# TOKEN2049 - Gatekeepers: Crypto Exchanges

- Channel: [TOKEN2049](https://streameth.org/token2049)
- Date: 2019-10-09
- Watch: https://streameth.org/watch/yt-g2p9M4eOfZc
- YouTube: https://www.youtube.com/watch?v=g2p9M4eOfZc

## Transcript

my name is Kevin purist Donnie I represent coinbase an institutional business for Asia I'm based in Tokyo it's a pleasure to be here today thank you for coming and today I'm gonna host a panel discussion entitled gatekeepers crypto exchanges and the themed gatekeepers really revolves around the recognition that crypto exchanges today in the crypto space play a really important role of determining what investors can access the markets and what projects and asset issuers can list on those markets so it's a really crucial part of the ecosystem and so it's important that we understand the trends what challenges that the crypto exchanges are facing so let's start off by letting the panelists introduce themselves maybe we'll start on our left here with you Teddy you could give a brief intro about yourself your role at the firm and then a little bit about what your exchange is all about with maybe an emphasis on what sets you apart from the other players on the stage here sure my name is Ted I'm the chief growth officer at finance what we do is we develop partnerships and look for opportunities for future growth so nothing that is right away in terms of user acquisition because that's marketing but we're looking for the next catalyst perhaps emerging markets perhaps new features perhaps new ways to add value to our existing users another thing we're looking looking for is for example education the way to bring more people from the non crypto into the crypto so one thing that stands out in terms of bina's compared to the fellow panelists here is that even though we're well known for exchange most of initiatives right now a lot of the effort we're put in is not just exchange related we're looking to expand the overall PI of how crypto can influence the lives of people around the world instead of just exchange that'll be the biggest difference thanks hey Jasper so yeah I'm Jasper managing director for eToro Asia so I think like we all coming from a bit different background each is actually coming from a all night trading network that offer multi SS class to people in the world right basically so we offer stock FX etf commodities we're probably the very few in training platform they offer real stock and real crypto at the same time and we also have this social function that people can actually follow each other's we transparent each artists per photo people can actually copy each other's right now we have 10 million users on the path from you know like they can talk to each other and and follow right so we've been engaged in crypto business like already for years we are recently launched you know our crypto altering in US and recently also try to offer you know this credit card fiat buying on our wallet so I think the whole purpose of it or is try to make you know our investors access to different trading class easily so this is you know what we do my name is Chris Lee I'm the CFO Wahby group so hobby is one of the leading global change so we can fear to token token token I also diverted future we have the top-tier future exchange afford contract exchange in the world and also we are have most comprehensive ecosystem in asia-pacific especially in China for people is a is a pool mining company one of the top 10 globally as well so we also include education cocoa bean University and also we have instant message of hobby charm so we basically were surrounded provide bass ecosystem have you know a pure infrastructure education for the botching ecosystem in asia-pacific poverty we expand the world and also we get we are fully compiler we do lots of combines a local change so we're the only one foreign resident on the 90 percent exchange in Japan we we are also G part our license exchange as well we can office in London Dubai Abu Dhabi Hong Kong Singapore semi Cisco's and we embrace the watching rate we we try our best to promote this both poaching ecosystem in world thank you hi everyone I'm Carolyn from Cohen super so compare with the previous ones just introduced we're a little bit younger in tenure the the things make our different is the first years we have a team combined of bankers like myself risk managers and super talented engineers the second thing is we probably are the first of the industry having the capability to do deposit and withdraw rules impose US dollar and Hong Kong dollars so as an exchange based in Hong Kong we are very proud and happy to see the recent move of the regulators in Hong Kong I think having the right protection and transparency of the infrastructure will help the industry players and particularly our customers to enjoy a safer and a healthy environment to support industry growth hi everyone my name is Alex Warren I'm co-founder and CEO of idec's we are known as the top decentralized exchange the largest by volume users transactions pretty much any measure that's still small compared to the other centralized exchanges that are here on the panel here with me what differentiates us is a focus on the non-custodial aspect of cryptocurrency trading so in order to trade on ID X you don't have to send your cryptocurrency to a third party to an account that they control you actually manage everything using a private key and a smart contract throughout the entire process and we think this is really in line with what cryptocurrency is about decentralizing the in this case custody the risk and all the components actually using disease these blockchain bearer assets in the way they were designed to be used rather than pooling them all together within a central third party in order to trade them the other piece is around kind of leveraging this aspect of our design the fact that we're using a smart contract for custody and settlement to create a more open platform so we're actually building out our exchange to have components of it controlled and operated by those in our community again in the interest of increasing transparency redundancy and resiliency okay thanks guys well let's go ahead dive right in starting with one of the most interesting topics at the moment which is these centralized exchange is specifically Teddy there's a lot of buzz around what finance may be doing in this space I understand that your technology your business model is a little bit different from existing decentralized exchanges out there do you mind touching on what it is you're going to be bringing to market and how it's different sure so right now we have the bynars chain that's launching soon the de central exchange that is based on Donny by news chain is in testan mode we're targeting to launch the main net before the end of April so what it is is we're looking at the existing block chains in the anecca sphere and find that most of the time crypto so far has been used to issue token race money gone to exchanges for secondary listing and for transfer or possibly payment remittance remittance the existing infrastructures are not able to sustain high speed transaction or high-speed trading in terms of these the central exchange application so this is what we intended to change with the bynars chain so it is designed from the ground up and it will be fast enough to sustain and process all the transactions on the corn bun is calm central exchange that's how fast it will be and there will be a one second block and one confirmation is final so this is the kind of design we have and we hope to let there to be more choices in the atmosphere about what tokens people what tokens standard people can use to issue their token that's the bonus tax so hopefully you can try the test right now I'll be launching very soon Thank You Teddy so Alex I want to give you a chance to respond to that right so he mentioned some of the limitations in the existing some decentralized exchange space can you address some of the points he raised and more broadly how do you feel about such a big and successful player like finance coming in and playing on your turf effectively yeah so a couple thoughts so he mentioned faster block times the scalability of the I'm chained I think that's a smart approach to look at the capabilities of the underlying network because that is a big limiting factor of decentralized exchanges today but we actually don't feel that that's going to be enough we actually think that the best approach is a hybrid design one which brings most of the activity off chain so that even you don't even have to worry about one second block times you have instant finality that traders demand and market makers want in order to use a platform but you're still settling and using the underlying blockchain for custody so that's kind of our approach that's our design the other part being that it can be replicated on any number of block chains so we aren't in the interest of picking a particular winner in terms of underlying block chains etherium AOS Algar and there's a lot of different ones coming out we actually get really excited about some of the interoperability chains because that's where we're really focused in the future is building bringing our high-performance hybrid architecture to a chain that can trade every single cryptocurrency from Bitcoin to anything new that's being launched I do think the finance chain is really interesting I can't speak for Ted but it seems that it's a minor leagues for crypto currencies you give teams an opportunity to create a token very easily launch it on the finance chain and if there's activity if there's interest if there's consumers you can kind of promote it to the big leagues of Finance comm so I think that's a really smart strategy from that perspective the core projects in that way but I definitely think we're going after a different approach to fundamentally fundamentally building out what we believe is the future of non-custodial trading okay thanks guys let's turn to another topic which I think is really relevant at the moment in crypto today which is derivatives so virtually every major cryptic spot exchange I've spoken to in the past three months is involved in bringing a derivatives product or derivatives market to the market and so I'd like to ask you guys about what you're thinking Chris let's start with you you mentioned that hoby already has a successful derivatives market tell us a little bit about how much that success has contributed to the overall success of hoby how important in derivatives is your strategy and how you see the growth potential there in reality if your traditional investment were developed to history's largest setter among the transitional investment world that that test effect and what we believe your papi should be comparing one-stop shop of like I change you should have a Fiat channel token token and and and diverted for some forward contracts and all the futures at the moment now we all together thanks for the contribution of transaction of the future coho be diverted Marcus and also Hobie gobo we're together we solve the number one Google Cavalli in intensive transaction so and another thing is that you could provide a comprehensive cover two solutions for the investors especially institutional investors and investors won't hatching and also to expect speculative with lavish five function I think it's a very crucial part if you want to have have a competent comprehensive solutions investor opportunity provided to the investors so I can see that many many exchange provides such service the derivative service so in long run maybe the other option is in other investment opportunities for order exchange as well got it okay well Jasper and Karen I want to give you guys an opportunity to tell us about any plans that you guys might have in the derivative space okay I'll go first and so actually eat or been running also the CFD business which is also a high leverage in the point right so we can offer two hundred times leverage on ethics and other indices for example so definitely authoring high leverage Hawaii challenge for clients to try the market even though the market is not like boorish even though a ring Jim okay people can profitable for the ring Jim okay using you know less capital on that it's definitely a good referral generally referred for the exchange or the company itself right but we also need to bear in mind that the high leverage trading come in too lot of potential problems as well like for example is actually very difficult to offer very high leverage on crypto because of the liquidity issue so you see some of the player in in the market they actually implement a lot of different limitation on trading compared to the traditional financial world so you know to to outside we definitely even now like we are offering time to time five leverage on crypto but no more than that it can be very risky I think is a trend but you know people you know need to give up second fall on that offering the highlight will be seeing 200x leverage from eToro and crypto any times never Karen what about you very quickly I think for if derivative is very important for anything if it is treated as asset class however for Kryptos we think that moment just there's the to issue when is the trust issue and second is the liquidity issue from our point of view from technically pure technical point of view we have developed our derivative capabilities internally a few months ago but we has we put on hold on launching it the reason is we think just for ourselves there's still a number of things to do as more priority for example on a customer settlement side we think that there are still majority retail customers in the crypto world and the wave of institutions professional investors they are moving but still have has has their concern and the hesitation so we try to understand and serve that part of needs as our current main priority that's why we upgraded our services and platform focusing on the needs such as more advanced the API there poetry analytics tools different order types safety on the custody side is cetera so once we view that we may have more confidence to offer more products see thank you guys let's switch gears a little bit now and talk about some of the challenges facing the crypto exchange space specifically right now we're in the midst of this crypto winter trading volumes are down dramatically prices are down it's a lot harder to make money even if you're a successful crypto exchange than it was say one year ago so what are the areas of growth that a crypto exchange can can look to to try and continue to grow the business now let's start with the concept of one of these ecosystem coins now Finance has been very successful with their BnB coin and I wonder to what extent the rest of the panel looks at that and desires sort of to replicate some of that success Chris what are your thoughts on that the first thing is for the poet Jesse if they can move forward for the industry we should be happy about that so I mean congratulations to to the finance in reality for Whoopie we also have a hobby token as well so for Hobie PI surface we can launch in the end of much very soon and we're headed back to line 1/2 years ago probably we already have subsurface already that actually is not new one that so we simply because we are more like combines kind of concern especially our customer need as well so we follow the different approach but we but based on the poppy token we have a lot have a whole ecosystem kind of a thing and also we do have like if you've got hobby token and also we can have hope money poor as well can generate extra income for the investors and also benefit by the exchange as well and in reality we we are probably among all the change will only one provide hobby shop is instant-message kind of I am I'm product and we have more than 1 million users already so so that's a we we have differentiated to other exchange I see thank you Teddy let's ask you for a sec so I know you're this decentralized exchange space in many other spaces but traditionally one of the main engines of growth for you has been the ICS space right and now there's a lot of people saying that the ICM market is dead it's gonna be all about stos how do you think about that sort of narrative is that something you buy into I mean I see it was always about fund raising for entrepreneurs who were serious about doing startups somewhere along the way kind of had a different spin to it it became for some people a good rich quickly scheme and people who start who raised money are not necessarily focused on their projects all the time so that's why sometimes it had a bad vibe to it what we're doing is more like a i/o so initial exchange offering that's our launchpad we believe entrepreneurs with great ideas to change the world should always be helped in one word the other and that is the platform we're using to help the entrepreneurs get access to funding in a very sensible way once the project's raise the money they do not get the money right away the crypto is actually is locked on by Nance and given to them in installments and they have to show product delivery and milestones before they get back the raised crypto in installments so that's that's one of the way we protect the users who participate in launchpad and also continue to facilitate in what we believe in strongly you just give the entrepreneurs the great chance so I seal a year or whatever I whatever it's always gonna be helping entrepreneurs raise money to do their thing got it where does that leave you visa V security token specifically is that a space you think we're definitely looking at very closely yes thank you let's go back over to you Alex in talking about what it means to be a decentralized exchange searching for growth I imagine it's quite different than than the other folks on the stage how do you think about that so in many ways we have a lot more opportunities for growth because of the limitations of decentralized exchanges today so one of the things were only built on the etherium network we started there because that's where the smart contract capabilities existed and where there was a large set of kind of asset of it so the first question though is then how do you expand beyond aetherium to other smart contract platforms as well as other call it top kryptos things like Bitcoin litecoin euros things that are on another blockchain so that's one area that we're really interested in it's going to be these kind of interoperability chains to your point about derivatives we're seeing the launch of derivative assets that use collateral in order to mirror other assets that aren't on that blockchain so that could be other cryptocurrencies or it can be other mainstream financial assets there's a couple groups launching an S&P 500 token and an oil token that will track those real-world assets I heard someone describe crypto as a way to bring first world financial products and first world regulatory structure to those who don't have access to it and I don't know if that's going to be the case but I really like this idea of opening up access to things that many of us in the room have the ability to invest in but a lot of others in the world don't but they do have access to Internet and cryptocurrency so that's one of the big areas of expansion and then Finance nbnb is a great example of using a crypto asset to help motivate and galvanize a community around a particular platform so we've got a similar type kind of structure a little bit different in terms of how it's being executed so we have a token that we use on our platform that users earn when they trade and provide liquidity and also can then stake and actually as I mentioned earlier run a piece of the infrastructure and earn some of the fees that the exchange is collecting so it's all about opening up the exchange for others to help operate it improving transparency as well as giving back to those who are making the exchange valuable and making the marketplace happen okay thanks guys and then I guess last question in this segment on growing in the crypto winter you know we're starting to witness a lot of consolidation in the space both in the exchange space as well as sort of on the buy side Chris or Jasper whichever one of you are both would like to respond to this what opportunities do you see in terms of consolidation or M&A in the current crypto winter I think the merge acquisition always a challenging job because the Internet's culture in terms of management as very difficult but I think in their lost opportunity to have secured a very good assets could comedy what in terms of light available that's life force and licensing license last year what we acquired Japanese exchange for betrayal we are 90 percent stake on the Bobby and then we also acquire a Lister vehicle in Hong Kong stock change that provide extra light a you know open the very important market in Japan and as always we have extra another source of capital source low lower capital costs for our future growth there's a good opportunity on time as well in general I think there's a heavy thing about there the shortcomings the Challenger part the how to you know the difference the culture stuff how to manage the team and how to synergy and once you do the to merge the debt company how do the restructuring I think that's a challenging part as well how is that going for you in Japan for example I think is a so far so good so more good news we will come we will release thank you great thanks so I just want to add on that you know like last year when I was in the panel we talked about exchange I wrote a work ethic and survived in the winter right and I actually a lot the panel agree 80% of the smaller change will die because of the winter and I'm unfortunately this Hong Kong change these actions in Hong Kong just now you know are not able to continue their business I think that we'll continue to see the same thing like the smaller players is going to be very difficult and I agree with Chris aside the Hammond is very difficult I personally look at you know a couple options in the past you know smaller exchange they actually not so well organized in terms of tonight the coding you know the probably some security issue so it's probably like you don't see a lot of like that that the big one acquired a small one but I will be very interested to see like the medium-sized one will be more working together to compete with the big one like this so we personally like it or are happy very open to see for potential M&A are so we have fundraising round you know last year so if there are any good poor Jeff you know we are very open great thank you and and yeah I think oh you're referring to with the Hong Kong exchange gate coin very very sad to see them them go they've been part of the Hong Kong community for a while here so yeah the crypto winter impacting many of us let's shift gears a little bit now and talk about an area which is maybe not quite as fun and exciting but still necessary which is regulation and compliance right and I think it's safe to say that today in the global crypto space crypto exchanges still have some trust issues hacks still happen client assets still get lost there's still questions about watch trading about trust about derivative settlement being fairly conducted and a whole host of other issues I think it's incumbent on everyone in the crypto exchange space to work to try and you know improve some of these things but I guess the first question I might pose to the panel is visa vie regulation in general is regulation something to be embraced or something to be avoided Karen let's start with you what are your thoughts on this regulation is definitely not something we're not familiar is from our background so but look at the crypto area at the moment I think most importantly to the customer is they have to trade in a very safety environment so easy to trade easy to invest but also be well protected so that that's the role of ourselves as a change to offer them do that but also I think from regulators point of view they if they come to view this environment to offer that safe teenis in the mind of the customer give us guidance in play ourselves have the right level of code of conduct for our staffs in also enable the partners like auditors insurance companies banks to support the business that would be all very good so we look at it very positively that's why we definitely want to embrace that and that helped to bring in more customer into this area all right thanks Karen on another topic this question of watch trading right so there's been many studies that claim to show that a number of exchanges including many Asian exchanges engage in fabricated trading volumes Teddy I'm not suggesting that Finance is involved in this but how do you ensure that you are not tar brushed along with all these other perhaps lower lower quality exchanges with respect to this question of wash trading sure I mean being the largest exchange by trading volume and page visit it is always something we look at seriously so sometimes we're handicapped or disadvantaged because we don't participate in watch trading and there are many newcomers in the market the occasionally like to make this vanity index or vanity metrics so high that they get some eyeballs whether on for example coin market cap when you kind of trade involved in comparison websites we believe that's missing the point it doesn't really matter if on the surface we look like we have less trading volume compared to the ones that have these artificially pumped exchanges because we're not trying to have the biggest trading volume we're just trying to make a great secure easy to use user experience and make sure the projects selection project selection is carefully selected so only the best projects come on to bind us and we have so much volume as a result of all those things done well not because we try to have volume so I think the ones who try to pump the vanity metrics they're missing the point completely I understood Alex what does it mean to be decentralized exchange visa V regulation do regulators even understand what your business model in your technology is and are the rules that they're writing correctly sort of take into account the fact that you have a different business model so encrypted first started there's a question of what is this asset class what regulation applies there's been more clarity on that over the past five years or so we'd still like to see more in particular from different different jurisdictions around what they think about these new token models so that's kind of one question that's being answered that's applicable to everyone on this panel we have another level of the regulatory question because of the nature in which our platform operates so we don't actually custody any funds we have no role in the execution or settlement of trades we're a software layer that allows people to interact with the etherium network and send authorization to a smart contract which then brings in it's basically all the laws that were written that they didn't anticipate bearer digital bearer instruments that could be traded via a digital blockchain smart contract Network right so none of them are written or kind of tailored to our business model or our unique architecture that said we think there's more clarity coming and we're taking a cautious approach we want to make sure that we're regulatory compliant and any jurisdiction in which we operate we're working to get the broker-dealer license and HTS registration in the u.s. we're kind of keenly aware of how other countries are approaching this and ultimately we want to be regulatory compliant even though we have a different approach to it from a technical perspective long term we hope to convince regulators that actually the technology itself is self-regulating that a lot of the concerns they have about delivery of assets settlement those things don't apply to our platform and that we should be regulated or at least kind of approached and monitored in a different manner than other platforms that do have control over that process great thank you well just in a couple minutes we have remaining let's do a quick lightning round want to go through each of you one by one but very quickly starting with you Alex what is one thing over the next 12 months that you're super excited about in terms of either a new product a new project a crypto asset what gets you going let's start with you yeah I guess I'll give to first is just the creation of new financial instruments so we saw the creation of tokens now there's of derivatives that are collateralized tracking other asset classes that's going to be really fascinating a lot of that's happening on aetherium the other is these interoperability protocols so that's kind of the envision connecting all these block chains together that truly allows for the frictionless transfer of value across different block chains via smart contract Thank You Karin new flows we need new Frost and we we are positive that to see their institutions and more players have trust and faith to the blockchain development and crypto industry so new flows Chris I think there's a formula for success exchange that combines security stableness value asset liquidity user experience and the final one is the Commission so that's a formula how successful a change I think at the moment the most the most exciting things should be viable assets as a great projects that what we need is great projects I thing live for example if iam that's a great project that's drinking everything for last like a couple years so recently there couple other projects it seems a bummer so we hope this kind new project like infrastructures for the approaching ecosystem can bring the changes to the this industry that's what I'm looking for okay Jasper so I think as eToro we don't first of all we don't have a token so we cannot do the launch pack or this but we can list your token though we'll be applying will be fine yeah Cory Prado and Fred so so I think that unit selling point of Vitoria so we have this traditional SS cars and the crypto so what excites me is like how it are able to you know bridge the traditional has set with the crypto asset right so I think you know one of the direction that we are working on is tokenizing asset so I think this can be you know something very excited to the market also to ourself great Eddie what excites me the most is definitely the launch with - chain so it enables the decks allows more entrepreneurs around the world to more easily issue tokens and allow their supporters to more easily trade their tokens on the decks and thank you all so much thank you thanks you