Interview with Praveena Prabha, head of compliance at COSS

Hi Praveena, thank you so much for having me! Could you tell us how you started working for COSS? Did you reply to a job offer or did they come looking for you?

Praveena Prabha:
I have ten years working experience, 8 of them being in client services and compliance. There was a job advert on a Singaporean job portal and I applied for it online. I was consequently called in for an interview. They offered me the job 3 days later. I was happy to join COSS because at the moment there is an ambiguity in terms of regulation regarding cryptocurrencies, so it is actually a very exciting time to be on board.

So, you were actually familiar with cryptos before joining COSS?

Praveena Prabha:
Yes, I worked for a payment and remittance company before joining COSS. They were a matured start-up who’s been around for 8 years. We dealt with payments and remittances and were starting to dabble in cryptocurrencies. I was already attending seminars on crypto regulations and its impact for Singapore companies.

Actually, that was one of my follow-up questions, your previous job, you were managing a team of 6 junior compliance officers. Was your mission there like your current job in COSS?

Praveena Prabha
Yes, it would be among the same lines because in terms of managing people you need to ensure that the compliance framework is established. Policy implementation and standard operating procedures follow. Once that is the case, you start teaching the Compliance Analysts how to go about their daily tasks.

Could you tell us more about your current job at COSS, what does your typical day look like?

Praveena Prabha:
My day starts off reviewing legal opinions. We have clients who want to list tokens on our exchange. We have to do some due diligence on them, we look at their idea, at their token model, their website, the team behind it and we also make sure their token does not function as a security. In Singapore, if it falls under the Securities and Futures Act then it must be licensed. We also don’t want to list tokens that don’t have a strong foundation in terms of their modelling.

Ok, so once you made sure the token is not a security, you also make sure the project is legit?

Praveena Prabha:
Correct, it’s very important to us because these tokens will then be offered to our customers on COSS. We could list any coin but that would hurt our reputation if we were opened to listing tokens with no solid business models. We like to protect our customers.

I also look into the crypto currency regulations that Singapore is going to pass. They have to pass this bill through parliament, which will happen somewhere in April 2018. So, we are looking at being regulated in the coming times. Once that is done we have to apply for licenses. Licenses all need some types of requirements to be met. So, in this aspect, we have started incorporating KYC. It is a necessary process, to ensure that the customers you engage with, do not fall under sanctioned lists. These are very standard mandatory bank regulations which we are mimicking. This helps stabilizing COSS as an exchange, because we want people to trust us. We need to apply for the license, if MAS approves it, we will be regulated.


Is it 100% sure that they will require you to be licensed and regulated or they still might decide against it?

Praveena Prabha:
Yes, it is sure. They have already passed a kind of bill and have organized consultations with the public, on what the public feels about the requirements. If you were to operate a cryptocurrency exchange in Singapore, you would have to be regulated under the Major Payment Institution or Standard Payment Institution. Once the bill is passed, in April, that is when we will truly know what we are required to do. So far, the consultation papers they gave us function as guidelines, after the bill has been passed in parliament it will be mandatory requirements.

And there is no way the parliament votes against the new bill?

Praveena Prabha:
There won’t be a vote against it, because in terms of mass adoption, if you are looking at people wanting to use cryptocurrencies, there must be some sort of regulation. There is no possible way you can introduce a cryptocurrency as an asset or as a financial product without regulation. No regulation allows people to be exposed to scams and money laundering. We are very pro compliance in COSS and happy to be regulated because when you are regulated there are certain rules which are set to keep your customers safe and to keep COSS safer and more stable. This is part of my job scope as well.
We are also looking at the long term for COSS. Essentially, we want to build a market for retail customers or investors who have already established trust with us. Us being regulated takes more work and it costs a lot of money, but it is necessary if you are looking for mass adoption.

Another part of my job scope includes partnering with suitable banks and credit card partners that would help us introduce fiat into the eco system. It takes multiple conference calls, due diligence on both the bank’s end, the credit card partner’s end and ultimately COSS’s end. A lot of work but truly exciting.

Currently you are the only one in the compliance team and on 5th of February, 4 more people will join the team, are there any more hires planned?

Praveena Prabha:
There might be an increase, it really depends on how many KYC verifications we need to do. We have established a team of 3 people who will be fully dedicated to KYCs and they should be able to do about 1000 verifications a day. During KYCs we have to look for authenticity, validity etc.
The COSS users who will not be able to submit their KYCs will be asked to withdraw the funds from their accounts and close their COSS account.
We have 120k accounts on COSS now and some of them are not active users. Only active users are likely to sign-up for KYC. If all these accounts come in for KYC at the same time, we will be able to scale up if we need to. That would be a luxury problem to have though.

One of your big task, is FIAT coming to COSS, what need to be done with MAS in order to make sure you will be able to list some FIAT pairs? Are you optimistic about it?

Praveena Prabha:
In terms of working with partners to introduce FIAT to the COSS Ecosystem I am really optimistic about it. We must be very careful about what we say regarding MAS. We do not know if they will accept our license application. Once the bill has been passed we will work to be in sync with the bill and then we’ll apply for the license. Being regulated helps us to bring FIAT to COSS because banks are more likely to work with us. They are a lot of things pointing to the positivity of it all: First the bill already exists, it just needs to be mandated in parliament. They’ve already established that cryptocurrency exchanges have to be regulated and have to work according to a guideline and we are working towards that guideline.
As we talk to banks currently and to our credit card partners they all ask “If COSS is regulated?” So, we are very optimistic, we are working on it and it is productive.

So, a major part of the work will start once the bill is mandated?

Praveena Prabha:
No, the work has already started, we are preparing. We just need the final details, but we already have some guidelines on what we should be doing if we want to get licensed. Once the bill is mandated we can go full force into it.

Rune Evensen told me yesterday, you can add FIAT before the regulation comes in, how does that work?

Praveena Prabha:
There are certain things you must do when you add FIAT. We try to follow what the bank do, because they are obviously already regulated. They have KYC screenings, they have transaction monitoring etc… By doing that we ensure that our level of compliance is very high. Essentially if you want to partner with banks, they have their own compliance processes that you need to respect.

You are aiming to launch FIAT in March through credit card, which level of fees do you expect to have?

Praveena Prabha:
The fees are currently in discussion, so we will have to see what our partners are willing to give us, as a base for their transaction fees. Then we’ll see what is comfortable for our customers but also for COSS. We want to make things very user friendly for our customers, but COSS also needs to work on a bit of revenue to make sure we have a cycle going on. I do not have the final figures yet, but we will ensure that it is a comfortable equilibrium for COSS and our customers.

Do you plan on introducing KYC to US users?

Praveena Prabha:
Yes, we do, but it is a very heavy process. You must ensure that the gains made by US citizens are reported to IRS. It’s a highly administrative process to be able to offer KYC to US users.
We are planning to include them, but it will come as a later stage.

Is there a chance to see bank wires on top of credit cards deposits before the regulation comes in?

Praveena Prabha:
I suspect, in all honesty, that the bank wires will come in after we are regulated.

Bithumb just partnered with WeMakePrice, a major online mall in Korea, and as a result this mall will start accepting 12 different cryptos for payments. Is it something that COSS is planning to do too and widen the supply of cryptocurrencies to people?

Praveena Prabha:
We have to work in steps, step 1 is to introduce FIAT by credit card, and then we’ll see what the impact on the trading volume is and how do we move forward. Do we want to increase the currencies we offer? Do we want to focus on one country?
After we introduce FIAT by credit card we’ll introduce by bank transfers and see the impact as well. On top of that, regulations will play a major role. So, we have to go step by step before we consider expanding our business model. Our goal is to ensure that cryptocurrencies are adopted by the masses, so that might be in the pipeline.

Anything you’d like to say before we close the interview?

Praveena Prabha:
Well, to sign it off, cryptocurrency is new for everyone, but I’m convinced it’s here to stay. I would encourage users to use the COSS exchange, because we are pro compliance and pro regulation. We really do want to protect our customers and ensure that they trust us as an exchange. We do want to be regulated, we do want to be on the same pages as banks and we want a big market for mass adoption to take place. These are some of the aspects I would like to share with the people who will read this interview.

Thanks a lot!