Social encounters

Q’s Timestamped:

0:25 For someone who has never heard of cryptocurrency at all, how would you explain OmiseGo? Who in the world is benefiting from this, and how are they benefiting?

2:20 What would be a consumer side or a business side example of when someone is going to be using OmiseGo in their daily lives?

3:16 I see four main categories that a project strives to achieve: security, decentralization, speed and cost. With these four in mind, how is plasma competing, or one-upping what these other projects are doing?

4:46 Ethereum is moving to a new consensus model, how does that impact OmiseGo?

5:01 In terms of ease of use, would you say OmiseGo is “grandma proof? What is the process for using the service?

8:43 Within these last couple years, there’s been a lot of new competitors in the the payment processing space that do daily transactions such as the Coinbase Card or Crypterium. How is Omisego differentiating itself, apart from those, and what your competitive edges over these solutions that are potentially very easy to use?

10:05 What is the status on Plasma?

13:45 What is the status of the DEX?

15:35 What is the status of the Wallet?

17:08 To the people who are concerned about the development roadmap and delivery, what would you say to “put their heart at ease”?

21:08 Is it possible for OmiseGo to “not work”?

25:01 What are you most excited to be working on right now?

27:01 What would you want somebody to build in your developer program?

Panel Highlights from Bank of Thailand Fintech Fair 2019 — A panel on Decentralized Exchanges, Taxes, and Regulations in the Blockchain Industry

Last month, Kasima, OmiseGo CTO was invited to the Bank of Thailand Fintech Fair. There, he gave a talk on Plasma, and was on a panel that discussed decentralized exchanges, taxes, and compliance regulations around the blockchain industry.

Kasima was joined by Anthony Lewis of R3, Billy Rennekamp of Tendermint, Sagar Sarbhai of Ripple, and panel moderator Paul Sim from Deloitte.

If you’re interested in the full discussion, you can watch the video below. There are also transcribed highlights from the event:

Billy: Digitizing and tokenizing assets is the future, but where will the liquidity come from? Am I correct in assuming that projects are trying to address this issue by creating Decentralized Exchanges? If so, what’s so exciting about these DEXs?

Kasima: You’re right, it’s why OmiseGO is building a DEX too. At this point it’s about creating an exchange that can fulfill the needs of the market, as well as cultivate a healthy market structure.

The exciting part is seeing how DEXs have evolved. It initially started by putting all order books online, and so EtherDelta was a thing. Then, we saw tactics like centralizing order matching and then clearing everything at the settlement layer — which is what was decentralized.

Now, with user swapping, a DEX basically processes exchanges asynchronously. We’re finally at a place where it’s not just theoretical. But we’re answering questions like what it means to be a market-maker and create liquidity.

Paul: I also want to add that just because an asset is tokenized or listed does not mean it’s liquid — liquidity comes from buyers and sellers.

Paul: Is it right to believe that private markets will adopt DEXs first because they’re more controllable and customizable? As compared to public markets which are large and chaotic?

Sagar: It comes down to regulations and the fact that we need institutional investors, who only come in once the market is liquid and perceived as ‘safe.’

To bridge the gap between safety and liquidity, some markets have come up with passive exchanges. For example, the Thai, Philippines, and the Abu Dhabi Global Market are great examples of markets with a framework of ongoing investments.

Even though the entire premise of blockchain is anti-regulation, being regulated is necessary. Because as more markets get regulated, more businesses invest, which creates more transaction volume, and so on.

Billy: Market making isn’t new, but there are all sorts of rules in traditional finance. So I often wonder how everything can be transferred to a system when money is a primitive in a programming language. What remains public or private? How does a transparent exchange work and can it keep up with transaction speeds?

Kasima: That’s a good point. Privacy and intent-hiding are important when it comes to making markets function. There might be ways to deploy zero-knowledge codes and secret algorithms so market-making remains hidden on-chain.

As for speed, the exchange being asynchronous can solve that problem.

Paul: Plus, a Swiss Digital Stock Exchange Deloitte works with has decided that whatever happens before the trade doesn’t need to be on-chain.

Kasima: So in simpler terms they take the execution off the blockchain and just put the clearing and settlement on it?

Paul: Yes, people want centralized orders books so they can set bids, split them, or cancel them without having things confirmed on the chain. Once there’s a match, then the blockchain gets involved.

Billy: But that’s how 0X works and we haven’t gotten the response or liquidity we expected?

Kasima: 0X doesn’t exactly play towards the market-maker role, there’s product work that seems to be missing.

For example it takes money to cancel an order on 0x, and a lot of market-making algorithms involve cancelling orders. Small things like these is what I call product work. In the end it’s all about unlocking the general public’s participation in these services.

Anthony: This conversation was a great way to highlight the differences between a traditional and modern financial ones. In the ‘new’ market more privacy will enable liquidity. In a traditional market, as long as people back the asset and trust it, there will be liquidity.

Anthony: But when you keep things private, doesn’t that make it a challenge for regulators?

Kasima: We look at regulations like an unblocker, something that will add liquidity to our products. But we don’t make statements about regulations on the technology we’ve built, we put that on the application-level. We just know that regulatory compliance will bring more usage to our network.

Anthony: Sagar, you’re an expert with regulations, how do you get your point through to so many different countries?

Sagar: Times have changed, nowadays central banks want to keep up with developments and are quite welcoming. Great examples are Bank of Thailand, NAS, Phillipine VSP, all are inviting and love collaboration.

We just have to make sure that we listen to what they’re saying and tailor our products to comply with the regulations.

Paul: Any final thoughts

Sagar: I just wanted to add that if someone believes that there’ll be one blockchain that’s going to rule the world, it’s not going to happen. The need of the hour is how to connect different blockchains using interoperable protocols!

Kasima: I also think it comes down to the kind of thing you want to interoperate. The frontier is how you start interoperating other forms of stake and execution. And even though we haven’t figured it out yet, I know it’s going to be fun.

This month, we get to know a bit more about OmiseGO’s compliance and regulations advisor Tipsuda Thavaramara — who the team first featured in their AMA bonus question on regulations. With over 20 years of experience in the field of regulations and compliance in Thailand and South East Asia, let’s hear what she has to say about OmiseGO and the highspeed ecosystem of blockchain and the fintech.

Q: Could you tell us a little bit more about yourself, your background with the Securities and Exchange Commission (SEC), Thailand and how all this has brought you to OmiseGO?

I was at the SEC for 26 years. My last position was Deputy Secretary-General in charge of policy, markets and intermediaries, and investment management. My most important contributions at the SEC have always been in capital market development. I spent the first ten years at the SEC creating new institutions and legal infrastructure such as the Bond Dealers Club (now Thai Bond Market Association), enabling rules for short selling, securities lending, derivatives law, and the non-voting depository receipt (NVDR) scheme as a solution to the problems related to foreign ownership. The subsequent ten years, I worked on several areas of market liberalization such as brokerage commission, licensing, overseas investment, and cross-border offerings. Then the policy issues in the last four years shifted to disruptive technology and what regulators needed to do to allow the industry to transform in response to change. I led the team that drafted the digital asset law in 2018 and the securities law amendment in 2019 that would allow digital securities issuance through a central securities depository.

I first got to know OmiseGO in 2017 when the company did an ICO (initial coin offering). The activity did not fall under the SEC’s jurisdiction but I invited Donnie and Vansa to come educate my team at the SEC anyway. We kept in touch and in 2018 Jun and Donnie introduced us to Vitalik Buterin. This was at a time when the SEC was in the middle of exploring regulatory options for crypto assets, so that was very helpful. How did all this bring me to OmiseGO? I would like to think that the OmiseGO team feels they can benefit from my policy making and regulatory experience as they move into a regulated market space. For me, joining OmiseGO gives me a fresh experience in an exciting new area.

Q: Can you tell us more about your role here at OmiseGO?

At OmiseGO, I am the compliance and regulations advisor. I help the OmiseGO business development team understand the relevant regulatory principles, standards, expectations, and issues of concerns. This ensures they design products and services that comply with regulations.

Q: You’ve worked with the Thai SEC for over 20 years, what do you see as the biggest changes that technology has brought about in the way individuals, businesses and even countries are doing business?

In my earlier years at the SEC, the securities industry in Thailand operated in a somewhat protected environment. There were fixed commissions and restrictions in the number of licenses and the types of eligible products. The brokerage business needed a large troop of marketing staff. So, competition then meant a race to cut commission rates while trying to steal your competitor’s salespeople. Today, technology allows businesses to have greater and faster access to data and market insight, to offer customer-centric solutions, to reduce reliance on people and to improve the ability to scale. All kinds of functions that can be offered “as-a-service” help lower the barrier to entry for new players. The game has changed almost entirely.

Q: A lot of the technology we deal with today weren’t even available maybe five years ago, so how are regulatory bodies coping with the increasingly digitalized world?

Regulators are always under pressure to promote an efficient and inclusive financial market, while ensuring market integrity, consumer protections and public confidence. The challenges that come with an increasingly digitalized world are manyfold: the borderless nature of internet transactions, the shift from humans to algorithms, the increasing decentralization of markets, the blurring of lines of product or activity classification, and the speed at which all this is happening. Regulators are not used to the idea of not being in control, so the most common response given time constraints would be to try to fit what they see with existing rules, even though those may not always fit. Even if they accept that what they see needs a new type of treatment, it is difficult to step out of the existing boundary, and some may end up with the new rule being an offshoot or clone of the existing rule. At the same time regulators will cooperate and share information and experience, and a new standard might soon emerge. They will also rely more on education and information transparency as a tool for investor protection, rather than relying primarily on themselves to grant permission for everything.

Q: What do you think are the biggest hurdles blockchain and crypto projects face when vying for mainstream adoption and how do you think they can overcome them?

I think one big hurdle is that consumers, businesses, and regulators are not entirely comfortable with the idea of not knowing who to hold accountable should something go wrong. Therefore we see all kinds of intermediaries being reintroduced into what is supposed to be a scheme without intermediaries. Crypto projects need to identify where and how they can address this trust and accountability question. During the earlier phases of mainstream adoption, permissioned or consortium blockchains will probably find it easier to break into the mass market.

I see OmiseGO succeeding in this area through proper regulation compliance on the network level, replicating traditional finance market structures within blockchain. This move will allow for institutional players to enter the space –triggering the next stage towards mass adoption.

Q: Where do you see blockchain and crypto heading in the next five years in Thailand and Asia?

In the next five years, I think there will be a lot of progress in mainstream adoption, but mostly with permissioned blockchains. We should see more traditional assets becoming tokenized, allowing peer-to-peer trading and real time settlement. And that will change the future of exchanges and clearinghouses.

Q: What role do you think OmiseGO could fill when it comes to regulations and the blockchain ecosystem?

With more and more mainstream adoption of blockchain and crypto technology, OmiseGO’s financial services will likely fall into a regulated space eventually. If its products and services are deemed to be not only compliant but also at the forefront of trust mechanism design, that would be a strategic advantage. The question of trust and accountability will remain central to the future of blockchain, and to the objective and design of regulations. OmiseGO is adding value here through cheaper transactions, a fast and scalable network, and through proper regulatory compliance — as I’ve mentioned above.

Upcoming events:

October 08th-11th, 2019: Devcon 5 in Osaka.

OmiseGO AMA 27: This month OmiseGO team leads to respond to community questions about the P2P payments function of the OmiseGO Network as detailed in the recent post Meet our P2P Payment Network. 3 out of the top 5 upvoted comments will receive a response via the OmiseGO blog before the end of the month.

Responses to previous OmiseGO AMAs: AMA #1, AMA #2, AMA #3, AMA #4, AMA #5, AMA #6, AMA #7, AMA #8, AMA #9, AMA #10, AMA #11, AMA #12, AMA #13, AMA #14, AMA #15, AMA #16, AMA #17, AMA #18, AMA #19, AMA #20, AMA #21, AMA #22, AMA #23 with Hoard Exchange, AMA 26 with Integration Team.