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Expert opinion

More, not less regulation will help cryptocurrency become mainstream

Friday 31 August 2018 | 08:55 AM CET

We are at the dawn of the global token economy. Since 2009, cryptocurrencies have evolved from just an idea into a means of exchange and payment for goods and services.

The cryptocurrency world is now growing exponentially and will play a major role in defining the future of money. Mike Kayamori, CEO of QUOINE offers to The Paypers’ readers his views on the promise of cryptocurrency, and calls for more, not less regulation of the space, in the interest of protecting all stakeholders, regulators, law makers, fintech startups, blockchain technology providers, financial institutions, and investors.

Continued, successful progress demands strong national, and eventually coordinated global regulatory attention to preserve innovation, and to promote and protect cryptocurrency investors and users.

And so how do we get to that point?

Countries around the world are trying to figure out the right approach. Japan is widely recognised as a leading thinker and innovator within the regulatory context. With 3.5 million individuals trading in digital coins, Japan is working quickly and collaboratively towards creating a stricter regulatory framework to prioritize customer protection and foster innovation, while prohibiting questionable practices.

Leading the way in adopting cryptocurrencies, Japan is the first country to fully regulate and licence crypto exchanges. Japan’s 16 government approved crypto exchanges, including QUOINE, are licensed financial institutions, similar to banks and insurance companies.

However, on June 22, 2018, Japan's Financial Services Agency issued stringent business improvement orders to six Japan-based, government-approved cryptocurrency exchanges - Bitflyer, Bitpoint Japan, Bitbank, Btc Box, Tech Bureau and QUOINE. For QUOINE, this meant allocating some of our technical and managerial resources to review our systems, and enhance our governance models to comply, while maintaining our platform’s full customer functionality.

The companies received varying demands, including, to construct a management system related to the exclusion of antisocial forces, building a legal compliance system, establishing a risk management system for money laundering and terrorist financing, construction of a separation control system for user property, establishment of a control system related to user protection measures, and construction of the risk management system in accordance with the new handling or the like of the virtual currency.

Regulating cryptocurrencies: a global shift

With the crypto industry experiencing a record-breaking growth rate, with market capitalisation already in the hundreds of billions, now close to one trillion, we see it becoming an integral part of the global economy, not just individual national economies.

Different countries are regulating crypto in their own way. Some are welcoming, some are cautious, and some are resistant. China, South Korea, Vietnam, India, the United States and the EU are all implementing their own distinct policies. US lawmakers are working on forming new legislation to regulate crypto; India has barred cryptocurrency as legal tender; Vietnam has banned payments in Bitcoin and other cryptocurrencies; South Korea has recognized crypto exchanges as regulated financial entities; and China has ended ICOs altogether.

And yet we can’t deny that wider adoption of cryptocurrencies across the world has led to greater innovation, which is vital to running businesses and societies. Banning crypto is not the solution; a better answer is regulation, supervision and global coordination.

And far beyond only regulatory actions, collaboration among stakeholders within the ecosystem is essential. Regulators, law makers, fintech startups, blockchain technology providers, financial institutions, investors... all need to work together to build the future of a thriving, regulated financial system.

But, a robust regulated cryptocurrency ecosystem is more than just about having a seamless experience for crypto exchanges and traders. It must be balanced and regulated with guidelines that can protect investor interests and ensure long-term sustainability, opening doors for innovation and increased capital formations.

Regulated crypto-model for everyone’s benefit

With appropriate regulatory measures, cryptocurrencies can be safely traded in the financial world and the crypto ecosystem can blossom through transparency and trust.

A regulated crypto framework will ensure: increased investor confidence; manipulation-free crypto market; protected Initial Coin Offerings (ICOs); and new money and innovation flowing in.

As the crypto world evolves, Japan continues to be a market leader in recognising and strengthening digital currencies. We hope that the recent focus on enhancing regulatory measures and compliance will encourage other countries to take necessary and appropriate steps in regulating and securing crypto in their own jurisdictions. That will make the crypto world safer and sustainable.

About Mike Kayamori

Inspired by the innovative disruption of blockchain and digital currencies, Mike co-founded QUOINE in 2014 with Mario Gomez Lozada. Mike brings over 22 years of experience in investments, business management, IT and venture capital across Japan, the United States, India and Southeast Asia. Prior to QUOINE, Mike was a Senior Vice President at SoftBank Group, managing its Asia operations and investments with SingTel and Bharti Group. He was also the Chief Investment Officer of Gungho Asia, the creator of Puzzle and Dragons. Before SoftBank, Mike was a Senior Director at Globespan Capital Partners, a Palo Alto-based venture capital fund with over USD1.2 billion under management. Mike holds a Bachelor of Law from the University of Tokyo and an MBA from Harvard Business School.

About QUOINE

QUOINE is a cryptocurrency trading platform founded in 2014. In November 2017 QUOINE raised USD 105 million dollars through an ICO. The crypto exchange platform has a user base of more than 500,000 with USD 50 Billion of trade volume in 2017.

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