As the CEO and co-founder of Hong Kong’s Gatecoin exchange, Aurélien Menant is passionate about digital currencies and tokens. One of the three largest Ether exchanges in the world in terms of trading volume, Gatecoin has steadily expanded its exchange offerings to a variety of cryptocurrencies and Ethereum-based tokens, while maintaining a strict eye on regulation and compliance on behalf of their domestic and international interest.
In an interview with BTCMANAGER, Menant explained his enthusiasm for Ethereum and where he sees the future of crypto-tokens heading. He also delves into the topic of regulation and compliance.
On the Exciting Potential of Ethereum
“We are very bullish about Ethereum and have been since the start as one of the first exchanges to list ether (ETH) back in Jul 2015,” said Menant. “We had strong faith in the project back then and we are still just as passionate about Ethereum and the entire ecosystem surrounding it today. The endorsement of Ethereum by major technology and financial firms such as Microsoft, IBM and UBS is proof that this “blockchain 2.0” has game-changing applications. With more dapps projects being built on Ethereum and their associated tokens we foresee the ecosystem eventually catching up with Bitcoin in terms of miners, users and applications.
We don’t see Ethereum as a rival to Bitcoin, rather [it is] a complementary ecosystem and hope that both continue to co-exist for the benefit of society as a whole.
While there are currently many crypto-exchanges out there offering various levels of sophistication in trading digital currencies, the places that allow the buying and selling of crypto tokens are few. With the projected growth of Ethereum as a dapp ecosystem, Menant is confident that the market for various tokens should also grow.
“We see a very bright future for tokens as we are optimistic about the prospects for dapps built on Ethereum and other decentralized blockchains. Tokens can represent multiple uses for their owners, either as ‘currency’ in exchange for the services/products offered through specific dapps, or as a new form of stock/share and voting right in the DAO. With more dapps emerging, that have tangible real-world applications, with potential mainstream appeal, such as Slock.it, the interest in owning, investing in and trading tokens will grow. In the long term, we see the tokenization of almost all types of applications, assets and organizations, from car-rental payment, to gold, to shares of Apple. We imagine that you could trade a token of almost anything on an exchange and use a basket of tokens in a very sophisticated wallet to purchase / use any service or product offered online or with internet connectivity. It’s incredibly exciting.”
Indeed, Menant was particularly enthusiastic about the potential for dapps like Slock.it, as part of the new “sharing economy,” to redefine the role of tokens.
“With Slock.it you already have the beginning of ‘disruption of the disruptors’ as Slock.it is revolutionizing the sharing economy and bringing greater democratization and security, compared with existing applications such as Uber and Airbnb, with the potential for further disruption in other areas of the sharing economy as well. You also have Augur, which is shaking up prediction markets (betting) and Digix which is bringing gold trading into the 21st century.”
“We’re also seeing some projects that offer investments in different fields as diverse as real estate, movie financing or VC funds. Crowdfunding or peer-to-peer lending are obvious areas that dapps will explore and hopefully take the space to a level so that an organization from any industry could receive crowd sourced investments and benefit from the greater transparency and disintermediation that blockchain provides.”
On Matters of Regulation and Compliance
There are several exchanges available for buyers and sellers of cryptocurrencies of all sizes. Some of them offer features that allow customers to purchase or sell cryptocurrencies without any personal identifying information like email or account details; however, Gatecoin appears to take an opposite approach. Regulated by the Hong Kong Customs and Excise Department as a Money Service Operator, Gatecoin complies with anti-money-laundering (AML) and know-your-customer (KYC) controls and procedures. They have also established a consistent dialog with the Hong Kong Monetary Authority (HKMA) and Securities & Futures Commission (SFC) to continue discussions on the regulation of blockchain assets as a legitimate class of alternative investment.
Some users might wonder what the actual benefit of compliance to such a high degree would be with an exchange. Menant explained that when that the business entity that you’re conducting trades with is on the right side of major governmental regulatory bodies, your funds are likely to be much safer than with other exchanges.
Common wisdom suggests that traders should never store large amounts of their assets in an exchange; yet this is still a common practice among some. For these traders, Menant offers this peace of mind:
“Security is our number one priority, which is why we store the majority of our cryptocurrency and token funds on multi-sig vaults in cold storage. This can cause some delays when processing large withdrawals but we are transparent about this with our customers, and they understand that this is for security. We also advise them to store their coins and tokens in their own secure wallets as well.”
From a user’s perspective, another reason that a major trader or just casual buyer of cryptocurrencies or tokens would want their exchange to be so diligent on regulation and reporting is the reduction of risk that their funds could be frozen. Aside from having funds stolen from an account, probably the second most debilitating thing for a trader to have happen to them is to be unable to access their funds or assets while an investigation takes place on their account or if their bank accounts linked to their trading accounts get frozen or shut down.
Menant acknowledged the importance of this concern. “We are very transparent about our licensing and regulatory status and ensure that we keep good relationships with all the banks that we work with. Of course, we cannot just depend on one bank and one account, which is why we work with several reputable international banks and payment processors across Europe and Asia. Our recent partnerships with Microcred Bank and Standard Chartered are good examples of this.”
A Global Perspective
From a unique, human-interest perspective, Menant and Gatecoin support the social mission that cryptocurrencies, especially Bitcoin, were rooted in from their inception. Gatecoin has started a side organization called CoinCharities that charities can use to collect bitcoin donations. Gatecoin is also working with international banks to reduce barriers for the unbanked, bringing low-cost money transfer services to customers throughout Asia and Africa.
As the rapidly expanding and ever-changing cryptocurrencies markets and technologies continue to evolve, it is companies such as Gatecoin which may help push the industry forward to even more mainstream acceptance. By straddling the line between pioneering the ability to trade disruptive Ethereum-based tokens and making sure that it is following all the required regulations, Gatecoin is an example of one company that can adapt to changing environments quickly and responsibly.