Exclusive: Is Belarus the Heaven for Tokenized Exchanges?
Matthew Lam Aug 21, 2019 09:00
In this interview with George Paliani, CBDO of Currency.com, we explored the fundamentals of the tokenization of assets and its underlying regulatory requirements. George explained that Currency.com isn’t just an ordinary exchange, where it is a platform with cryptocurrencies and traditional financial products such as commodities, indices, stocks, bonds.
Exclusive interview with George Paliani
In this interview with George Paliani, CBDO of Currency.com, we explored the fundamentals of the tokenization of assets and its underlying regulatory requirements. George explained that Currency.com is not just an ordinary exchange, where it is a platform with cryptocurrencies and traditional financial products such as commodities, indices, stocks, bonds. He then explained the key differences between security tokens and tokenized securities and the significance of “Decree No. 8” in conducting crypto-related business in Belarus.
What are the differences between security tokens and tokenized securities?
To understand the difference, you must be able to differentiate between traditional securities and security tokens. Security tokens represent tokens that have gone through security token offerings, as they have tokenized their assets. Each security token can represent partial ownership of a particular asset. We don’t list these tokens; we list traditional securities found in the traditional financial markets. We only list traditional assets from the financial markets that already exist and have done an IPO.
Tokenized securities, for example, Tesla shares, can be traded on the traditional financial markets. At Currency.com, we have tokenized it and put it on our platform. Not only can you trade cryptocurrencies on our platform, but many tokenized shares can also be traded on our platform as well. We offer our clients to trade traditional financial assets.
Users on Currency.com can use Bitcoin and Ether to purchase tokenized securities. How do you address the volatility concerns of these two cryptos?
We genuinely understand that volatility is a huge issue in the cryptocurrency markets. We solve this by a process by having our own version of stablecoins. Therefore, the funds deposited into your account from the bank will be the exact sum you will find in the Currency.com wallet, enhancing the trading process and user experience.
How does Currency.com compare to other competitors in the market?
One of the significant advantages that we have is regarding regulation. We are a fully licensed exchange, regulated by law and the government, audited by a big 4; we are entirely transparent about this with our users and the government.
We also offer margin trading with leverage of up to 100x, which is unique in this market. It is an option that we provide, and for professional traders, it is a very manageable risk.
Which regulatory approvals have been obtained to become the first regulated tokenized exchange?
We are a European regulated exchange, under the Decree No.8, which was issued in Belarus in December 2017. Being regulated, it allows us to operate in a completely transparent regulatory space. There is an ongoing development in the legal and regulatory space as they are adding more laws and decrees in Belarus; we consider it one of the best legal space to work in the twenty-first century.
Currency.com excluded the USA and the jurisdictions on the FATF list for 1000 tokenized securities to both private and institutional investors. What are the regulatory reasons behind this move?
We do not work with the FATF blacklist, not with the FATF countries. And we do not work with the US for the reason that for the financial activities related to crypto it is obligatory to get the MTL in the several states as well as the approval from the United States Securities and Exchange Commission (SEC).
Currency.com recently issued Belarusian government bonds, is it because of the special regulatory environment in Belarus? Which country’s government bonds will be the next?
Issuing the Belarusian government bonds was the first step as an experiment for us, as they were the first to be issued on our exchange. We have already offered this service to several counterparties, under an NDA. You will be able to see shortly that other bonds will also be on our platform available for traders.
Due to its success, subsequently, we have access to tokenize government bond number 252 with up to 4.2% per annum yield to maturity. The tokens will be denominated in USD, and each token is worth $1000. It can be reinvested into more bonds or other products on the platform and users that have purchased a whole token can request a transfer of the corresponding physical bond at any time.
As you mentioned, Belarus introduced “Decree No.8” last year to promote crypto-related business. How does Currency.com accommodate to this new regulation?
I would say that it is one of the strictest decrees that I have ever encountered. When you enter the Currency.com website to begin trading, you will need to follow the KYC instructions and procedures, as one of the most critical requirements. Necessary personal information would be required, such as your ID or passport as well as your proof of address; this process can be done in under five minutes.
AML, KYC procedures are all regulated and are under Decree No. 8. It is one of the most transparent and strictest decrees I have come across, which makes us one of the most transparent and regulated exchanges in the world. The authors who have written this decree, have extensive experience and are experts in the field.
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