Does it not sometimes feel that way……… a great idea created, a wonderful thought developed only to be told “well actually……”
The continuing growth and adoption of fintech and the inclusion of major technology firms in the traditional offshore space together with the massive increase of the crypto-assets market are creating a new era of competition, leading to what we see as better client service and innovative financial products.
At their heart with these latest trends, we are seeing the already existing players’ change their business models and even the financial-market structures/products they offer. We are seeing well established, large, regulated, global companies change the way they have done things to attract the new clients operating in the blockchain space.
And then of course regulation is already playing a key role in shaping the face of this ever changing and wonderful landscape, defining some of the maps these changes are driving us along. The blockchain twitter verse has hours of discussion on this aspect much of which is NSFW, but an underlying takeaway is that if done right, it is not such a terrible thing. Like my kids getting much more upset about the thought of taking their vitamins than actually taking them.
However, in recent months I am genuinely enjoying and looking forward to client introductory calls. The amazing variety of the projects has struck me. Our new clients are young, incredibly smart, seemingly requiring no sleep and the enthusiasm they come with has certainly rubbed off on this older head and makes the more tedious “back office” side of things less tiresome. They have sought formal advice as to the best way to structure the financial side of their projects and this often leads to a variety of structures sometimes with an offshore aspect. But these clients have no history or experience in this type of set up and most do not want to be overburdened by it – and we know it can certainly be burdensome.
In 2017/18, many of these projects fought hard against the regulatory side. Looking for a light touch as the whole concept of regulatory oversight was completely against the idea they were creating. Now, however, these new innovators are showing a maturity that some clients in the space a few years back may not have had and are fully embracing the importance of compliance/KYC/AML and most importantly, risk management. They have put their hands up saying “we know we need it, but we need your help.”
They are bringing in seasoned experienced professionals to their corporate boards – a move that brings in security, independent oversight, reliability, and accountability. The analogy we often use is that most of these structures are like teenage kids, they can do most things but need permission to do so. Yes, there is some foot stomping, some door slamming and threats to change the wi-fi password but in the end, after maybe some explanation/negotiation/compromise the path forward is cleared and we move ahead fully aware, though that the map itself may have a better route down the line.
In conjunction with good governance these projects are employing risk and compliance firms who have both AML experience in multiple jurisdictions and most importantly in my opinion, can speak the same technical language that they use day to day in developing their product. While it may not be ideal for any blockchain enthusiasts who want the core philosophy behind their concept to remain “pure,” with the exponential rate of adoption by institutional players and traditional investors there will be stricter regulations looming over the horizon – I am afraid there really is no way to avoid it.
But it does not have to be as painful as the headlines often make out. The expertise we can offer on both the corporate governance side as well as the technical skills and experience the Provenance team has can ensure that the founders, developers, investors, and even regulators all rest easy knowing the least fun part of their projects are in safe hands. We have already put in place innovative concepts and resolved significant client issues/concerns simply through the expertise and ability to be in harmony with our clients, as well as maintaining important dialogue with regulators who are themselves looking to. Visit our website for more information about our range of services.
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