According to Bitstamp APAC General Manager Leonard Hoh, it is high time to dispel the myth that regulation is bad for crypto innovation.
"The problem with the narrative that regulation stifles innovation and runs against the ethos of crypto is that it perpetuates the idea that to participate in crypto is to have a blatant disregard for regulation and compliance. That is simply wrong," Hoh told Digital Life Asia.
Longest-standing crypto exchange
"Clearer and more complete regulations actually make it easier for companies to operate in a market and invest in their business. To this end, Bitstamp has been a supporter of regulation. Not only to be compliant in the markets that we serve but to help define the frameworks that would benefit both industry players and customers," he said.
In business since 2011, Bitstamp is the longest-standing crypto exchange. Now that the company is expanding in the Asia Pacific, Hoh said that Bitstamp's proactive approach is helping it navigate the regulatory environment in the region.
"APAC is a fragmented market and we understand that each jurisdiction has its own approach and timeframe. As a global player, it is a challenge to maintain an ever-expanding license portfolio. However we are confident in our well-tested package of operational and compliance offerings to grow this further," he said.
Hoh cited a trusted track record, working with regulators, and reliability as three main factors behind Bitstamp's longevity.
"Even when it wasn't fashionable, we've stuck to our view that working with regulators is the path to mainstream adoption and sustainable revenue growth. We were the first crypto exchange in Europe to receive a Payment Institution license (2016 in Luxembourg) and to this day, we continue to invest in growing our global regulatory footprint. To date, we have over 50 licenses, including the BitLicense in New York, USA, and the VASP (virtual asset service provider) licenses in several European markets – recently including Spain and France," he said.
Regulation and innovation
Asked how the crypto industry can protect the web3 ethos of decentralization in the face of increasing government regulation, Hoh replied: "Regulations have their benefits. For example, curbing fraudulent and illicit behavior, and providing investor protection. Rather than fight against regulation, which in our opinion is a matter of when, not if, the crypto industry can take a proactive stance and work with regulators to give the DeFi sector some clarity and freedom to experiment."
He maintained that regulation will not stifle crypto innovation.
"I would say that innovation is driven by user needs, and it cannot exist in its own silo. For adoption to happen, there must first be trust. Bitstamp's Crypto Pulse survey in 2022, which polled over 28,000 retail and institutional investors in 23 markets, showed that the top barriers to entry for investors are the lack of regulatory clarity and the lack of knowledge; not that the industry isn’t being 'innovative' enough," he said.
That being said, one of the innovations that Bitstamp offers is Bitstamp-as-a-Service.
"Bitstamp-as-a-Service is a modular infrastructure service that gives a financial institution, be it a bank, brokerage or a fintech company, all the building blocks it needs to offer its end customers access to crypto markets. Depending on a business' specific needs, they can choose from three solution tiers, each one offering a different set of our crypto exchange, client reporting, and compliance services that we've battle-tested for over 10 years.
"For our clients this enables them to rapidly deploy their crypto product offering without necessarily having specialized crypto capabilities or licenses. Importantly, Bitstamp-as-a-Service is integrated with our client's existing app/platform with Bitstamp powering the backend infrastructure while they continue to own the customer relationship and experience."
Emphasizing that Asia is a key growth area for Bitstamp, Hoh shared some of the company's expansion plans.
"We doubled our team size over the past 12 months, and we’ve been active in markets like Singapore and Hong Kong where many crypto-native and fintech firms are based.
"We are also looking at the Philippines with high intent, not only because we are already serving some local firms as our clients but because of the multiple use cases that can flourish in the country. Facilitating better payment rails and GameFi participation have created interest but remain underserved. With that said we see opportunities with fintechs and banks looking to serve this local market that is also taking a more embracive stance towards crypto and its underlying technology," he said.
Regulation and innovation? Maybe it doesn't have to be either/or.