Bridging TradFi and Crypto: “Compliance and Regulations Concerns for Large Institutions”

Bridging TradFi and Crypto: “Compliance and Regulations Concerns for Large Institutions”

Time Stamp: January 30, 2024 12:25 PM
Source Node: 2461986

At the Finance Magnates London Summit 2023, industry
leaders convened for a pivotal discussion on “Bridging TradFi and Crypto: Work
in Process”, shedding light on the complexities and opportunities inherent in
integrating these two distinct spheres. Moderated by Chen Arad, COO at Solidus
Labs, the panel delved deep into the challenges, regulatory concerns, and
transformative potential of cryptocurrencies within traditional financial
frameworks.

The panel, comprising Cassandra Cox, Director of
Institutional Sales at LMAX Digital; Gareth Hughes, Head of Exchange at Zodia
Markets; and John Salmon, Partner and Head of Digital Assets and Blockchain
Practice at Hogan Lovells International, provided nuanced insights drawing from
their extensive experience in both traditional and crypto financial spheres.

Cox emphasized the similarities between crypto-assets and
traditional asset classes, stressing the importance of providing clients with
alpha-generating opportunities while navigating complexities in onboarding and
custody solutions.

Cox remarked: “Crypto, akin to traditional asset
classes, offers a return structure, providing alpha sources and trading
opportunities to clients. The initial conversation mirrors that of other asset
classes. While certain aspects of crypto may complicate onboarding and the
initial journey, the industry has diligently developed tools that can be
swiftly deployed.”

Hughes highlighted the critical decisions surrounding
custody solutions and market
access, underscoring the importance of reputable service providers and
understanding the nuances of crypto trading venues.

John Salmon, Partner and Head of Digital Assets and Blockchain Practice at Hogan Lovells

“The way individuals perceive the crypto industry is
inevitably influenced by their background, not just geographically, but from a
market perspective. Those with a forex background often
liken it to a currency
pair, while those with equities experience see it differently.” Hughes commented.”

Cassandra Cox, Director of Institutional Sales at LMAX Digital

“Crypto
isn’t entirely distinct; there are many similarities with the FX and equities
worlds, such as listed futures. Typically, people start by considering where to
custody their crypto, a question you should address personally, whether you
prefer owning your own wallets or hosting your infrastructure.”

Salmon echoed their sentiments, emphasizing the dynamic
regulatory environment as a primary challenge for institutions considering
entry into the crypto space.

Salmon said: “The constantly shifting regulatory
landscape and the variations across different jurisdictions pose challenges. At
large institutions, there’s an appetite for digital assets broadly, although
there’s also apprehension. They’re concerned about compliance, regulations, and
legal implications.”

Stablecoins:
Bridging Borders amidst Credibility Concerns

The discussion further explored the realm of decentralized finance (DeFi)
and its implications for traditional financial institutions and regulators. Hughes
expressed the difficulty in navigating the DeFi space due to regulatory
concerns, emphasizing the importance of understanding and adhering to KYC/AML
regulations.

Gareth Hughes, Head of Exchange at Zodia Markets

Cox highlighted the potential of DeFi as part of the
technology solution for bringing tokenized assets into trading environments,
while Salmon underscored the challenges in defining DeFi accurately and the
importance of regulatory clarity.

Stablecoins
emerged as a pivotal growth area, particularly in facilitating cross-border
transfers of value. While acknowledging stablecoins’ potential to revolutionize
global financial operations, panelists also highlighted credibility challenges
facing the cryptocurrency industry, citing instances of scandals involving
major players like FTX
and Binance.
Regulatory clarity was deemed essential to enhance investor confidence and
mitigate risks associated with illicit activities and market manipulation.

Institutional
Adoption and Regulatory Clarity in Cryptocurrencies

The discussion underscored the critical role of
policymakers and regulators in establishing a conducive environment for
cryptocurrency development. Concerns were raised regarding the US’s regulatory
approach, with skepticism expressed about Chairman Gary Gensler’s purported
anti-crypto sentiments and the fragmented regulatory landscape.

In contrast, European and Asian jurisdictions were praised
for clearer regulatory frameworks and proactive approaches to fostering
innovation while ensuring consumer protection.

Notably, the
approval process for spot Bitcoin exchange-traded funds (ETFs) in the US, was
also discussed, with panelists predicting increased institutional adoption of
cryptocurrencies in the coming year. They stressed the need for responsible
governance and compliance as the industry matures and gains wider acceptance.

While regulatory challenges persist, there is optimism for
progress and mainstream acceptance of cryptocurrencies. The panelists
emphasized the importance of clear regulatory guidance, collaborative efforts
between industry stakeholders and regulators, and ongoing dialogue to navigate
the evolving landscape effectively.

A
Fraud Survey

We
invite you to participate in our joint survey conducted by FXStreet and Finance
Magnates Group, which explores prevalent online financial fraud types,
platforms used for fraudulent activities, effectiveness of countermeasures, and
challenges faced by companies in tackling such fraud. Your valuable insights
will help inform future strategies and resource allocation in combating
financial fraud.

LINK:Social
Media Scams: Help Shape the Fight with Your 2024
Survey Participation

At the Finance Magnates London Summit 2023, industry
leaders convened for a pivotal discussion on “Bridging TradFi and Crypto: Work
in Process”, shedding light on the complexities and opportunities inherent in
integrating these two distinct spheres. Moderated by Chen Arad, COO at Solidus
Labs, the panel delved deep into the challenges, regulatory concerns, and
transformative potential of cryptocurrencies within traditional financial
frameworks.

The panel, comprising Cassandra Cox, Director of
Institutional Sales at LMAX Digital; Gareth Hughes, Head of Exchange at Zodia
Markets; and John Salmon, Partner and Head of Digital Assets and Blockchain
Practice at Hogan Lovells International, provided nuanced insights drawing from
their extensive experience in both traditional and crypto financial spheres.

Cox emphasized the similarities between crypto-assets and
traditional asset classes, stressing the importance of providing clients with
alpha-generating opportunities while navigating complexities in onboarding and
custody solutions.

Cox remarked: “Crypto, akin to traditional asset
classes, offers a return structure, providing alpha sources and trading
opportunities to clients. The initial conversation mirrors that of other asset
classes. While certain aspects of crypto may complicate onboarding and the
initial journey, the industry has diligently developed tools that can be
swiftly deployed.”

Hughes highlighted the critical decisions surrounding
custody solutions and market
access, underscoring the importance of reputable service providers and
understanding the nuances of crypto trading venues.

John Salmon, Partner and Head of Digital Assets and Blockchain Practice at Hogan Lovells

“The way individuals perceive the crypto industry is
inevitably influenced by their background, not just geographically, but from a
market perspective. Those with a forex background often
liken it to a currency
pair, while those with equities experience see it differently.” Hughes commented.”

Cassandra Cox, Director of Institutional Sales at LMAX Digital

“Crypto
isn’t entirely distinct; there are many similarities with the FX and equities
worlds, such as listed futures. Typically, people start by considering where to
custody their crypto, a question you should address personally, whether you
prefer owning your own wallets or hosting your infrastructure.”

Salmon echoed their sentiments, emphasizing the dynamic
regulatory environment as a primary challenge for institutions considering
entry into the crypto space.

Salmon said: “The constantly shifting regulatory
landscape and the variations across different jurisdictions pose challenges. At
large institutions, there’s an appetite for digital assets broadly, although
there’s also apprehension. They’re concerned about compliance, regulations, and
legal implications.”

Stablecoins:
Bridging Borders amidst Credibility Concerns

The discussion further explored the realm of decentralized finance (DeFi)
and its implications for traditional financial institutions and regulators. Hughes
expressed the difficulty in navigating the DeFi space due to regulatory
concerns, emphasizing the importance of understanding and adhering to KYC/AML
regulations.

Gareth Hughes, Head of Exchange at Zodia Markets

Cox highlighted the potential of DeFi as part of the
technology solution for bringing tokenized assets into trading environments,
while Salmon underscored the challenges in defining DeFi accurately and the
importance of regulatory clarity.

Stablecoins
emerged as a pivotal growth area, particularly in facilitating cross-border
transfers of value. While acknowledging stablecoins’ potential to revolutionize
global financial operations, panelists also highlighted credibility challenges
facing the cryptocurrency industry, citing instances of scandals involving
major players like FTX
and Binance.
Regulatory clarity was deemed essential to enhance investor confidence and
mitigate risks associated with illicit activities and market manipulation.

Institutional
Adoption and Regulatory Clarity in Cryptocurrencies

The discussion underscored the critical role of
policymakers and regulators in establishing a conducive environment for
cryptocurrency development. Concerns were raised regarding the US’s regulatory
approach, with skepticism expressed about Chairman Gary Gensler’s purported
anti-crypto sentiments and the fragmented regulatory landscape.

In contrast, European and Asian jurisdictions were praised
for clearer regulatory frameworks and proactive approaches to fostering
innovation while ensuring consumer protection.

Notably, the
approval process for spot Bitcoin exchange-traded funds (ETFs) in the US, was
also discussed, with panelists predicting increased institutional adoption of
cryptocurrencies in the coming year. They stressed the need for responsible
governance and compliance as the industry matures and gains wider acceptance.

While regulatory challenges persist, there is optimism for
progress and mainstream acceptance of cryptocurrencies. The panelists
emphasized the importance of clear regulatory guidance, collaborative efforts
between industry stakeholders and regulators, and ongoing dialogue to navigate
the evolving landscape effectively.

A
Fraud Survey

We
invite you to participate in our joint survey conducted by FXStreet and Finance
Magnates Group, which explores prevalent online financial fraud types,
platforms used for fraudulent activities, effectiveness of countermeasures, and
challenges faced by companies in tackling such fraud. Your valuable insights
will help inform future strategies and resource allocation in combating
financial fraud.

LINK:Social
Media Scams: Help Shape the Fight with Your 2024
Survey Participation

Time Stamp:

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