Regulation Could Go Either Way: It’s an Open Playing Field - Naeem Aslam, ThinkMarkets
“For every genuinely promising project there are ten, if not more, scam or fraudulent ICOs,” believes Naeem Aslam, Chief Market Analyst at ThinkMarkets.
Naeem Aslam is the investment and compliance and regulation expert. He will moderate panel discussions titled “Large investment funds are looking into crypto. How will it influence digital currency regulation?” at the Blockchain International Show London. In the interview, Naeem Aslam discussed regulations and their impact on economy. He talked about crypto exchanges and their future possibilities and revealed secrets for successful startup development.
Interviewer: Blockchain International Show London (BSL)
Speaker: Naeem Aslam, Chief Market Analyst at ThinkMarkets (NA)
BSL: We would like to ask you about your view on the future of regulations. If more blockchain startups start getting large investments, what can possibly change in regulatory environment?
NA: It’s really an open playing field – regulation could go either way, and of course it depends on the jurisdiction. ICOs have driven a huge surge of innovation, and we’re seeing vast progress, as old industries are transformed and completely new markets and solutions are created. A heavy-handed approach, as happened in China, would stop it all in its tracks. The ecosystem is in desperate need of a fair and informed regulatory framework. For every genuinely promising project there are ten, if not more, scam or fraudulent ICOs, where people abuse the model for private gain, with no intention of developing a working product. We need a system that can protect investors with the power to hold ICOs accountable, but without stifling innovation. We need better levels of understanding from regulators: you can’t police this new ecosystem properly without being fully informed. Some countries, with the Baltics leading the war, are starting to realise this and are making strong efforts to learn about and explore blockchain and decentralized ecosystems. The nations that can provide the best regulatory framework the fastest will likely see a lot of capital moving their way as projects relocate to the best conditions.
BSL: As for cryptocurrency regulations, in what cases do you think they are positive and can benefit economy?
NA: When it comes to decentralized technology, how do you enforce regulations? Governments need to come to a decision: enforce a blanket ban as we’ve seen in China, or proper regulation. The current ambiguity in some key global markets is totally unsustainable. History shows that societies that allow free flow of information are more likely to prosper. Free regulation that allows the flow of data and value would likely attract global investment. Countries that respond with openness to these new developments will see a significant economic benefit. Also, if we could develop a fair way to organise cryptocurrency taxation within these new structures that would certainly be a huge boost in revenue for governments – everyone would be a winner.
BSL: What tips can you give to startup projects that want to get investment?
NA: If you really understand your industry and believe your project is the solution for that sector, then the investment will come. Build a team that you know can deliver on the promises you’re making, and spend time developing a community. When all those things are in place, people will want to invest in your project – it’s just a matter of getting the word out there effectively.
BSL: What important elements is it necessary to keep in mind to manage a crypto business in regulatory compliance?
NA: One crucial element if you’re launching an ICO is to really understand your token. In the US, classification as a security could have a huge impact on your business. The token needs to have utility, to be a vital part of the project’s infrastructure. If it’s just a means to reward investors, you’re going to have a lot of difficulties; if you want to be more than just a vehicle for speculation, there are plenty of those already. It’s still early days, and the regulatory framework hasn’t been fully established yet. It’s important to make sure you have a clear grasp on what’s happening within your project, alongside an understanding of any changes to the regulatory context you find yourself in.
BSL: What do you think about the future of crypto exchanges? How is it possible to improve their work even more?
NA: There are a few things that need to be addressed, and those reasons are driving forces behind the TradeConnect project. The crypto community has built all these decentralized ecosystems, only to centralize them around exchanges – in essence, doing little more than moving the choke point somewhere else. They’re an irresistible target for hackers, and often traders are provided with no assurances or means of holding exchange owners accountable. The future for exchanges will be systems that can better protect trader security, while at the same time answering the other central issue: liquidity. As blockchains develop and become more scalable we’ll be able to move exchange systems on-chain. It will mean that traders won’t have to hand over their private keys, and we won’t see the headlines about multi-million-dollar hacks that have been too frequent recently.
BSL: If cryptocurrency is strictly regulated in some countries, should blockchain enthusiasts start their business in compliance with laws or is it better to start a crypto business in the less regulated environment?
NA: That’s not a question that’s easy to answer until we see how this develops. It’s a great example of how the lack of clarity in this area is a hindrance to development. If you have a fantastic business solution, you’re driven to build it, but without knowing where we stand in the eyes of regulators we’re wasting time, money and effort trying to ensure we’re legally compliant in a vague situation, or stuck in total stasis.
Interact with the expert and get answers to your crypto questions at the conference!