There are many people that argue that regulation within the crypto and digital space is
unnecessary and quite frankly they feel it can’t even be policed effectively anyway.
Then there are those that argue that regulation shouldn’t even be considered and that
crypto assets should be banned altogether. Whatever side of the fence you sit on, it is
clear that the industry has developed rapidly in the last decade and is very much here to
stay. The team at Ethbits vehemently agrees with that philosophy, and on that basis we
see regulation as also on the horizon, our decision to undertake the long and winding
road to have the firm regulated was an easy one. For us there is two clear tenet’s
behind this decision.
The first and probably the strongest, is about always putting the customer first and
treating the customer fairly. This includes everything from service right through to
pricing. There must be some kind of recourse if customers are not happy with the way
they are treated, and firms should quite rightly have to stand their systems and policies
to question. Regulation and the regulator, go some way, to providing this. By opting to
be regulated, we hope that our clients and our partners can see that we not only take
this element very seriously, but we the kind of company that takes tasks head on.
The second reason is that we see the technology as falling under the remit of the
financial sector, and therefore we agree it should be regulated. Finance is one of the
most important technologies of today. It directly impacts people’s livelihoods, futures
and those of their families. As Ethbits is a FinTech company, effectively combining
finance and technology we take the both elements of this with equal importance. Our
security protocols regulates our technology and our processes, policies and procedures
regulate the financial aspect of the business.
We see regulation of this technology as not only imminent, but also vital. Whilst we will
always be accountable to our customers and shareholders, we feel that the regulators
should be providing the necessary checks and balances for the industry. These in turn
will bring some much needed confidence in the sector. People are afraid of hat they
don’t know and understand. If we can stand up and say, we are a finance firm and a
regulated financial entity, well people know exactly what that means and subsequent
barriers start to fall. Yes it is more costly, yes it creates a greater degree of work and it
often leads to greater restrictions of what you can and can’t do. But for me it provides
that key additional level of accountability that the industry, especially a fairly new and
burgeoning industries really needs.
Regulation brings with it a number of benefits. It certainly shows that a business is
ready and confident to be tested on its systems and processes. It adds a level of
professionalism and accountability which in turn leads to a greater degree of trust. This
helps the sector across the board.
Secondly and in relation to both the business and the customer, it opens the door to
partnering with the existing financial framework. A framework that we very much rely on
to service our clients cost effectively. One of the biggest challenges, and there are
many, that an exchanges faces, is convincing banks to assist with custody accounts,
Without those custody accounts its extremely hard to run the exchange effectively.
Regulation opens the door to payments systems and services that other main stream
providers get to use.
I see huge potential in the digital markets space and a bright future. But along the way
there will be people that want to take advantage of the momentum and positive
sentiment, people that will do this only for their own short tem gains. These people will
create damage to an industry we all care and love for. This industry is ours to nurture
and grow and regulation is a vital step in that growth cycle. ,
Another key factor to consider is that it is sensible to be in a jurisdiction that is regulation
positive. Malta is certainly that and in many ways is leading the regulation charge. What
we certainly don’t want is for the country we are based in, to suddenly turn around and
ban the business.
As a partner in an exchange, I am rallying for regulation. It worries me when I hear
people say the industry can’t be regulate d and scares me when I see them unwilling to
get regulated. The purpose of regulation is to provide a balance and protection between
those consumers that are often less sophisticated and the sophisticated sellers.
Regulation therefore be set up to protect those that are least knowledgeable and the
most vulnerable. Its design in itself can therefore be prohibitive. Part of this process
therefore distinguishes between professional investors and the more vulnerable
consumer. Professional investor however dominate the OTC markets where the
bespoke financial instruments lay. Whether this distinction is right or not is another
As part of the regulatory process, Ethbits will have to show they have a competent and
ethical team. All board members undertake a criminal record check and are interviewed
by the regulator. The business model is analysed, the cash flow forecast looked at to
ensure that the company is liquid and all staff that have a regulated function are tested
annually to ensure they are fit and proper. That level of detail and scrutiny, for me, is a
necessity for any business handling and dealing with client funds. We have people’s
livelihoods in our hands, we have a responsibly to our patrons. This responsibility
should be taken seriously, and the challenge of regulation should be relished.
As a customer of an exchange you want to ask yourself, do you really want to place
your faith, your future in the hands of an unregulated entity. Is the stress not enough just
making sure you are on the right financial path without having to worry that the
exchange you are using is run by the working people and there is a chance that custody
of those funds is in danger. I know what I would do.
To summarise, we at Ethbits is regulation as challenge but welcome it with open arms.
We chose Malta precisely because the authorities were pressing so firmly ahead with regulations. It means that our customer has comfort in the professionalism of the team
and the direction sadly regulation restricts the people we can help…