The End of The Gold Rush: New Opportunities for Crypto-Tokens in the Regulated Environment

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The crypto year 2017 was like a rollercoaster ride for everyone involved. What opportunities and challenges now arise for companies and banks?

Bitcoin, Ether, Litecoin and Ripple: Various blockchain-based cryptocurrencies are currently dominating economic news. The reports of fantastic gains and equally nightmarish crashes entertain the interested public and shake the courageous adventurers who have ventured on the virtual floor. These stories are a little reminiscent of the great Klondike Gold Rush: Every day he produced new millionaires — but luck was not long lasting for them: Not infrequently, they were soon met again in rags wrapped in their claim, because they have the beautiful gold had been taken off by a few dark figures.

Confidence in the financial system was at stake

The impact of this development has surprised many observers — the blockchain technology and the tokens created on it seem now to be the only salvation panacea for many financial adventurers. The economic volume around Ethereum and Bitcoin has apparently developed completely detached from the usual financial players such as banks and regulatory bodies. Banks have no insight into what their clients have been doing in the past few months on the crypto-floor. They have missed trends such as ICO (Initial Coin Offerings) or TGE (Token Generating Events) — these new forms of financing were basically illegal from the perspective of traditional banks, so they largely ignored them.

New players entered the market: crypto banks such as Coinbase or exchange bureaus such as Bitfinex, Etoro, Kraken, Binance, Yobit and many others provided the market with liquidity in a completely uncontrolled and unregulated way. But this market is not just a backyard in the neighborhood — it is the international financial system that sees itself threatened here in its foundations and its credibility.

Crypto-regulation: The wind turns

And so financial controllers all over the world — in Asia and the US and i especially in Europe — began to monitor the situation closely and take regulatory action.

The overseers are guided by different motives. However, a look at EU certainly provides information on the necessary measures in the interests of comprehensive investor protection: the focus here is on a strict categorization of the typology and legal scope of tokens. Pure utility tokens, which only give the user the right to use a service, are to be valued differently than those that represent shares in the company itself or in goodwill.

As part of these measures, the classic financial players and banks will also get the green light to enter the market and seize new business opportunities. In particular, they can offer their customers the highly demanded services in the environment of cryptocurrencies. In short, there will be stronger regulation that will create more obstacles for fraudsters and more opportunities for economic agents seeking technological efficiency. 2018 will be marked by the search for the key app that brings blockchain technology into the mainstream.

Time to Market — at any price?

But how should companies address this emerging market — just like the classic business? The former truths no longer apply to blockchain technology, processes and technologies continue to evolve rapidly. The use of cloud services shortens development time through massive reuse. On the other hand, the area around the Blockchain represents a new technical area: the services are currently being developed with great vigor, but the degree of maturity is by no means always suitable for business-critical processes. A solution that is too fast and under-tested will involve investment and reputational risks that are difficult to ignore.

Author: Marko Vidrih @cryptomarks

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