LEVERJ CEO Talks Crypto Investors Custody and Risks that Institutionals can Offset
Leverj.Io CEO: Institutional Virtual Asset Investors Will Discharge Risks To Risk-Takers
In as much as there are considerable changes in the regulation of virtual assets in the past one year, most of the powerful administrations in the world leave a lot to be desired when it comes to appropriate legislation.
This is because certain market are either completely unregulated, or over-regulated. In cases where crypto markets are unregulated, participants have been left open to unintentional destructions. On the other hand, the over –regulated markets are faced with burdensome, costly legal processes which eventually limits novelty.
According to Bharath Rao, the founder and CEO Leverj.io, once institutional investors will gain an entry into the crypto space, and this will shape how the regulatory landscape will influence the blockchain industry.
Rao’s associate, the CSO of Leverj.io, Shashank Tiwary, will make a presentation in conjunction with other blockchain industry leaders in a panel on crypto trading. The Summit is a key virtual asset and forex event which will be held at the Old Billingsgate in November.
It is Easier to Start in a Less-Regulated Market than to Start in the Established Market
Emanating from a Wall Street experience, Rao asserts that they are very conscious and familiar with what is required of them in accordance with the law. For instance, in order to provide their derivatives products in the United States, one has to be enlisted with the CFTC.
Additionally, in case an entity is receiving orders directly from the public, then they will be required to be registered with an FCM. Unfortunately, the steps are not fast enough, but are rather expensive and time-consuming.
Rao believes that the only alternative they have is to begin a jurisdiction where it is easier and faster for the entire process to become regulated. He however clarifies that presently, the firm does not have any intentions of going to such a location. Nevertheless, Bermuda is one location which is open to blockchain-based transactions, as long as there is verifiable stock taking and pellucidity, which Leverj.io has at the moment. With Malta and Switzerland in mind, Rao is of the idea that it is much cheaper than starting in established markets.
Competitors Who Target Unregulated Markets Will Make More Profits
Rao continues to assert that each section of the fiscal landscape has it specific codes of practice. For instance, while virtual assets are regulated by FinCen, security tokens are regulated by SEC. In this regard, the simplest thing to do is to go to places where regulation is simple and quick to access authorizations. Thereafter, an entity can use the history and experience that they have in operating the firm to successfully gain entry into established markets.
Furthermore, Rao adds that the tendency for many crypto startups to try and get access into established and large markets like the US is not the right way of doing it. Cryptocurrency is an international market and there is no way a firm is going to be in a position of abiding by all the regulations in all the over 200 nations globally. By and large, it is not just feasible.
According to Rao, a firm that is attempting to provide virtual asset products has to decide between going through the slow process of regulation of a single nation, or going for the unregulated market, where they may capture several different countries.
Rao believes that the competitor who goes for the unregulated market is likely to make more in terms of revenue. This is simply due to the fact that they will be in a position of capturing a feasible market. This is unlike the competitor who decides to go for the regulated market, and who will eventually go through a long process of seeking for approval. Due to the long period of time it takes to access approval, the competitor’s product may become outdated. This in actual sense, is the real hurdle. Eventually, it does not make sense attempting to get regulatory approval especially due to the fact that sometimes it takes too long.
Abiding by the ‘Spirit of the Law’ Verses the ‘Letter of the Law’
Rao is of the idea that there is a happy middle ground in that presence of the innovative blockchain technology makes it possible to abide by the spirit of the codes of practice in fundamentally all jurisdictions. This is irrespective of whether one complies with the letter of the law or not.
For instance, in the case laws of the United States, in the United Kingdom, or Europe, it matters not whether one is complying with the letter of the law, if one is breaking the spirit of the law. Nevertheless, if an individual complies with the spirit of the law within these jurisdictions, and not the letter of the law, in most cases, one may just receive a letter to fix the challenge.
Institutional Investors Expected to Stabilize Virtual Asset Markets
In the firm’s white paper, Leverj.io has defined elaborate strategies in which it will act as a gateway for big institutional investors to enter the crypto space. The inflow of institutional finances into the crypto space will bring about some level of stability in the industry. This will then attract smaller players who will be more contented to enter the markets.
The Inflow of Institutional Finances Will Make it Possible for Producers to Discharge Risks to Risk-Takers
Rao compares the effect of institutional traders on crypto markets to the prices of food in markets in the West. This is because there is stability of prices of food in these nations simply because of the availability of commodities markets of the said goods.
In nations where there are no commodities markets for the goods, prices are bound to fluctuate. This implies that in case of a bumper harvest, prices will crash, leaving farmers counting losses. Therefore, the availability of commodities market enables producers to offload risks to those who speculate, thus ensuring the stability of prices. This can also be replicated in the crypto market where large institutions can make the cryptos stable.