Beyond Innovation #7: Regulating Cryptocurrency with Coinsilium’s Malcolm Pallé


There’s definitely a lot of action in
the world of cryptocurrencies and there’s a split view on this is Bitcoin
gonna be worth fifty thousand dollars or is it gonna be worth zero? No one really
knows the answer but Malcolm you’re in the middle of this firestorm of activity,
there’s a lot of exciting developments around cryptocurrencies. Coinsilium
has an advisory business, you’re doing token sales, all of this stuff needs to
be regulated in some way, shape, or form. What do you think the regulatory
roadmap looks like? Regulation’s coming. I think the big real question I think
is how you actually view this sector. Is it blockchain, is it cryptocurrencies,
where does one stop, where does the other start so I think the attitude towards
regulation will vary depending on what lens you look at it through. So we look
at everything through the lens of blockchain. Cryptocurrencies have come
about because they’ve been enabled by this technology, we knew this was
going to come along down the line. As you say, when you start going out and doing token sales to writ and you raise on aggregate ten billion,
regulators are going to sit up and say hang on a minute, you know, what’s going on
here? So if you set the stage there and you’re in front of the regulator, what’s
the primary messages you think they should be considering in terms of
developing this framework. We quite close to, or we keep close to what they’re
doing in Gibraltar and we sort of watch very carefully because they have in that instance and that’s where our focus is, in that jurisdiction, they’re
looking at building regulation from the ground up. So they’re not looking at sort
of what is and trying to sort of fit things into moulds that aren’t
appropriate, they’re saying they understand or they made a point of
understanding what this technology’s about and what it can enable, and their regulation is
built around a distributed ledger. So that could be cryptocurrency exchanges,
it could be companies doing token sales, anything where there’s a transfer of
value, not necessarily money but a value, our data may come under that regulatory
framework and with that regulatory framework gives companies like us and
our startups that we work with a lot of certainty. When you think about utility
tokens versus security the nomenclature’s thrown around very
loosely. What do you think the regulatory framework should look like to
distinguish utility tokens from security tokens, or are they distinguishable? Yes I
think so, but it’s only come about because tokens were just tokens when
they first started and there was no framework to actually distinguish the
two. So once it become apparent that certain startups were using the
issuance of a token to raise funds and you know you’d look at it and say well
it’s not actually a share of the equity but it’s you know, what’s it doing? It
became a little bit disconcerting, so that’s when the regulator’s started
saying well hang on a minute if it looks like a share, acts like a share, walks like a share,
it’s a share. If it’s backing an asset, then it’s a share. So they needed
to get their heads around that first and now the process is starting to move
forward, it’s starting to evolve, people are looking at it more clearly so
getting back to utility that is a sort of a sweet spot if you can actually fit
that and you can demonstrate that it is not a security under the sort of Howey
test if you like, then you know you’ve got something you can use
as in utility- Within an ecosystem, requisite members, all have value associated with it. -Correct. And we one of the most enjoyable parts of our role is
actually finding that project, that startup that is actually got a really
good utility so that’s what the buyers want, clear utility and a strong
prototype.

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