We’d like to start off this post with a question.
Would you eat at an unlicensed, unregulated restaurant? Would you bring your children there?
The question then is, would you put your money into an unregulated exchange?
The Licensing Race and its Implications
“It’s been an arduous journey getting a license,” said Tim Ying, CEO and Co-Founder of GOW. “I wouldn’t underestimate the value and importance of a license,” he continued. “It’s the endorsement of a higher authority to allow the industry to flourish.”
The Philippines, Malta, Estonia, and other legal jurisdictions have been vying to become global crypto hubs. Each seeks to offer the core benefits of cryptocurrency while catering for the changing crypto landscape. Industry trends drive regulation, while regulation seeks to address market failures.
Bangko Sentral ng Pilipinas announced its policy to allocate Virtual Currency Exchange licenses in late 2017. As expected, this drew in a lot of interest and resulted in a flurry of applications. Its strict guidelines, required reserve ratios, and penalties for those violating its policies helped to create a safe and secure crypto trading environment for consumers, while giving the investors the certainty they needed to invest in projects.
The question remained, how do you maintain a democratized system with a large degree of autonomy predicated upon a peer-to-peer settlement system erstwhile introducing regulation that seeming hampers the original aim of Cryptocurrency?
For this reason, GOW chose the Philippines at its operational jurisdiction.
Regulation Isn’t Necessary, Or Is It?
“Having new, snazzy technology doesn’t mean we’re the best; in fact, that has to be earned,” said Will Sung, COO of GOW. “Understanding how customers and society evolve is something we take very seriously here at GOW Technologies.”
For centuries, gold was the preferred medium of exchange among merchants and traders alike. As innovation took place, gold became impractical and fiat started to come to the fore. This, as pointed out by Sung, was only possible as a direct result of regulation, codified under the gold standard, which was held as the global norm until Richard Nixon’s decision to float the dollar in 1972. This allowed for both mass and global adoption within a matter of decades.
Bitcoin celebrated its tenth anniversary on January 3 this year and with it we have seen global interest. While the global fiat craze took decades to fulfill, became a worldwide phenomenon within a decade of its existence.
To make mass adoption possible, regulation and licensing are the next step.
What Does The License Empower GOW to do?
In Q2, 2018, GOW registered with the Securities and Exchange commission as the first step in the application process to become a fully regulated virtual currency exchange and in the following months, it completed the process to become a fully-licensed virtual currency exchange under its subsidiary company, eTranss.
With its long history of helping Overseas Filipino Workers remit money back to the Philippines, GOW has sought to bring the benefits of virtual currency to the real world. Our license enables us to do that.
As a result of passing the vetting procedures of the Philippines Central Bank, GOW owns and operates a bank account allowing for a multitude of transaction types, both locally and internationally. Our license and account allows for fiat-to-crypto and crypto-to-fiat transactions, while making international remittances at lower rates than other providers. This opens up essential trade corridors, solves the last-mile problem and has the potential to help enterprises worldwide to flourish.
With BSP data recently reporting that 77% of the Filipino population remains unbanked, having a license also enables GOW to serve the underserved population, empowering them in ways that traditional finance never could, offering a full suite of financial services and encourage upward social mobility.
“GOW acts as a bridge between traditional finance and crypto assets. To do this, it is imperative that there is a balance between institutional liquidity and retail demand, then we can finance the future digital society,” said Sam Sun, Chairman of GOW.
Bringing the benefits of virtual currency that brings the benefits of traditional finance and virtual currency to the mainstream requires licensing and regulation, rules and norms of procedures. The Philippines, as a crypto-friend jurisdiction, is among the best-placed players globally to make that a reality.
The PwC head of FinTech, Henri Arslanian, mooted 2019 as the year of institutional involvement in crypto. The virtual currency industry is still in its early stages and volatility unquestionably remains. Licensing and regulation not only help tame that volatility and uncertainty, but also act as a lever to bring the benefits of crypto from the virtual space to the real world.