How regulated industry leaders are shaping the future of finance

Innovation often goes against rules and regulations, as if rules and regulations must be in opposition or at least in tension with each other.

In our experience, these clichés don’t stick. At the London Blockchain Conference 2024, we saw the role played by large incumbent leaders like Boston Consulting Group in driving innovation despite the reality that (to use another cliché) large institutions resemble giant supertankers. It is driven by an almost unstoppable momentum and changes in direction are not made quickly.

In fact, these larger institutions may have an advantage over more agile institutions. They have exposure and experience to a vast and diverse customer base. As a testing ground for new market solutions, it is in many ways the perfect candidate. And as a fully regulated and compliant option for gaining exposure to digital assets, it is virtually unrivaled.

This was the focus of the final panel of the 2024 London Blockchain Conference.

“We are interested in how to connect blockchain and traditional finance,” Lewandoska introduced the session.

The three panelists on stage were well qualified to discuss the topic. For example, Palao outlined Sygnum Bank’s mission and mission to allow institutional investors to access digital assets with complete trust.

Kaszycki explained that Mobilum’s mission is to be a bridge between traditional finance and the digital asset space. Therefore, they offer a variety of programs to help the industry leverage the value of traditional financial systems, including bank rails, payment cards, and liquidity provision.

Björnsson explained that ISX has recently shifted to opening its own exchange to international customers and will be rebranding from ISX to OrangeGateway. Björnsson adds that they have been open to Icelanders for many years, attracting everyone from mom and dad to large corporations. Their focus is to help get everyone who wants exposure to digital assets on board. Bjornsson also said OrangeGate is introducing BSV onramp for its services.

But the first question posed to the panelists was aimed at Sygnum’s Paloa. “How is Sygnum Bank positioning itself to onboard traditional asset holders into this digital world?”

“I would say this is one of Sygnum’s main missions, but here’s the caveat: We are committed to bringing new users and businesses into the industry with complete trust. We believe that the industry needs the support of a fully regulated counterpart. “This is what we wanted to bring,” he responded.

Far from insisting on his bank as a one-stop solution for those looking for more trusted counterparties in the industry, Palao made it clear that the industry still needs more regulated counterparties.

Kaszycki went into more detail about the prepaid cards mentioned in the introduction.

“In the case of cards, in the digital asset space you own, there are times when you want to use it as a net asset. It’s not an easy task. You have to convert it to fiat somehow. You can do that through your bank, but what we offer is a downloadable wallet that connects to your exchange or mobile device. Cards that are fiat currency can be recharged (in the case of debit cards).’”

They will soon be offering a credit card program, but he cited this as an example of where regulations present additional hurdles due to current rules on lending.

Kaszycki also enthuses about the positive impact the EU’s new digital asset regulatory framework, MiCA, and the BTC ETF approved at the beginning of the year, will have on the industry and the confidence individuals and businesses will have in it.

“We use the (BTC) ETF and MiCA. We finally got a chance to open a bottle of champagne. The digital asset space awaits regulation. All of you have at least once experienced problems with your bank, such as sending fiat currency to an exchange. It’s not that banks don’t like the space. (pointing to Signum))—The problem is that banks are more regulated than we are. They are asked questions about why they are allowing certain activities and how it fits into their risk policies,” he said.

“The problem is that unless there is proper regulation, banks will have to utilize the space in a very simple way.”

Both the ETFs and MiCA he mentioned serve as a statement that digital asset classes are now available to traditional institutions. Kaszycki said this is a huge win for the industry.

Björnsson added that the space is still rife with fraud, which will pose a difficult challenge for regulators trying to root out the bad actors. We have seen big companies in this sector taken down for money laundering and this will continue to be the biggest challenge for regulators.

“If you let the bad players go, it will be much healthier for the regulators to take up that space,” he said.

Palao also pointed out that the regulatory environment is very local. For example, Switzerland, where both his own Sygnum Bank and Kaszycki’s Mobilim operate, is widely seen as the most favorable jurisdiction for digital assets. After all, it is home to the famous ‘Crypto Valley’.

“As we explore different markets, we see all the different regulators working to create clear regulations for the industry. It’s a bit of a challenge. obvious regulations,” Palao said.

“In many cases, we see regulators looking at innovation through the eyes of the past. In many cases, traditional game rules are difficult to apply.”

But Palao is quick to point out examples of regulators truly trying to go one step further and build regulations that not only enforce the rules of the past, but adapt to the needs of the market.

Kaszycki agrees and adds: “Digital assets are based on blockchain but can represent many different kinds of services. It’s a headache for regulators to enforce the same rules, as digital assets can include stablecoins, derivatives, and common utility coins. What MiCa brings to the market is a clear definition of who controls what. Stablecoins belong to the banking system. Financial Products – Collateral and Exchange Fees.”

Lewandowska then asks how the panelists position themselves in front of regulators.

Björnsson said one of ISX’s strategies is to adapt to the BSV blockchain, which is one of the most scalable blockchains.

“In the next 5 to 10 years, tokenization, or tokenization of products and services, will require the most scalable solutions. By offering BSV as our primary trading pair, we are trying to serve that market. It may take 5-10 years, but I think eventually all these Web3 applications will require scalable solutions. “This is why we are broadening our horizons.”

Palao added: “One of the things I realized while working in banking is that just like we talk about protocols in blockchain, all payments are also executed according to protocols. SWIFT is a protocol, but it is one of the oldest protocols in history. We are closed on weekends and do not provide immediate final confirmation. So one of our roles is to enable our customers to adopt and utilize alternatives that we believe are superior.”

Watch: Now is the time for regulation to enable blockchain growth.

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