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Liza Aizupiete, Managing Director of Fintelum – Interview Series

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Liza Aizupiete, Managing Director of Fintelum - Interview Series

Liza Aizupiete is the Managing Director at Fintelum, a European-based token launch (ICO and STO) platform.  Liza has extensive experience in traditional fund management, and is also an experienced blockchain entrepreneur, having successfully launched and raised capital (ICO) for Globitex where she was a Co-Founder and Managing Director.

 

RS: You’ve recently launched a company called Fintelum, can you tell us a bit more about what Fintelum does and what markets it serves.

LA:  Fintelum services can be summarised as follows:
– Primary token issuance
KYC/AML compliance
Smart contracts (utility and security tokens)
– Crypto funds co-custody
– Token transfer agency
– Corporate actions
– Secondary token OTC exchange desk

At Fintelum, we built a token launch platform to cater to token issuers in carrying out technically sound and compliant ICO/STO token sales. Fintelum is geared to provide services on the European soil for global clientele. The main services are compliance, crypto funds co-custody, and smart contracts. For security token industry, Fintelum serves as a token ownership transfer agent, ensuring secondary market by token OTC desk and provides ongoing blockchain-based corporate action services, such as voting, dividends and announcements.

 

RS: How does Fintelum differ from other token issuance companies?

LA: Fintelum’s unique selling points are:
– Integrated crypto multisig wallet services and funds co-custody
– Token transfer agency and OTC exchange desk
– Comprehensive on demand reporting

Fintelum was founded in 2018 and subsequently licensed by the Estonian FIU to provide services for crypto industry in compliance with EU AML laws. The main differentiators lie within the benefits Fintelum clients can have from a longtime team with experience in finance and building and running our own regulated cryptocurrency exchange.

For one, Fintelum features multi-currency cold/hot wallet management system with co-custodianship for added reliability. Issuers can be reassured that all technical, blockchain and compliance related work will be carried out with utmost care. For that we have built a comprehensive backoffice, where issuers can safely navigate and control their fundraise. From creating campaigns and programs to managing investor data and affiliates.

Another differentiator is our Ethereum based security token STO implementation and subsequent OTC desk. Fintelum is able to act as a token transfer agent, maintaining blockchain based capitalisation tables or shareholder registry for companies or other tokenised assets. We are creating unprecedented availability for eligible (whitelisted) peers to exchange both security and utility tokens.

For utility token, Fintelum differentiates with our systematic approach in KYC/AML compliance. There, after a successful fundraise, the issuers can rely on a comprehensive reporting system. All data collected and verified can be made available to banks and other financial institutions that would otherwise be unable to service a non-compliant enterprise. In fact we have several banks and payment service providers that can offer fiat services to Fintelum clients.

On the whole, Fintelum services pack-in some of the most crucial features to successfully launch a crypto fundraise. The issuers will still need to have their own local legal counsel and have a clear idea of their own marketing strategy, whereas Fintelum will do the rest. It is safe to say that Fintelum service package is the most comprehensive available on the market.

 

RS: You have extensive experience in fintech and funds, what reasons did you choose to start a token issuance company instead of some other type of crypto service or business?

LA: In short:
– Companies sought our know-how
– Understanding of the industry and technology
– Anticipation of the global change in the capital markets

After having successfully completed a EUR 10 million ICO fundraise, for our former company, several projects approached us to learn how crypto crowdfunding works. And as compliance and AML took precedence over anonymous crypto donations, we thought it natural to expand on our experience and institutional understanding how the capital markets will likely evolve. ICOs or utility tokens already made a historical mark on capital markets industry. Likewise, STOs or security tokens will continue reshaping capital markets and we are excited to precipitate this change with our new business.

 

RS: You previously did an ICO with your former company, Globitex, what did you learn from that ICO that can help token issuers on the Fintelum platform?

LA: Our advice:
– Find the right partners
– Work with professionals
– Grow your community

Our major takeaways from running an ICO was that it matters a lot at what stage your company is, what shareholders and partners you have and which service providers you choose for your fundraiser. You may have a wonderful idea, technically impeccable product. But you need professional service providers that will do everything else for your fundraise to actually happen.

We were very lucky with ours. We managed to raise EUR 10 million and closed our public sale in a matter of 24 hours. Not discounting the timing when we ran our campaign, it is also important to have a clear idea of whom you want to target as your investors and/or product users – your community. Because an ICO as well as STO campaign works inadvertently as a marketing campaign for your current or future product or service. And you need to invest the time and effort to reach out to your community, to show the world that your product exists and is worth investing in.

It is worth noting that STOs make more legal sense, but much less retail buzz. The times of raising hundreds of millions for a white paper ideas with no hard cap are definitely gone. But ICOs are not dead. I still anticipate some major utility tokens to be released this and next year. STOs on the other hand can work beautifully under crowdfunding law exceptions up to EUR 5-8 million, and above – according to the Prospectus Regulation (in July 2019 replacing the Directive) in Europe.

For the ICOs a fixed and guaranteed hard cap will add to the success and popularity of the fundraiser. With STOs, hard cap is replaced by clear legal rights and expectations.

 

RS: What types of companies do you think are best suited to launch an STO?

LA: In my view:
– Small or medium working businesses, ideally with revenue streams
– Global fund management companies with existing subscribers (investors)
– Real estate or financing projects with attractive interest rate offer
– Alternative energy projects with eco impact and good dividend prospect
– Gaming and sports with large retail following

Today, the potential buyer of an STO will need to overcome burdensome KYC/AML profiling process to be compliant with the sales of a security. And depending on the jurisdiction and the project offering, the pain levels may vary. But it is clear that investing in an STO or ICO today is much more complicated than just a year ago would have been, contributing towards a development of a utility token project. This is why the STO must be attractive enough an offer for the pain of investing. Indeed, for equity or debt tokens, an STO issuer needs to have a great proposition on the table to be able to attract investment.

 

RS: What types of companies would you personally like to see launch in the cryptocurrency space to help the industry as a whole reach wider adoption?

LA: I’d bet on:
– Sports and games
– Virtual reality
– Food

At Fintelum, we get disproportionally more enquires from real-estate related companies than from any other sectors. This is presently the case. And it may be due to the fact that real estate is a hard asset. Like commodities, precious metals, real estate is something people understand. Investing in complex equity schemes may require more sophistication and/or risk appetite. Whereas I would personally like to see utility tokens continue to persist. We have come across several great ideas. But the fear of the present downmarket poses resistance and unwillingness from the managers to delve into the process of launching a token.

The three categories, namely sports/games, VR and food industries are most appropriate for ICO type of fundraise, because of the loyal retail client base they all either have or have the potential of commanding. Finance as a sector has already been done, with caveats. It brought about institutional interests, and serious price volatility as a result. But, by tapping into the mass market though either of these industries, we may be able to sustain a steady and solid adoption rate.

 

RS: You’ve been a female entrepreneur in the cryptocurrency space for over three years, can you tell us about any benefits or challenges being female in a male-dominated field may have brought?

LA: I was born in Latvia and educated in Switzerland. According to Open Knowledge report by the World Bank, six economies—Belgium, Denmark, France, Luxembourg, Sweden and topping-off with Latvia —score 100 in the Women, Business and the Law index, meaning they give women and men equal legal rights in the measured areas, whereas Switzerland scores just marginally below at 97.50. In fact Latvia has the highest proportion of female executives in the entire EU, according to the latest EuroStat survey.

This shows that generally women should not be experiencing any difference or special challenges in the developed world economies. And it is no different in the nascent crypto space. Although the industry is predominantly male, the rules are the same for both genders. Hence, I have not felt particular challenges being a female entrepreneur. Indeed, the only challenges are mostly self imposed. This is because, by some gender bias, females tend to be more critical, especially of themselves. So, if anything, the challenges are self inflicted and are completely unrelated to external factors.

 

RS: Can you describe briefly what you think the next two years looks like for ICOs and STOs.

LA: The coming years will be a slow recovery from the ICO exuberance that culminated in the years 2017-18. It will be a recovery and maturing of the cryptocurrency and crypto assets industry, where STO will have an important place, setting precedents across jurisdictions.

ICOs had reached unprecedented 10-fold returns on investment, raising in excess of USD 20 billion in funding, in the years combined. The crypto fundraising will continue, but it will happen in a more professional way; more law-abiding manner; hopefully, innovative at the same time.

It would be unfortunate, if the law makers decided that we don’t actually need innovation, and that the existing system is good enough as it is. My hope is that competition will increase, and the barriers of entry will not be disproportionally raised. So the new entrants and innovators can have a chance of their lifetime to actually make the word a better place.

 

RS: Is there anything else you would like to share with the readers?

LA: To inaugurate the launch of Fintelum services, I invite potential token issuers to take part in our Easter arrangement. From 21 March to 21 April 2019, Fintelum will wave half the onboarding fee to all eligible token issuers who come through during this time.

Contact Fintelum here to launch your compliant ICO or STO token sale.

In addition, to energetic self-starters, using the hashtag #TokeniseYourAssets in your social media will help land an internship and work opportunity with Fintelum.

Contact Fintelum at info@fintelum.com for more information.

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Rebecca has a keen attention to detail and is an investment analyst and entrepreneur. Some early investments include Spotify and Lyft.

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Benjamin Tsai, President & Managing Partner of Wave Financial – Interview Series

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Benjamin Tsai, President & Managing Partner of Wave Financial - Interview Series

Benjamin Tsai is the President & Managing Partner of Wave Financial. Wave Financial offers early-stage investment, asset management, and treasury management to further the growth of the crypto and digital asset ecosystem

What was it that initially attracted to becoming the President and Managing partner of Wave Financial, an early stage venture fund focused on crypto currency?

My experience is mainly in the finance space, both sell side with BofA Merrill Lynch for 12 years and buy side with AllianceBernstein for 3 years.  When I returned to Los Angeles, I started to get involved in blockchain technology and its various uses.  The most natural one was to apply it to finance, and that application was most interesting to me.  So when I met David Siemer, our CEO, we decided to put together Wave Financial, an asset management firm focused on blockchain/cryptocurrencies.

This platform allows me to explore the limits of the space, such as crypto derivatives.  We have recently launched the Wave BTC Income & Growth Fund, which is a fund that pays a target rate of 1.5% yield monthly by selling Bitcoin options in the market.  We believe this is an innovative product, first in the market, and should be attractive to both long time bitcoin holders and also new investors in crypto.

 

One of the index funds offered by Wave Financial is the ‘Select 20 Index’ which is a fund that rebalances itself monthly and provides exposure to the top 20 digital assets. How has this fund performed compared to a more activate trading fund approach?

Comparison between active and passive management is always difficult.  This is especially hard in the crypto world, where there is not any established benchmark.  We developed the Select 20 Index to serve as the crypto market benchmark that better reflects the market compared to just Bitcoin.  With the index as a baseline, we also have our fund which tracks the index.  Due to the low fees, we believe we are doing well to provide market beta to investors.

There are actively managed funds that may be doing better and worse, but they would have been taking higher risk compared to the market beta, and also have higher fees.  The outperforming ones would have been able to justify the higher risk and fees, but the underperforming ones obviously do not.  For an investor to determine which funds could outperform would be very difficult, as track records are very short, and the crypto market is still in its infancy.  It would be difficult to show how that alpha capture can be replicated going forward.

In summary, there will be funds that outperform and ones that underperform our index and/or fund.  But for clients to take a pure market beta, similar to an equity ETF, our product provides the exposure at a low cost, and is an effective tool for achieving that for the investors.

 

Wave Financial is clearly bullish with the future of digital securities having invested in both Securitize and Vertalo. What is it about this industry that has you most excited?

I believe the existing infrastructure for equity, fixed income, and various asset classes have all been building and improving on older systems which were silo-ed.  As investments themselves become more flexible, the traditional infrastructure is no longer efficiently supporting the new way of asset management.  For example, there use to be just bond investors and equity investors, then we had 60/40 target allocations, then the endowment model which included alternative investments of hedge funds, real estate, commodities, and more exotics assets, and so forth.  For the next generation of investors, access to these asset classes and being able to get int and out of these assets should become more simple and more available to a wider audience.  I believe digital assets can do that.

For example, we are currently working on a kentucky whiskey fund.  This fund will give accredited investors access to investing in whiskey, with the opportunity to trade the ownership on the blockchain in a private exchange.  This type of flexibility at a reasonable cost was simply not available before the advent of digital securities.

 

What are some of the issues that security tokens need to overcome to reach mainstream adoption?

I believe that the education and infrastructure are two things that are missing in the industry before we can have mainstream adoption.  On the education side, we need to get investors comfortable about tokenization as a technology applied to existing financial instruments that improves the efficiency of it.  The legacy ICO marketing issues and poorly thought out projects (along with frauds) certainly has given the concept a negative bias.  But education will overcome that with time.

The second part is infrastructure; we need to have well accepted stable infrastructure for doing security tokens.  This means issuance platforms (like Securitize and Vertalo) that have transfer agent license which allow them to track/change the ownership of the securities, qualified custodians (like Coinbase and Kingdom Trust) that can help clients hold the security tokens with peace of mind, and security token exchanges (like OpenFinance Network and tZero) that can provide a place for the tokens to be traded.

As an addendum to the infrastructure, we also need better user interface so clients can focus on the investment aspects of security tokens instead of worrying about what chain it’s on and other technical challenges that are not really relevant to their core investment thesis.  When I log into Schwab to trade, I don’t think about what OS I am running and what language the interface is programmed in to complete my trade.  Once done correctly, it would be very transparent and irrelevant for the users.

 

Out of all the different types of assets which can be tokenized such as real estate or art, what industry do you personally believe is best suited to tokenization?

Is this a trick question or a softball?  I think whiskey barrels are the best thing to focus on!

Seriously though, I think any asset that gives off a cashflow would be interesting.  We have looked at real estate, race horses, solar panels, and other ideas that can be done.  Whiskey was good not because the portfolio gives off cashflow, but because we can sell a few barrels to generate cash and also provide a mark-to-market for the investors.  This is hard to do with a single Picasso; it would be impossible for me to sell a fraction of it.

The real estate space is an interesting one.  I am personally a real estate investor in Southern California, so I keep a close eye on this.  In the US, deals have not generally been very successful due to the fact that the buyers of real estate are not really interested in the tokenization, and there are plenty of buyers to support the business without it.  I believe that the development in Asia will be different, as more people are looking at both real estate and blockchain technology.  The two combined should be attractive enough for Asian investors, and it should catch on better than here in the US.  I have spoken to a number of top tier financial institutions in Japan, and real estate is an area of focus for them as they look at tokenization.

 

Circling back to the Wave Kentucky Whiskey (WKW20) that you mentioned earlier. For investors who are not familiar with this, could you explain what this is and the benefits of investing in this asset class?

Although we started the discussion with tokenization of hard assets, Wave Financial are a California Registered Investment Advisor (most of us are FINRA registered) so we have fiduciary duty to our investors to provide good products.  We reviewed a number of different assets and decided to focus on whiskey because the return profile is very attractive.

We are able to source a barrel of Kentucky whiskey and store/insure it over 5 years for roughly $1000.  In 5 years, that barrel of whiskey is estimated to be worth $3000 to $5000 on a conservative estimate.  This is a 3x-5x return over 5 years, and the variability is very low.  Also, as this is a commodity, we are able to get insurance for our inventory, which covers the value of the losses if we dropped a barrel or if the warehouse burns to the ground.  (This has happened before, as the whiskey is over 50% alcohol!)  The downside risk is limited.  One last point I would bring up is that we have found whiskey to be very resilient in down markets.  From industry research, through the financial crisis, American whiskey had only 1 down year in 2009, and the drop was 1.4% by dollar and 0.7% by volume sales.  (This is not an anomaly, Scottish whiskey went up in value in 2009.)  All of this means that the whiskey is a very attractive investment asset class in general and especially in this market.

 

In early 2018, you Co-Founded and became the CFO of the LA Blockchain Lab. Could you share with us some details on what the LA Blockchain Lab is?

LA Blockchain Lab is a non-profit that was founded to connect academia and government in Southern California to promote the use of blockchains.  We count UCLA, USC, UC Irvine, and Caltech as founding schools and we work with the City and County of Los Angeles governments to education and disseminate information about the developments in this space.

 

What are some interesting projects that you have seen come out of the LA Blockchain Lab?

One of the roles we have taken is to provide consulting to large corporates as they explore the use of blockchain.  For example, we worked on a project for Lamborghini a while back that explored how they can use the technology.  It was fascinating as we presented to the board and had a lively discussion at Pebble Beach.  We also consulted with Panasonic and helped them host a seminar on Smart Cities, with the CTO of City of LA and USC professors presenting on technological advances to cities and what more can be done.  We plan on further seminars in entertainment, finance, healthcare, and other topics, although we are assessing the situation with the shelter-in-home order in place.

 

Is there anything else that you would like to share about Wave Financial?

We are very proud of the work we have done for the past few years in rolling out products and providing treasury management services for corporate and high net worth individuals.  We think this is the professional and the right way to do business, and we look forward to growing our business to serve more customers over time.

Thank you for this fantastic interview. For readers who wish to learn more visit Wave Financial.

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Paolo Ardoino, CTO of Bitfinex & Tether – Interview Series

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Paolo Ardoino, CTO of Bitfinex & Tether - Interview Series

Paolo Ardoino is the CTO of Bitfinex & Tether.

Bitfinex is a digital asset trading platform offering state-of-the-art services for digital currency traders and global liquidity providers.

Tether is the most widely used stablecoin in the world. They recently launched Tether Gold.

You’re currently the CTO of two of the most successful blockchain companies in the cryptocurrency space, Bitfinex and Tether. How did you find yourself in such an enviable position?

I started in the Bitcoin crypto space between 2012- 2013, not too early, not too late. I was able to enjoy quite a few runs in the space. At the time I was working in the traditional financial sector in London. I had my own startup, and my expertise was in building highly scalable applications as a part of computing and distributed systems. Of course, finance and scalable applications and what the system sees is a perfect match for Bitcoin. So as soon as I started reading about Bitcoin, I fell in love.

I was experimenting and getting more and more excited about Bitcoin. And then at the end of 2014, I had the opportunity to join Bitfinex. They had a problem with the matching engine. Given my expertise, I offered my help to build the matching engine to be more scalable, so we were able to achieve 1,000 times the previous number of transactions per second.

Then, I started getting a little bored with my company in London which was mired in traditional finance. The old, outdated protocols were no longer interesting and I wanted to do something that was related to Bitcoin and the crypto space. I saw this as a huge opportunity to do something that would matter in the long run — to help change the financial system itself and leverage the groundbreaking technologies based on blockchain.

In mid-2016 I became CTO of Bitfinex and worked hard to bring the platform to what is today. The beautiful interface, carefully designed and really robust, the matching engine and APIs were all a priority, as well as making it all highly scalable. This is basically still my role today. Apart from managing my team, I keep working on the core of the platform. In 2017, I became the CTO of Tether. Tether is the biggest stablecoin by market capitalization. It’s really one of the most amazing ideas in this sector. Everyone today talks about Tether, but it was really created by a group of visionaries and Bitcoin lovers in 2014. They had this great idea to solve the problem of arbitrage, especially efficient arbitrage across crypto exchanges. The arbitrage opportunities were really big, but the problem is that to exploit those, you have to move wires around different exchanges. It was really painful and really slow — it could take days! Tether was the solution for that and worked out beautifully.

 

Tether Gold is a token (XAU₮) that is pegged to physical gold. Where is this physical gold located and what’s the redemption process should an investor choose to redeem their tokens?

The physical gold is located in Switzerland and for security reasons I cannot give the exact location. In order to redeem Tether Gold, a holder must have enough tokens for a full bar of gold. In order to start the redemption process we normally ask that a customer have at least 430 Tether Gold tokens. We do that because 400 ounce gold bars aren’t actually 400 fine troy ounces — they vary in size from as small as 385 fine troy ounces and as big as 430 fine troy ounces.

When a holder wishes to redeem, we run an algorithm that “consolidates” their Tether Gold tokens onto one or more full gold bars. Those bars are then made available to the token holder for pick-up at the location of their choosing in Switzerland.  From there, they can bring the gold wherever they want, according to travel rules and transport mechanisms and various rules of Switzerland and their jurisdiction. Alternatively, the token holder can ask us to try to sell their gold bar to a purchaser in Switzerland. If we’re able to sell it, the token holder will get the proceeds from that sale, less our fees, instead of the physical gold bar.

 

Why do you believe that gold stablecoins are necessary for investors?

We are seeing a period of uncertainty in the market. Thus, gold represents an interesting alternative to fiat cash. When there’s a lot of uncertainty in the financial markets, usually hedge  funds go to cash, so they sell their assets and they try to minimize the volatility. They usually use cash for that, but gold is representing a sort of middle ground between keeping the investment in full — let’s say equities, stocks, cryptocurrency, whatever — that are super volatile and something that feels more volatile than cash of course that is more novel. Gold is this middle ground, and is also one of the assets we see becoming more active when there is geopolitical uncertainty.

 

Tether Gold recently surged to a $21 million market capitalization. Do you believe this is based on coronavirus fears? What else is driving this surge in interest?

It reached $21 million, but for me this is just a start. I believe that in the next few months we’ll see additional growth. As I said, gold is not just a really useful hedging mechanism for traders. Gold is a good way to hedge part of the risk when you have your assets under management. Tether Gold is a good way to hold gold because you are not charged annual fees based on your holdings of Tether Gold. I believe that the $21 million Tether Gold is still a small amount. Our vision is that Tether Gold will become a preferred way to hold gold. As gold is used as a hedging mechanism for large funds, we expect Tether Gold will continue to grow in popularity. There will be the need of much more Tether Gold as a result. So we should see more and more users acquire Tether Gold.

 

Can you share with us the current plans of integrating Tether (USDT) on the lightning network?

Bitfinex and Tether are funding a project called RGB Spectrum that is meant to develop a protocol to issue digital assets on top of the Lightning network. I believe that the moment the protocol is live, stable, and well-tested Tether will be one of the first to utilize this new protocol. That’s because Bitfinex and Tether believe that Bitcoin and Lightning network are really important technologies and the network is really scalable, purely peer-to-peer. It’s as decentralized a protocol for micropayments as it should be. The RGB protocol will be ready to launch Tether on top of it because that will complete our vision of having Tether enable peer-to-peer micropayments.

 

Over the past year we have seen many new USD stablecoins. Why should investors continue to use Tether over some of these new options?

I believe that the reason is that Tether has some first mover advantage. It started in 2014, and the first big competitor started in 2018. Tether had four years of technological advancement and business advantage. One of the key qualities of a stablecoin should be cross-chain interoperability. Our major competitors are working mainly on Ethereum, while for us it is important to try and to serve as many communities as possible. Ethereum has a big community, EOS has a big community. Other blockchains that we support like Algorand, and Liquid, and Tron have big communities, so realize that for a stablecoin to be complete and to be really useful it needs to be the common ground of different blockchains. That is a huge advantage that we believe our competition hasn’t realized yet.

 

Bitfinex recently replaced IEOs with Bitfinex Token Sales which is digital assets offering and launch solution for high-quality crypto projects. Can you share with us what this platform is exactly, and why entrepreneurs should use it versus launching an IEO on Binance, KuCoin, or other competitors?

First of all, you can see that Bitfinex didn’t launch many IEOs. They didn’t launch many projects because we know that most of the projects that were launched had really bad performance. We don’t want to replicate the errors made by other platforms. We are more careful, and did an enormous amount of due diligence before deciding to launch a project through our Bitfinex token sales platform. I believe that our approach is more professional and more thorough. Projects that we’ll launch will be part of a really exclusive platform and will be fully considered as a high quality project just for the fact that we were able to complete our thorough evaluation process. We want to make sure that whatever we list is a quality project that respects the fair valuation, and has a high utility so that the Bitfinex customers that will be interested in participating in the offering will be protected. To achieve this, we’ll already have done a lot of due diligence for them.

 

What type of projects will be featured on this platform?

There’s a wide variety of projects. There are artificial intelligence-related projects. There are games. There are tokens that aim to bring banking to the unbanked in a poor region. There are new blockchains interested to get adoption and prove themselves through the process. It’s really a huge variety of projects.

 

Are there any new exciting projects in the pipeline at either Bitfinex or Tether that we should be aware of?

At Bitfinex, we are working on many new features that are really important for our customers. We are focusing on options when it comes to our derivatives platform. We are launching new integrations with third party providers in the near future around lending. And we are going to create an advanced version of our renowned peer-to-peer margin lending platform that has been powering our margin trading platform since 2013. So there are many projects that we are working on, plus launching additional pilot projects built on top of Lightning network to help market makers to try out how to improve their trading strategies, exploiting fast live network pay settlements.

 

Is there anything else that you would like to share about either Bitfinex or Tether?

As a general thought, Bitfinex is one of the key companies in the crypto space that for many years fought and allowed the industry that we’re all a part of to grow in a steady manner. Bitfinex shielded a lot of the problems to the crypto industry, especially being an on ramp to fiat and helping raise funds. Bitfinex built many interesting projects, a really solid trading platform that is home to a lot of traders. Experiment was the first to support the Lightning network, so basically Bitfinex is showing a lot of love to Bitcoin. We believe that Bitfinex is working for Bitcoin rather than using Bitcoin to just create profit.

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Adam Vaziri, CEO of Blockpass – Interview Series

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Adam Vaziri, CEO of Blockpass - Interview Series

Adam is the founder and CEO of Blockpass – a self sovereign identity application for regulated industries. Adam Vaziri’s background is as a blockchain lawyer and set up Diacle in 2013 to assist blockchain projects with compliance. He is a tireless blockchain entrepreneur and labelled a ‘bitcoin pioneer’ by Bitcoin Magazine.

Could you explain what Blockpass is and how the platform benefits investors?

Blockpass makes compliance for blockchain and other financial services easy and quick to adopt. It is the only KYC & AML verification SaaS that businesses can sign up to and in minutes conduct compliance checks on on-boarding customers. It is fully automated and hosted in the cloud, and requires no integration or setup cost. You can set up your account immediately and test the service for free. For investors and other individuals, Blockpass is a secure, user-centric gateway to financial services and other regulated offerings, allowing one click KYC submission.

 

You have a legal background; how did you transition from law to cryptocurrency?

I discovered bitcoin in 2012 and set up the first legal consultancy in London to specialise in bitcoin. My job was helping bitcoin companies get licenses and operate their business compliantly. A lot of the problems these startups were facing was how to comply but not spend too much on lawyers and consultants.

When I saw that compliance was expensive, I thought it was unfair that only large businesses could afford to comply. Smaller businesses are faced with a lot of compliance responsibilities and that just adds to their costs. It means to be a successful regulated business you have to be big. When regulations come in, we usually expect that businesses will find it too expensive to continue. So, they sell off or move. Anti-money laundering regulations for crypto businesses are coming into force for the whole industry this year. This will put a lot of crypto businesses out of business.

This is why we created Blockpass. Make it very easy and cheap to comply but have the best compliance in the market.

Most of the KYC vendors in the market lock in their clients for 2 or more-year contracts. We take that out. Blockpass is pay as you go. You only pay for what you use.

Integrating KYC into a business is a pain. Sometimes you have to integrate a vendor to check passports and a vendor to check sanctions list. It is complicated and time consuming. With Blockpass we are taking out that friction completely. A business just signs up on our website and generates a button which they send to their customers. That’s it. The business doesn’t have to think. They choose KYC Connect our full KYC package and they know that we will cover everything.

The kyc market checks users over and over again even though those users have already been checked. It is a complete waste of money. The way to fix that is give users a digital identity. That’s what we do. So, our 10k verified users don’t need to redo the verification process every time they sign up with a business. By not repeating this we can pass on the cost benefits to business by reducing the cost of verification.

Basically, compliance should be easy and cheap for businesses. That is our goal. Make it easy to follow the law. If you make it easy, then less businesses will make mistakes.

For users their experience of accessing regulated services is terrible at the moment. By giving users a digital identity, they can start to enjoy trying out new services without the headache of KYC. Just one click on the Blockpass app and they are verified.

As banks shut bank branches and every financial services provider is online you need an online identity too that you can reuse for all the services you want to access.

At Blockpass our community matters most. We give PASS tokens to all our new members as a ticket for them to join the ecosystem we are building. Once they are verified, they get benefits of being a member and accessing the services of our partners in one click. We want people who are hearing about crypto for the first time to come to us and create a digital identity and have a great experience of choice of different services they can access in one click and special offers from our partner businesses. When I first discovered bitcoin I had to do a lot of the work myself to understand who could be trusted and what to use. With Blockpass we want to make crypto easy for people, compliant and safe.

 

Once investors are verified, how often will they need to update their KYC documentation?

That depends on the merchant and jurisdiction. In the Blockpass console, the frequency of updates can be set by the merchant.

 

This was designed for the blockchain industry but could be used for many more applications, can you share what types of merchants would benefit from this application?

It could be used by any business that operates in a regulated industry, such as banking, stock trading, precious metals and gems trading, insurance and gambling.

 

Blockpass has the PASS utility tokens, what are these tokens for, and are they necessary to use the platform?

PASS tokens have KYC within the token. We created a token that needs the sender to be checked to send the token to someone else. Our tokens are how we register new members into the Blockpass ecosystem. We call this PASS Club. PASS Club members get access to content and special deals from our merchants such as free bitcoin brokerage fees, gold storage or a fee waiver for a bank account opening.

 

The PASS tokens also enable access to the PASS club. What is this club exactly?

We want to create a community of people in crypto that embrace crypto and have access to reliable information about vendors in the crypto space. PASS Club is about users also getting access to the best deals from the merchants we add to our marketplace. If they have a special offer, we want to give that to our PASS club members.

 

Could you tell us about the Blockpass Identity Lab and its collaboration with Edinburgh Napier University?

We founded the Blockpass Identity Lab in September 2018, which is led by renowned British computer scientist Professor Bill Buchanan.

 

You also offer PASS Verify which could benefit Dapp developers, what is this exactly?

PASS Verify is essentially a lower level of verification compared to our flagship product – KYC Connect. PASS Verify only provides Face Match and AML Monitoring services, while KYC Connect, in addition to Face Match and AML monitoring, also includes ID document authentication and Proof of Address verification. PASS Verify is also the gateway for users to become members of PASS Club, an exclusive e-commerce network for crypto enthusiasts powered by Blockpass and the PASS token.

To learn more visit Blockpass.

 

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