertainties, Przemyslaw and Ernest both encourage builders to understand the regulations and don’t give up. Jonathan advises crypto builders to keep trying even though it means sitting down and talking to the regulators countless times or even bringing the governments to court. He believes that regulations are coming, and we can either be a part of it or sit on the sidelines and cry.
“The point is don’t get discouraged. Keep trying. If you sit on the sidelines and just complain about it, the stuff is going to come in without your input, and that’s going to be even shittier than what it is now, so keep the fight going!” – Jonathan Turnham, Partner of Travers Thorp Alberga
Ernest thinks it’s essential for industry players to examine their products and services and do a good jurisdictional analysis. Agreeing with him, Joachim advises builders to think about the target audience and what they want to achieve for society. Focus on explaining the benefits of the use cases to gain attention and support from regulators and policymakers.
Check out the full discussion on MiCA and regulations on the EBC YouTube Channel!
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