Sharing guest: Joy lee, Business Director of ChainUP
Live time: Jan. 19 10:00 PM Singapore time
Questions & Answers
Q1: Since 2017, ChainUP has served more than 600 customers worldwide, covering almost five continents. How has ChainUP developed and what is its current status?
A: ChainUP was founded in Singapore in 2017. Initially, ChainUP was positioned as the world's leading blockchain technology service provider, focusing on the exchange field, providing exchange technology solutions to customers. Due to the market demand and team collaboration, after four years of accumulation , we have served more than 500 customers. As ChainUP continues to grow in the industry, we continued to launch new businesses. In 2018 and 2019, we launched wallet solutions, liquidity solutions, and in 2020, we launched mining brands Origin Storage and KingHash. In 2021, ChainUP Group established a cryptocurrency asset management company with a CMS license. ChainUP has achieved good results. In the last four years, ChainUP Group has served more than 600 global customers covering five continents and more than 30 countries and regions.
Up to now, ChainUP has a team of more than 200 people in Singapore, Japan, South Korea, Hong Kong, Canada, the USA and other countries.
Q2: In 2021, the global regulation of the cryptocurrency industry will be more stringent, especially the taxation, anti-money laundering and stablecoin risks of cryptocurrencies have attracted widespread attention. What are your thoughts on regulation of the crypto industry?
A: Encryption currency in give financial facilities at the same time it still has the potential financial risks, such as market risk, credit risk, operational risk, and so on, its unique anonymity can give money laundering, tax evasion and other illegal ACTS to shield, and encryption assets flow of globalization, and a single regulatory status of sovereign states, also bring difficulty to encrypt assets supervision. The explosive growth of stablecoin makes it not only normal transactions, but also illegal activities such as fraud, money laundering and illegal financing. Therefore, although crypto assets have not had a substantial impact on the stability of the financial system, market manipulation, fraud, inadequate investor protection, money laundering and other problems exposed in the development of crypto assets have attracted widespread attention from regulators in various countries.
Blockchain cannot develop without interacting with the global regulatory system, and regulation is a step forward that the industry must take. Clear regulation will help clean up the mess and encourage innovation to flourish. Therefore, strict regulation means that the encryption industry is more mature, which is actually a good signal for the encryption industry.
Taking the US and Singapore as examples, the US contributed several positive information to the cryptocurrency industry in 2021, such as the listing of Coinbase and the first approval of bitcoin futures ETF by the US Securities and Exchange Commission, which have reflected the mainstream capital market's recognition of cryptocurrency in the US. Another positive point is that the United States is the center of BTC mining in the world, and several crypto mining companies have been listed on NASDAQ.
Singapore is one of the most important markets for cryptocurrencies in the world and one of the jurisdictions that has established regulation of cryptocurrency exchanges. It is more open and inclusive than other Asian countries in terms of regulation and compliance. During 2014-2018, the Singapore National Regulatory Authority (MAS) expressed its position on cryptocurrencies, operating ICOs and licensing of Singapore cryptocurrency exchanges; In 2019, the new Payment Services Act came into force, introducing two types of licences: small payment institutions and major payment institutions. Now, those running cryptocurrency exchanges will be licensed in Singapore. We anticipate Singapore's policies in advance and have been conducting global business with our Singapore headquarters as the core since 2019. In terms of licenses, Singapore has issued five RMO licenses in addition to PSA, and we have helped our client get one.
All these show that strengthening supervision is not "suppression" as some people understand, but to improve the industry access standards of the exchange, protect the rights and interests of investors, and contribute to the healthy and stable development of the industry in a benign direction.
What is gratifying is that more and more customers are actively learning about local regulatory policies, actively embracing compliance, and embracing supervision, which is simply exciting.
Q3: What are the differences between the regulatory policies of popular countries such as the United States, Singapore and Japan? How does ChainUP's system meet regulatory needs in different countries?
A: It says that by 2021, overseas countries will pay universal attention to the tax, anti-money laundering and stabocoin risks of cryptocurrencies, which can be regarded as the common regulatory policies of major countries. There are many differences. For example, supervision in the United States has two obvious characteristics. First, from the perspective of regulatory subjects, there are many departments and institutions involved in supervision. Second, from the perspective of regulatory tools, there is a tendency to incorporate cryptocurrencies into the existing legal framework rather than rebuild a new regulatory system.
Among Asian countries, China has banned all cryptocurrency-related activities ; Japan, South Korea and Singapore are very active in issuing central bank digital currency or participating in the research and transnational cooperation of central bank digital currency. The supervision of issuing and trading of digital currency is gradually clear. The governments of South Korea and Singapore also support the application of blockchain technology.
Other regions, such as the European market, including France, Spain, Germany, Switzerland, Italy, Sweden, Russia and Portugal, and other European countries have introduced relevant regulatory policies. These regulatory policies mainly target anti-money laundering, stablecoins and central bank digital currencies. Overall, European countries are more positive towards central bank digital currencies, but increasing regulation of anti-money laundering and stablecoins.
Countries in West Asia and the Middle East have shown a positive attitude towards mining, and their central banks are also very positive towards central bank digital currencies. Countries in the region hope to promote blockchain-related industries through a friendly policy environment to benefit their economies.
While there are differences in regulation, the main focus is the same, that governments don't want to stop and kill innovation and they are all exploring a more appropriate direction, but need to prevent fraud and bad activities. ChainUP has been actively exploring and developing systems to address these concerns. Generally speaking, there are three aspects:
Physical regulation: For example, the Malaysian government's current regulatory policy on exchanges requires that the exchange's source code should be placed on local servers. To do so, customers can choose to use ChainUP's privatization service. Our privatized source code is very open and the full source code can be deployed locally, including our wallet system, can be set up under the supervision of the Malaysian government.
assets supervision: such as in Japan , you need to use the wallet which is under the supervision of the government , therefore, ChainUP also open to provide developers a good exchange system and complete the API documentation, and a professional development engineer guidance, to help customers to embed the exchange system change wallet, solve the technical problems in the process of compliance to exchange better.
Accounting supervision: The current regulatory policy in South Korea is account supervision, including liquid accounts and user transaction information. For liquid accounts, ChainUP liquidity system can split all customer transaction data and provide all account information; As for user transaction data, merchants can freely export account information of all transaction users.
Q4: What are the common requirements and standards for exchange infrastructure in each country? How does ChainUP do this?
A: To answer this question, firstly, we need to understand the infrastructure of the exchange, such as operating qualifications, system architecture, servers and databases, user account assets, etc., which constitute a relatively complete and operational exchange.
Each country does need to meet certain requirements and standards for local exchanges. The first one is operation qualification. For example, Washington of the United States stipulates that digital currency trading platforms must register with SEC to become national securities trading platforms or obtain licenses. It also requires an independent third party to review it and to buy a certain amount of "risk guaranteed bond" that is related to the amount of trading done in the previous year.
Singapore requires all cryptocurrency exchanges to comply with anti-money Laundering (AML) and Countering the Financing of Terrorism (CFT) legislation. In particular, cryptocurrency exchanges must perform procedures to identify token issuers and then place corresponding tokens on their platforms. Japan as early as 2017 issued a series of standards and rules for digital currency exchange must have the authorization of the Ministry of Finance and the financial services agency in Japan, and the financial services agency will put Japan's virtual currency exchange comprehensive regulatory framework, including internal monitoring exchange system, check the customer asset protection mechanism, as well as the possible site inspection.
In addition, the personal information of users on trading platforms is also the focus of government regulation. For example, relevant regulations in Japan require Japanese Bitcoin exchanges to maintain minimum capital (reserve) requirements, separate customer accounts, and adopt AML and KYC operations. A Compliance licence in Switzerland means that the company is in strict compliance with AML and KYC regulations and is subject to FINMA regulation.
Therefore, in system research and development, we also pay more attention to the compliance requirements of customers. Besides KYC, do you have a license? Are digital currencies recognized in the country where they are registered and operated? Will it face regulatory risks? We have also developed more compliance systems, such as KYC system docking, AML chain data anti-money laundering docking, and a set of perfect security risk control system to ensure the security of server and database, wallet, background management and other aspects. That would give regulators broad confidence that exchanges can meet their compliance standards, helping them get around further regulatory hurdles.
Q5: In the long run, compliance is an issue that exchanges have to pay attention to. In order to develop compliance, what aspects can exchanges start from?
A: First, you need to understand and research the latest compliance policies of each country; You can then apply for a digital currency license in some jurisdictions where you operate based on the exchange's customer base and market development goals; Currently, the most popular jurisdictions to license cryptocurrency exchanges are Japan, the United States, Singapore, and the United Kingdom.
The licensing process for a cryptocurrency exchange includes the following:
1. Register the company in the selected jurisdiction. Typically, top exchanges are structured to include several companies with common functions that should optimise taxation and spread risk.
2. Open accounts for business related needs; Hire special employees, whose list varies from state to state (typically, appointment of AML officers [experts responsible for implementing AML policies], compliance officers [experts responsible for communicating with other mandatory requirements set by law];
3. Prepare necessary technical equipment and software;
4. Collect and prepare documents required for operation activities.
The second is to meet the standard AML requirements for opening a cryptocurrency exchange. If you want to open a cryptocurrency exchange, you should carefully check the anti-money laundering legislation of your chosen jurisdiction. Typically, cryptocurrency transactions need to perform the following as part of their activities, such as: perform complex RYSK analysis procedures (due diligence); Regular training of personnel; Drafting internal certificates to minimize money laundering risks; Accounting; Report activity in relation to suspicious transactions and regularly notify the authorised authorities of such transactions.
More detailed content, can consult relevant law firm or license plate agency company in actual operation.
If you already have an exchange and are operating, it may be a matter of assessing whether or not all aspects of the system are in compliance with local requirements and then working on them.
But if you are currently planning to set up an exchange, you may want to start by buying/developing a digital currency exchange system, and it is best to consider compliance issues from the beginning. You need ChainUP to help you build a compliant trading system that will save you a lot of time.
Q6: ChainUP's exchange system is divided into private deployment and SaaS deployment. How should customers evaluate whether to go private or SaaS in terms of compliance?
A: The criteria for choosing between a private or SaaS deployment is not compliance, as both are currently compliant. Compliance is a general direction, so we want to ensure that all customers using our systems are compliant, both private and SaaS customers.
So which deployment mode should the customer choose? It can be referenced from team size, technical strength, flow and so on.
For example, the customer already has technical personnel and the ability to do their own development, and has high requirements for customization. We will recommend him to use privatized deployment, because privatized deployment will provide part of the source code, support independent development, assets are controlled by the customer independently, and data privacy is higher. And customers can carry out secondary development, product scalability will be stronger.
If the customer has a small team and no technical staff, but a high volume of traffic, then he is better suited for SaaS deployment. Our SaaS trading system enables customers to quickly set up an exchange and share the liquidity of ChainUP's 500 + SaaS exchanges.
Interested in learning more about ChainUP trading system? If you need, please contact ChainUP to talk about your needs!
