Crypto AM: Blair Halliday of Gemini in conversation with James Bowater – CityAM
As access to the crypto market broadens, customers are increasingly conscientious about the exchanges on which they transact. Exchanges are no longer being evaluated purely on factors like volumes traded or trading fees; customers are concerned about which companies take proper care of their funds and their data with effective security and compliance. In fact, market share is rising among ‘top-tier’ exchanges that rank highly in areas such as legal, regulatory, and security risk management.
Our aim at Gemini is to bring accessible and secure crypto products to a global audience, and our full launch in the UK is a big step forward in achieving that goal. UK users now have access to a simple and safe way to trade and store crypto in pounds sterling (GBP), with the ability to link a UK bank account, or use debit cards to buy crypto directly. UK-based institutions can also access market data and trading services on behalf of clients who are interested in investing in digital assets as part of their broader portfolio.
Building a sustainable and safe future in crypto
Our approach to entering the UK market is indicative of an increased focus on compliance in the industry. We intentionally sought high levels of authorisations from the Financial Conduct Authority (FCA), which is rightly stepping up its oversight of crypto firms. At Gemini we see it as part of our responsibility to educate the market on why this scrutiny is a good thing, and to work proactively with authorities to limit bad actors’ ability to use crypto platforms.
Specifically, the FCA granted Gemini an Electronic Money Institutions (EMI) licence. For our customers, this means that the fiat currency they use to fund their accounts is stored in a safeguarded account. It also requires us to ensure that customers have the ability to refer complaints to the Financial Ombudsman Scheme and any instances of malpractice to the FCA itself.
In a significant moment for the industry, the FCA also approved Gemini as one of the first registered cryptoasset firms as part of the updated Fifth Money Laundering Directive, which brings crypto activities under the auspices of the UK’s Money Laundering Regulations. In practice, this gives Gemini customers assurances that they are not putting their money into a product flooded with illicit funds from fraudulent sources. It will be a turning point in the industry when we reach the FCA’s January 2021 deadline for all existing businesses to be registered or cease trading, and we welcome the continued robust approach the FCA is taking in its assessment of crypto firms.
For the crypto industry as a whole, advocating for progressive regulation and demonstrating that we are serious about building a sustainable, trustworthy, and safe environment for engaging with digital assets is an existential effort.
On the horizon in European crypto compliance
Looking forward, all financial services firms, including crypto businesses, are assessing the future impact of Brexit. For Gemini, the UK is a particularly important market, with an advanced regulatory regime, a rich tradition as a global financial hub, and a forward thinking consumer base that increasingly accesses financial services through innovative applications. We’re accounting for the need to secure passporting rights into the rest of the European Economic Area after the UK leaves the European Union (EU) by applying both to the FCA and to the Central Bank of Ireland. Ireland is a vibrant market itself and somewhere we want to be offering our cryptocurrency services to customers in euros.
Looking at wider trends in crypto compliance in Europe, one of the biggest challenges is creating a unified regulatory framework across different jurisdictions. The EU’s Fifth Money Laundering Directive is an excellent initiative to help combat money laundering in the financial sector across the member states. Recent statements of intent such as the recently released proposed Markets in Crypto Asset Legislation, help to further clarify what the future of regulation and control may look like. However, until that is agreed to and formalised, there remain different levels of crypto oversight across the UK and Europe.
Other intergovernmental organisations like the Financial Action Task Force (FATF) and the Organisation for Economic Cooperation and Development (OECD) are looking to broaden common reporting standards on Anti-Money Laundering and Counter Terrorist Financing programmes. As that happens, companies will be required to deliver consistent levels of reporting on their security and controls. If executed properly, raising these standards should usher in a more level playing field where crypto companies are held to the same high standard, and it should encourage innovation to bring the best possible products and services to market.