Asia was once considered the world’s crypto hotbed. Europe now appears to be catching up, with various conferences, crypto-focused laws under development and the French government’s announcement of €500 million in funding.
We sit down with Karim Sabba, the founder of Paris Blockchain Week and Woorton, a digital asset liquidity provider, to discuss these recent changes.
A few years ago, it seemed many world powers weren’t interested in Blockchain and now they seem to be in a race for Blockchain dominance. What do you think set this in motion?
The fear of losing a competitive advantage is a strong driving force. When a large corporation sees its biggest competitors experimenting with the technology, it is naturally motivated to explore blockchain itself. It cannot risk letting its competitors become more efficient while it remains unchanged.
The reverse was also true not so long ago. When everybody was speaking out against the technology, nobody wanted to be the company looking into blockchain. Now, we are seeing companies such as Facebook, JP Morgan, and all the major public auditing firms with teams dedicated to blockchain technology.
Europe has a bit a of an edge over Asia in that there are fewer laws that are hostile towards crypto (crypto is banned in China and ICOs are banned in Korea). Do you see Asia catching up in that regard?
As the industry matures, we will likely see more agreement among governments on how to regulate it. Currently, jurisdictions are taking very different approaches.
Asia is being far more stringent, and we are seeing businesses leave as a result. For example, tighter regulations in Japan forced many exchange businesses to relocate or shut down. The upside is greater consumer protection, which may lead to stronger cryptocurrency businesses over the long-term.
At the moment, it is too early to say whether Asia’s strict approach is good or bad. However, it is clearly preventing some potential blockchain and cryptocurrency businesses from operating in the region.
Do you think Asia or Europe can catch up with a place like Malta, which got a bit of a headstart in the game?
There is still a lot of uncertainty about the technology and how it should be regulated. It is natural for most governments to take a conservative approach.
Malta’s decision to pass blockchain-related regulation helped it attract major blockchain businesses such as Binance and OKEx. However, this is a growing industry, and second and third waves of blockchain businesses will emerge. Regulation should be more consistent across governments by then.
Governments can attract businesses in ways other than regulation. We will see this as they compete for blockchain businesses. Government-funded programmes and support can help attract the right talent. This is one way European countries outside Malta, as well as countries in Asia, may compete for blockchain talent.
What do you think should be the most important objective for these various Blockchain events in Europe, raising awareness or financially supporting the industry?
It is important to remember that we are in an extremely early phase in this industry. The priority is helping people make the right connections.
That may mean founders connecting with developers or founders connecting with investors. The industry’s progress depends on these relationships, and events help create them.
There is currently a shortage of developers dedicated to blockchain technology. Demand is extremely high, while companies in more mature industries can usually offer more lucrative packages.
Founders often need to persuade developers to take the risk of joining an early-stage company. They may do this by presenting a vision or offering equity so developers are compensated for the risk.
Blockchain events are where these deals are made. We are excited to connect professionals from different backgrounds at the Paris Blockchain Week.
The CEO of MasterCard recently said that many Blockchain projects have not lived up to their potential. Is Blockchain still the technology of the future or could it be a passing fad?
It depends on what future we are talking about. There is no doubt that blockchain technology has been overpromised by many, and some have tried to apply it where it does not make sense.
The key is understanding what the technology is and where it can be used to improve existing industries. Events such as the Paris Blockchain Week help attendees understand the technology in greater depth and see how it relates to existing industries.
It is not surprising that the CEO of MasterCard is speaking against blockchain technology. Financial services are among the industries most exposed to disruption by blockchain technology.
It is also important to be patient. We tend to overestimate what technology can do in the short-run while underestimating what it can do in the long-run.
Disrupting industries that are decades or sometimes centuries old will take time, especially for a technology that is barely ten years old. But when they are disrupted, we will see a profound change.
There is a large influx of institutional investment into the Blockchain industry. How does Woorton come in?
Woorton is in the front line of this institutional step for several reasons. The company is backed by two regulated French asset managers having an extensive network in the asset management industry. This gives Woorton unprecedented exposure at the french and european level.
We have also been careful to apply the same standards as traditional markets under MIFID laws when possible. We also follow banking-industry KYC/AML procedures, with an extensive KYT check on the crypto side to meet the expectations of our institutional clients.
Last but not least, Woorton has been pro-active in the coming crypto secondary market regulation in France. We worked with the regulator to draft a first framework for our activity. We then worked through the French Digital Asset Association, alongside most leading French actors, to propose an entire secondary market framework to policy makers.
What does Woorton have planned for the year ahead?
We want to consolidate our presence as a global liquidity provider. We will continue to onboard investment funds, brokers, private banks, HNWI and soon banks.
We also plan to add more fiat currencies, including GBP, CHF, AUD, YEN or HKD, as well as more cryptocurrencies to our automated trading systems.
We want to expand the Woorton Market-Making as a Service (MMaaS) activity by onboarding new clients while maintaining the highest level of quality in terms of issuer.
The main goal is to reduce the spread and organically increase the volume of our client’s digital asset on the exhanges. Market making in securities, forex and other traditional assets is a very opaque business.
Our current focus is bringing full transparency to our activity for clients. We will announce a unique feature in this respect in a few months.
In a competitive market like crypto, differenciation is key. That is why we launched a 24/7 API on USD, EUR, and will soon add GBP.
We are also deploying market making strategies on decentralized exchanges. The asset universe we offer to our liquidity provider clients will expand through our MMaaS activity.
Blessed with the trust of dozens of clients, we hope to continue expanding our reach in Europe and Asia.
