Status crypto: will the project of Gutseriev change the digital currency industry?
The Gutseriev family and the best IT-businessman of the Republic of Belarus launched the first regulated crypto exchange in the CIS.
Saeed Gutseriev, the son of the Russian billionaire Mikhail Gutseriev, and a member of the board of directors of the “Safmar” group and Belarus’s venture capitalist and IT star Viktor Prokopenia shook hands and launched the fully functional trading platform for tokenized assets Currency.com. Will the local banks and the Belarusian bureaucratic machine be able to make use of the time advantage and are such projects promising for the industry as a whole?
A little over a year ago, Belarus surprised the world with its intention to become a hub for technology projects and a cornucopia for the digital economy of the future, including operations with cryptocurrencies. The Belarusian authorities gave the crypto industry a new hope for the quickest creation of an adequate legal field. After all, all the states of the world are jealously watching each other’s experience in this area.
The opening of the project of Gutseriev and Prokopenia is a direct consequence of last year’s law coming into effect. After the Decree “On the Development of the Digital Economy”, which came into effect in March 2018, the first crypto-exchange in the post-Soviet space was licensed to regulators.
It is known that the exchange was launched in the High-Tech Park (local Silicon Valley). This is a zone with its own tax and legal regime, which creates special conditions for IT projects of various sizes. Tokenized assets will be traded on the site: digital coins, or tokens, at par equal to common securities. Also, assets are presented for raw materials, shares, index funds, of which there are about 150 instruments in total. Subsequently, the founders plan to bring their assets to a total number of 10,000. Guaranteeing ownership of this asset, which represents a token on the stock exchange, is Capital.com of Viktor Prokopenia and the Gutseriev family. This investment company operates in the jurisdiction of the UK and Cyprus.
Cryptocurrency pairs will also be traded: for now it is Bitcoin and Ethereum. The times for cryptocurrencies are far from hopeful: trading volumes fell almost three times since the peak in January 2018, the cost of the most expensive currency Bitcoin fell to a sixth of the former peak level in December 2017, and Ethereum fell by 90%.
In such circumstances, the task of making a profit on a crypto-exchange will be difficult. Nevertheless, the declared target for revenue at the end of 2019 for Currency.com is $70 million; the main bet is on the exchange’s commissions in the amount of from 0.2 to 1.5%. The income plans look overstated despite the fact that the size of the commissions is average for the market.
As for the target audience, in order to be able to trade on a stock exchange, it is necessary to be registered and tested. On the first day, the author attempted to occupy the queue and received a notification that there were more than 3,900 people in front of him. If this is not a marketing ploy, then the community has probably reacted to the site with interest. However, it was not possible to immediately test the hypothesis.
The site stated that it would be possible to deposit funds through Visa and Mastercard issued by any bank. Most likely, the restrictions will still be there: for example, regulators in the United States forbid their citizens to use the exchange. Transactions will be carried out with the help of Belarusian BelVEB and Paritetbank.
Project Perspectives
According to RBC, the tandem of Gutseriev and Prokopenia invested $10 million in the creation of the site, which, by the standards of investment deals that involved crypto-projects in recent years, is not a lot. At the same time, the domain has a “beautiful” name, on which a significant part of these funds was likely spent.
The project is not something radically new. Similar projects already exist in the domestic market. For example, Blackmoon (the Russian fintech-company Blackmoon Group) in 2017, created a bridge between the cryptocurrency market and traditional financial instruments while operating in the legal field.
The eternal question remains on the agenda for everyone who works with cryptocurrencies remains open: how to convert crypto into fiat. Inspired by the aforementioned decree, many of the industry communicated with Belarusian banks last year. However, no one could open an account of a legal entity to trade cryptoactive assets.
Perhaps this is the cost of the law being passed before gaining practical experience. In this case, there is hope that the time that has passed is enough for the situation with the Belarusian banks to change. This would allow many companies in the Russian market to provide banks in a friendly country not only with volumes and money but also with new jobs.
On the whole, landmark pilot projects like the initiatives of Gutseriev and Prokopenia have a positive effect, allowing those who previously had barely any grip at all to enter the legal market.
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