2018: The Year that Was
Blockchain and cryptocurrencies to disrupt Finance, logistics, retail and other industries, in the future. But none of that has happened yet. In fact, 2018 has been a very tough year for cryptocurrencies.
We sit with Prashanth Swaminathan, Founder & CEO, XDAT to get his view on the most defining moments of crypto in 2018 and what’s next for cryptocurrencies. A veteran investment banker at Morgan Stanley, London, Prashanth is an expert in structured finance and has over a decade of experience in the field. In 2018, he founded XDAT – a digital asset exchange – and currently leads all its efforts towards growth, adoption, team and regulatory aspects.
XDAT stands for ‘Exchange of Digital Assets with Trust’, an EU based global fiat-to-crypto exchange. XDAT aims to redefine the global landscape of cryptocurrency trading by becoming a globally trusted brand that sets its policies and procedures in full compliance with the incumbent regulations of its jurisdiction.
Q) What were the most iconic moments for Bitcoin this year?
In my opinion, Bitcoin had an eventful year:
- Mainstream launch of Lightning Network, accentuating the status of Bitcoin as a medium for everyday transactions. In fact, the number of merchants using the Lightning Network has increased to over 4,000.
- IMF head Christine Lagarde acknowledging that cryptocurrencies such as Bitcoin would facilitate faster and inexpensive payments.
- The SEC suggesting that Bitcoin is not a security.
- Some big miners like Giga Watt having to shut down and file for bankruptcy. Although there were a lot of fake news around this topic!
In general, while price action has not been encouraging, that is not of particular concern to long term believers. I believe this space has shown evolutionary spirit this year which is critical to its longevity.
Q) In your opinion, were there any major impact on the public perception of cryptocurrency due to comments or activities of any influential figures?
In short, yes. As this space is mostly unregulated there is no restriction on what anyone can say.
For instance, Craig Wright, who massively splits opinion, has been going after ETH XRP and BTC. He has publicly declared that ETH has no use case post SEC’s crackdown on ICOs, has called XRP an illegally unregistered security platform, and most recently commented on miners routing hash rates away from BTC for the BCH hash wars which probably precipitated the price fall in BTC last month.
Additionally, Vitalik and Ethereum foundation team have been constantly pushing back key upgrades such as sharding that has also probably impacted the perception of Ether.
Outside of cryptosphere, Jamie Dimon and Warren Buffett have been quite vocal about their dislike for bitcoin and cryptocurrencies. However, Mohamed Aly El-Erian has been supportive, Goldman Sachs has invested in crypto related entities, and Fidelity launched an institutional platform to trade crypto. So it is apparent that traditional finance is beginning to look favourably towards this space but there is a long way to go for wider adoption.
Q) What were the most noteworthy legal moments for cryptosphere this year?
Undoubtedly SEC’s stance to bring Cryptocurrencies under regulatory purview tops the chart. I firmly believe that regulation is important and will dictate adoption in this space.
Be it SEC’s take on cryptocurrencies versus securities, their insight on ICOs, charging celebrities like Floyd Mayweather and DJ Khaled, or rejecting Bitcoin ETFs – SEC has make it very clear that their primary concern is investor protection.
Outside of the US, The Financial Service Agency in Japan is evolving its licensing framework for exchanges and replacing the term Virtual Currency with Crypto Asset to prevent them from being misinterpreted as legal tender.
Malta’s Prime Minister Joseph Muscat tweeted to welcome Binance to move their exchange to Malta and drafted a framework on the back of it. This was pivotal for the exchange community.
In India, one of the sleeping giants in this space, RBI restricted the banks from operating accounts for crypto exchanges, thereby debilitating a thriving crypto market.
Q) Tell us about the significant crypto price movements that there significant for the industry?
In my opinion, there were few substantial price movements this year. Bitcoin dropping below the psychological mark of 6000 has to be on the top. Although the prices have been falling for the whole year, level of 6097 followed by 5700 was deemed as strong support. XRP taking over ETH to second position is also significant as they seem to have been rewarded for positive actions and strong marketing.
We are also beginning to see coins and tokens getting relatively less correlated to the price of bitcoin (XRP, Waves, ETN, etc). All of these projects have shown tangible progress in their businesses, which shows that investors are now thoroughly evaluating projects before planning their investments.
Q) Globally, how are the governments reacting/will react to cryptocurrency?
It is a wide range. Japan is at one end of this spectrum as one of the most friendly countries that has embraced cryptos and is issuing regulatory licenses and constantly evolving them. At the other end of the spectrum are countries such as Saudi Arabia and Pakistan that have outright banned trading in cryptos (although I am not sure how these are enforceable).
All other countries are in the middle, although there has been a lot of movement to the left of the spectrum (towards Japan) with many other countries preparing regulatory frameworks and looking favourably at this space (US, Australia, South Korea, Bahrain, Thailand, Philippines, Malta, etc).
Globally, cryptocurrency has been embraced by a few governments, institutions, and individuals but it has yet to be adopted by the masses.
Q) What do you think would be the catalyst that would encourage consumers to use crypto for everyday transactions?
Three things would encourage consumers to use crypto for everyday transactions – cryptos have to be easier to access, trust needs to be built, price volatility has to decrease. All these variables are interlinked. XDAT is taking a long-term vision and aiming to build a long-term trusted brand with products that can enable wider adoption.