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CEX.IO’s Executive Director Predicts the Future of Crypto Exchanges
Finance Magnates | Oct 19, 2020
Crypto assets continue to be some of the most promising instruments traded in 2020. To better understand this growing space, Finance Magnates spoke with Konstantin Anissimov, Executive Director at UK cryptocurrency exchange, CEX.IO for his perspective.
CEX.IO Has Become One of the First Exchanges to Onboard Institutional Clients. What Was the Impetus behind This Strategy and What Are Your Goals in Doing So?
I’ll start by saying that the strategy for onboarding institutional clients is related to the situation in the market. More and more corporate and institutional investors are moving towards crypto as an alternative investment asset.
And in doing so, they are looking for trusted, reliable partners. Our strategy has been to create the tools and the platform for institutional clients which provides a way to invest in crypto assets that is trustworthy, secure and in-line with their expectations for compliance and effectiveness.
See: The case against BitMEX is a compass pointing towards the future of crypto regulation
In terms of our goals within this strategy, at CEX.IO we feel that the institutional space is going to grow tremendously in the next 2-3 years, and we plan to be at the forefront of this growth.
Our goal is also to further balance out our portfolio with institutional investors so that we can offer more efficient markets and better pricing for all the user categories.
Regulation Is always a Hot Topic Issue in This Industry. Will Regulatory Concerns Plague This Industry or Help Improve It Moving Forward?
How do you even start to regulate something that doesn’t have a place of jurisdiction and a legal entity?! It has happened with cryptocurrencies to an extent, but I believe that with DeFi things will be even more challenging.
However, in order to build reputable, trustworthy businesses, it should comply with some rules, and customers need assurance that their funds are well-protected.
And, ideally, are protected by the government, up to a point – like with the bank deposit protection schemes, for example. So I think that there will be quite an acceleration in terms of regulation of cryptocurrencies worldwide.
See: 3 Ways Digital Assets Will Reshape The World
We are seeing it now in the U.K. and other countries: France, Germany, Austria, etc. We have also recently seen the leaked EU-wide cryptocurrency regulation draft – MiCA, which I believe has already been submitted to the European Parliament for the first iteration of the review.
The flip side to the security aspects of regulation is that it will get harder for the small market players to survive. I personally foresee a period of mergers and acquisitions between the medium and small exchanges.
I also think that after that there will be a process through which regional leaders will emerge – maybe the top 10-15 market players for the whole of the EU region – which will keep on growing.
The regulation will bring stability, trustworthiness and security to the market, at the cost of losing some of the competition, making this less of a free market.
At CEX.IO we have been taking the route of a trusted and regulated market participant for many years now. This is why we now have MTL (money transmitter licenses) in almost all of the States in the USA, we are FinCEN registered and hold a DLT license in Gibraltar.
See: Canada’s first public Bitcoin fund hits $100M mark
We are also in the final stages of the FCA registration in the U.K. In addition to this, our applications are being reviewed in Singapore, Germany, Austria, the Netherlands, France and Canada.
Many Experts Peg Crypto as the Future of Investing. In What Ways Are These Assets Going to Eventually Define This Industry?
What I would like to say to this is that I am a strong believer that, in the near future, cryptocurrencies will become a full-blown asset class within the investment industry.
In my mind, it will probably be somewhere close to high-risk equities or high-risk FX currencies to start with.
This assumption is devised partially due to the progress in regulation, partially due to how the markets are deforming and the fact that the interest rates and yields of other investment instruments are very low or negative.
More and more institutional investors and funds have to find new investment opportunities in order to make the ROIs that their investors (LPs) expect from them.
Will cryptocurrencies dominate the financial industry – I really doubt it for the near future. The reason is that, unless the majority of the countries in the world decide to use blockchain technology to issue bonds, shares, and other financial instruments, I don’t see how cryptocurrencies can challenge the status quo.
See: 6 Things to Consider Before You Make Investing Decisions
Blockchain technology may be able to, but it will probably have to be a mixture of private permission and public blockchain technology and we are still far from that right now.
I’m more of a believer that cryptocurrencies are now very close to becoming a full-blown investment asset class.
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