International Finance Magazine May-June 2018
written by Sangeetha Deepak
What is the defining core of the Crypto Summit?The purpose of the Crypto Summit is to assemble parties actively involved with the process, which includes startups, opinion leaders, policy makers and politicians driving the legal side of the process. Switzerland has developed to be the hub for crypto in the recent years because of the government’s more liberal approach in terms of regulation, which also attracts a lot of companies in this pace. This country is set to become one of the leaders of the blockchain revolution. And that’s why not having the conference in Switzerland won’t be an option. Since I have been in this industry for last five years and of course, have a global network with people who work in this industry I have invited them all to come to Switzerland this time.
What are the topics discussed at the event?The topics largely extended to what needs to be done to establish Switzerland even more solidly as a global hub for blockchain technology – the kind of regulations and institutions we need to create here to become a profound leader in this space. The topic of focus is shaping the crypto together, which is the whole purpose of the dialogue between stakeholders and significant others. It is also about how to conduct ICO and what it takes to succeed ICO. On the other hand, there are also technology topics such as centralising exchanges and security of assets. Switzerland became home to one suit of all good ICO projects. Recently, ICO guidelines were issued to understand how to approach them.
Can you name some of the keynote speakers at the event?The keynote speakers present at the event were Alex Tapscott, Vinny Lingham, Tim Draper, Charles Hoskinson and Kathleen Breitman.
Switzerland is becoming a global hub for crypto talent. How will the country position itself in the next 1-2 years?If you create an appropriate regulatory framework, it allows the company to legitimately work and a lot of those companies will come here. They are building and creating all types of platforms, protocols and business models. For financial services specifically, it means creation of new infrastructure and if the new infrastructure is created here, it becomes a great competitive advantage for such a small financial center as Switzerland. The technologies that have been created also attract most of those businesses and can have profound impact or influence on the competitiveness of the country.
What is it about Swiss finance culture that lends itself to digital currencies?Switzerland for the last 200 years was in a very privileged capacity. It was all about wealth management for the rich people of the world, who brought their wealth here to protect it from corrupt regimes in their countries. Previously, you needed to open a bank account here in Switzerland, you need to bring five million or so. Now, this is changing. Cryptocurrency such as bitcoin is democratised because anyone can purchase it from anywhere in the world and can be transferred to any address with no boundaries. So what does it mean for us in Switzerland? It means a lot of companies like Smart Valor are building next generation platforms, which will be accessible to cryptocurrencies. This system used to be restricted only to the rich, and now it is available for everybody. And that is why we talk about democratisation of access as well.
Earlier, you mentioned about Smart Valor. Can you tell us more about it?The official name is Decentralised Marketplace for Tokenised Alternative Investment. In simple words, it is very similar to Amazon but for specialized investment products. They are specialised because they are issued in a form of token on the blockchain and it can represent any kind of physical value. It can be a diamond bitcoin, gold bitcoin or even a piece of art-like a Picasso bitcoin. In fact, it is a digital footprint of any asset that can be expressed as a token, and even ICO can be considered a form of tokenisation for participation of startups. At Smart Valor, we are the platform and we are the marketplace for those tokenised investments.
What was your motivation behind founding Smart Valor?My background is in banking and I grew up in Ukraine. At one point in Ukraine, the complex financial conditions led to huge losses. If you have been through such an experience you will really understand how powerful cryptocurrency as a concept is. It is the first national currency independent of the government and a huge huge invention of our modern time. For me, ideologically it is this technology that can help us to literally re-invent money and provide freedom of access to so many people who have never had this before. Previously, I joined a bitcoin firm Silicon Valley and helped them to get their regulatory framework complete in Switzerland. We were very successful and had the potential do it all as there are no limits. We can even do more complicated stuff than bitcoin wallet and this is exactly what we do in this marketplace as tokenized investments.
Why is the cryptocurrency world such a male-dominated space?I think it’s not so relevant to only cryptocurrency. Overall, in the startup or tech space, there are still very few women. It is also partially driven by the fact that venture capitalists are male-dominated companies. There are statistics which show findings that when a team is managed by a woman, the possibility of getting money from venture capitalists is significantly reduced to six percent. However, I see a change in this. If you go for ICO people don’t really care about the gender as long as you have a great idea and the funding will take place. This is why ICO is a great democratisation of funding for startups.
What do you expect the value of bitcoin will be in a year’s time from now?In the next couple of years, I think the value of bitcoin will go up to hundred thousands. I’ve made some predictions before and they were way too conservative. I invested for the first time back in 2013 and in a very unlikely circumstance started my own company. Back then, I never saw that bitcoin could reach twenty thousand in five years. This is way too high from what I expected. In a year’s time, its value could realistically range somewhere between fifty to hundred thousand.
What do you think the true value of bitcoin is?Today, diamond coins and gold coins are connected to the true value of gold. But bitcoin is more about trust and belief in this technology and protocol that will establish a potential to become the next generation of reserve currency-the digital gold. It all depends on people who believe its value is higher because its supply is limited. As of now, the supply is just one million, so the more number of people believe it is the alternative to dollar, the more people will invest in it and the prices will rise. As more people learn about the technology in-depth, they will understand how huge it has become in ten years. Therefore, its crucial that people understand it, believe in it and will eventually buy it.
In the recent past we’ve been reading a lot about fluctuations and risks associated with crypto. So, what can be done to regulate them?We don’t need to regulate cryptocurrencies. We need to regulate financial intermediaries and players active in this space such as exchanges and other entities that are dealing with cryptocurrencies including wallet providers and custodians. For example: it is very important to prevent cryptocurrency being used for money laundering and purchase of illegal goods. To have all the processes in place, we have KYC (Know Your Customer) and anti-money laundering rules. So the same rules have to be followed by crypto exchanges. Additionally, we need to clean up and introduce more regulations.
Do you think Barclay’s agreement to provide US cryptocurrency exchange Coinbase with access to the UK’s Faster Payments Scheme will encourage other banks to follow suit?Yes, this will put more pressure on other banks to also position themselves as the leaders in digital currency field.
What is the difference between Bitcoin, Ripple and Ethereum?The primary differences between the three are defined based on this: Bitcoin is considered digital gold, Ripple is a payment network and Ethereum is a platform for the development of apps using smart contracts.
Based on your extensive experience in the industry, which of the cryptocurrency do you think is most preferred as a form of investment?BTC and ZCash are the chosen forms of investment. SMART VALOR was founded by Olga Feldmeier, a prominent figure in the Swiss Crypto Valley. Prior to SMART VALOR, Feldmeier was Commercial Managing Partner of Xapo, one of the world’s largest Bitcoin custodians, where she was responsible for establishing the company in Switzerland. Working in close collaboration with Swiss authorities and financial regulator, FINMA, Feldmeier established Xapo as the first cryptocurrency custodian to receive permission to operate in Switzerland as a financial intermediary, releasing it from the initially considered obligation to apply for the banking license. Prior to Xapo, Feldmeier held several management positions in the financial services sector working for global brands such as Barclays Capital, UBS and the Boston Consulting Group (BCG). To realize her vision, Feldmeier enlisted the support of a co-founding team, including Julien Bringer, a serial innovator with 50 US patents in cryptography and embedded security and former Head of Innovation at IDEMIA, a world leader in digital security and identification technologies.