BY DELPHINE FORMA FOR ADELLO MAGAZINE
During the last 5 years, I have developed a truly real passion for crypto and blockchain. Innovation, creativity, openness, and decentralization are at the center of it. The space is fascinating because of the endless possibilities that it allows, not only in the financial space but also in the way we interact with each other. A slow revolution and shift are happening, and when I started my journey in this world in 2018, I deeply wanted to be part of it and help shape its future. I have been trying to raise awareness and fight the general misconceptions about it, especially by trying to make it more tangible.
The industry is not only about crypto; it is about the technology that is changing our society by enabling direct interactions and disintermediation. We can see this with the rise of decentralized autonomous organizations (“DAOs”) and different crypto communities and cultures built around specific projects.
DAOs have enabled people to connect and work together to achieve different goals. One of the most well-known ones was set up to enable the purchase of an original copy of the US Constitution.
Although the technology has been around for a while, regulators, policymakers, and the public still struggle to understand it. Education and private-public partnerships are crucial for creating flexible regulations that foster innovation. Regulations provide a structured legal framework, helping businesses operate under clear conditions. To achieve mass adoption, the industry must collaborate and communicate openly, improving our global outreach.
I started my journey in the world of blockchain and crypto in 2017 while I was still working in the traditional financial sector.
I was quickly fascinated by the endless possibilities and use cases that the technology offers and by its potential to improve processes and significantly decrease manual work in the trade finance world. This is how I decided to switch my career and move to this new nascent industry. This was in January 2018 when I started working as the Global Head of Compliance for Lykke, a crypto exchange. I did not want to miss the train and be left out in the old traditional world. It was the ICO boom and events were happening almost every evening in the small city of Zug. This was very helpful in getting to understand the industry and the technology, learning and extending my network. Indeed, in order to be a strong compliance officer and enable the business to prosper, it is key to understand technology, products, and business models.
I was soon invited to speak at global conferences on crypto compliance and blockchain. I advised startups, organized crypto crime events, and joined the Crypto Valley Association board. Everything moved fast, and there was much to do. In 2018, as a compliance officer, creativity was crucial for navigating regulatory landscapes and ensuring business growth in a compliant environment. The challenges were significant, with a steep learning curve. Regulatory and licensing strategies became critical since blockchain and crypto cross borders. Understanding this allowed us to differentiate ourselves from competitors and optimize business models based on location, products, customers, and target markets.
Founding the OpenVASP Association
At the end of 2019, we started the OpenVASP Association, of which I am a member of the Board, to provide a solution for virtual asset service providers (VASPs) such as exchanges to comply with the “travel rule,” which requires the exchange of information on the originator and beneficiary for funds (crypto included) transfers. Indeed, in 2019, travel rule compliance was added to the FATF recommendations for all VASPs.
Swiss Regulatory Developments
In the same year, the Swiss regulator FINMA issued a circular to specify compliance requirements in Switzerland. The goal is to fight against financial crime, especially sanction circumvention. Blockchain allows the transparency of transfers, which means that you can see from which addresses the funds are coming and to which address they are going, but it does not allow you to identify who is behind an address.
However, using blockchain analytics tools, you can determine if they have been associated with any illicit activity, which is a very powerful tool for compliance officers and law enforcement agencies. The travel rule will allow the identification of the individual who controls a specific address. Worldwide implementation and adoption are still slow, and it comes with all of the challenges for VASPs, who have to navigate different regulatory landscapes with different potential applicable rules and requirements.
Transition to Crypto Mining and Beyond
After nearly three years at a crypto exchange, I transitioned to a crypto miner, gaining a complete view of the process from creation to sale. However, working at an exchange is more exciting due to its dynamic innovation, especially in product development. As a compliance officer, I thrive on finding creative solutions that help the business succeed and enhance the customer experience. In early 2022, I joined BitMEX, one of the oldest crypto derivatives exchanges. Here, I manage Swiss local compliance and handle global initiatives, including travel rule strategy, licensing, risk assessment, and token due diligence.
What my experience in crypto has taught me since 2018 brings me to what I see as the next big trends in the next couple of years.
The combination of Non-Fungible Tokens (“NFTs”), blockchain-based games and the metaverse is helping mass adoption by making blockchain technology more concrete to the general public and by acting as a powerful educational tool. Their growth has definitely raised more attention in the industry and attracted a lot of new investors as well as traditional ones.
The rise of NFTs has boosted awareness and shown how blockchain technology can transform interactions. NFTs are a clear use case of blockchain, enabling direct engagement. They can represent various digital or physical items, such as artwork, video game items, music, tickets, vouchers, trading cards, real estate, fashion, designer objects, virtual land, and iconic sports footage.
Big brands are now using technology to engage with customers in innovative ways, making interaction more accessible. Sports clubs and the sports industry have also contributed to awareness by using technology to enhance fan engagement and decision-making.
Fashion’s Dominance in the Metaverse
Fashion is set to dominate the metaverse. In early 2022, brands like Gucci and Adidas began exploring this space. Expect many fashion brands to open virtual stores, design digital clothes, and host virtual fashion shows. The pandemic has accelerated this trend, with brands creating virtual outfits for the metaverse.
Soon, people will visit virtual shops to try on clothes as they would in the real world. Using body scanning technology, your avatar will represent you in the metaverse. Brands will design real clothes virtually, allowing you to see how they fit. You can purchase these items as NFTs, wear them in the metaverse and blockchain-based games, and even exchange them for physical versions.
Play and move to earn games will explode, as will games linking the real world to the virtual ones, such as completing actions in real life and getting rewards for them. Stepn is a good example of such games and education through fun.
The last two years have seen a growing interest and investment of traditional players such as hedge funds, asset managers, venture capitalists, pension funds, and banks, which seem to have finally understood that the industry is here to stay.
Impact of Regulations
The growth of regulations has certainly enabled this trend. Indeed, traditional players are more inclined to transact with regulated businesses that have to respect similar rules. However, regulations should not impair innovation, and regulators need to take into account the differences between trade and the new crypto industry.
Evolving Crypto Regulations
The crypto regulatory landscape will keep evolving. As the sector matures, regulators will issue more guidelines and frameworks. For instance, most VASPs will need registration and licensing in their operating countries and any regions where they offer services. Regulation can offer a major competitive edge, attracting both institutional investors and retail customers seeking a secure trading environment. This is the direction we’re pursuing at BitMEX and where I contribute.
Decentralized exchanges, financial product innovation, and smart contracts technology will continue to grow as user interfaces become more user-friendly. For the industry to grow and go mainstream, we need education, user-friendly apps, adaptable regulations, and public-private partnerships. Keep a close watch—this is our future.
