I'm Leanna. I happen to live in look and I indeed am a chief compliance officer of the next we fly hero Bria and a few other companies. So my company acts as a service provider for compliance services for some of the cricket players. And before that, I was in compliance for Amazon. Just to give you an idea that I might know what I'm talking about, and I wanted to start this presentation by giving you couple of examples of what happened to redly Europe in January when they just launched in Europe. So we fly launched in Europe, had a huge PR campaign. Everybody's excited, received thousands of applications like during the first week server product. And then we started looking at who applied. And then there was so many providers who essentially said, Hey, I am this crypto wallet. I am this crypto provider. I am this blockchain, whatever.
And I don't need any license because crypto is not regulated. Can you please accept me as a client? You know, all these questions came to compliance. So they came to me and we had to really look at this because of course you want to be naming the business and you want to go fast and you want to, you know, not to partner your brothers and sisters in crypto, right? But at the same time, you have your own license. You have to worry about your own reputation and you have to make certain decisions. How you going to differentiate who's legal when who's not. And also who has the acceptable risk of their business model and who isn't. It was tough. And like, sometimes you just have to flip away cause you don't know, but essentially the position that I took over time and so far it has worked. So nobody is going to prison because of my decisions, which is good.
Is this that if somebody is handling the client's money, if somebody is executing transactions on behalf of others, if somebody is making certain decision, whether this transaction needs to happen or should be blocked the post, then usually this is a financial service and it has to be regulated. Not because it's crypto, but because the nature of the service is written. And from my experience, I have seen like three buckets or three types of licenses that might be in played, and I might be wrong because this is really case by case basis and some conversations I've had with regulators. So I've seen several crypto companies applying for payments licenses, for example, beat stamp, beat flyer, and some others. And then they say, I am executing customers, orders of buying and selling digital booths, which is cryptocurrencies. And therefore I need a payments license, both flyer and beat stamp are regulated in Luxembourg.
And Luxembourg was regulator actually took a stance that this is not Iani because the eman regulations are written in such a way that it has to be. In fact, and since you have deposits and coins in and coins out, it's not Fiat only, therefore it's not email. That's why payments license is the appropriate one for these cases. However, if there is a crypto service that is funding a card, or if there is a crypto service that is founding another instrument that is expressed in Fiat, then it would be Iani. And you could see, for example, example is licenses, IMI institution in ter. Well, actually a lot of companies are S IMI in Gibro. Apparently they have different reading of email directive, but it is what it is. At least they been consistent.
Yeah. And the third category that hasn't happened yet, but I think it will, would be method types of licenses. Usually what has to happen. There is some kind of leverage treating CDs. A lot of crypto funds come to me and come like they walk around and they say, what kind of license do I need? Probably it's a brokerage of something else. And some asset trading companies, some blockchain based tokenized, hybrid assets, ideas, and projects. They pop up like mushrooms after the rain every day. And I think they would eventually fall into this category, but I haven't seen anyone being licensed as that operator yet. So remain to be seen. But I personally think this is where it's going. So yeah, essentially more likely than note, if you are handing clients money or executing their transactions, you are somehow in a regulated sphere and you have to get license. Okay. That's right.
Then another challenge that a lot of blockchain and crypto operators see is how the hell do I open the bank account? Especially in Europe, it's incredibly tough. It's not secure. And even if you have a bank account today, it's not guaranteed. You're going to keep it tomorrow. And even the banks who are saying, oh, we are super innovative. We have this innovation hub, we have this innovation department, we just hired the FinTech expert, blah, blah, blah. When you count to them and you say, actually I am doing something. I am having something to do with crypto. They say, well, sorry, we can't open you bank account. Even like corporate activities.
And I think it's, I personally think it's very, very unfair. And it, it represents a lack of understanding of what blockchain based transactions could bring. Because let's say if I come to a bank and I bring 200 euros in cash, it's not even a risk. Like people do it every day. You could do it in your sleep. But if you bring, or if you say that your business model brings 200 Euro value of Bitcoins to your clients, it's no, we can't do this. But if you think about it, there are tools such as chain and or Olympics. And like, they're not my companies. I just really like what they do because I think it's needed. And even like security services use them. They can tell you when this wallet has been created, they can tell you whether they use any mix Singapore or whatever services they can tell you whether the funds come from a recreated exchange, what kind of quality historian do they use? You can never tell this information about cash. So I am compliance expert and I would rather have a client with a Bitcoin than with cash. And I think slowly, but truly things will move there. Well, like people usually say common sense prevails, but it takes time.
And I do think that all the other blockchain and crypto projects, because right now analysis is available for Bitcoin blockchain, I think tutorial would be the next. And then smaller blockchains would probably build something similar because you, you don't really care that my name is Yanna. If you can, you know, track my and risk, assess my blockchain history, this information is much more valuable than my name, my date of birth and my G bill to bill. So this is I think, where it's going. Yeah, I feel I'm so lucky that I'm presenting the second on this topic because it's been very, very true that there was this ICO hype. Then everybody thought ICO was a dad and nobody would ever believe them and nobody would ever invest in them. But now somehow they came back, they came around and they still raise funds. And it's getting a little bit more organized and a little bit more structured, which is a good thing.
So I do share the view and I've talked to several regulators about that. That ICO is a form of crowd funding. And there are historically been like four types of crowd funding that are very well known. You have debt, you have activity, you have so-called product based or rewards based. And then you have charity. So debt and security is out of the picture because if you wanted to do the IP or you would have done it, charity is not really a workable solution unless you are red cross. And then you are left with the ICO structure where essentially you would say a group of people wants to get together to build a product. And then they would kind of share the benefit or you would want to prepay for certain product. That's going to be delivered in the future. Or you would want somehow to receive an advanced payment for future goods and services that you need some time to deliver.
And it's not the first time this happened. It's not the last time this happened, but it's just the problem here is there is no law that says, what is the utility token? So you have to operate with the known terms and known legal structures to define what it is that you are doing. And I think there has been an convergence in terms of how ICO structures are being defined and managed. And actually, if you thought about your structure quite well, it's quite easy to get a legal opinion on that. And what I have noticed that if you have a good legal opinion from a reputable firm, regulators, be Singapore, Switzerland, you know, and some other places they really hate entering into debates with legal first. So they usually just accept it or they ask like two pages of questions, they receive the answers, and then they kind of somehow give you an indication or that of no objection of what the case may be.
And my personal view is that the biggest uncertainty is what about the secondary market for all these talkings? Because you could structure your own ICU and your own talking in a perfectly like safe side of non security, which everybody wants, but then the secondary market happens. And even though IC project would say, no, no, no, no, it's, it has nothing to do with me. I have no intention of interference. It's just happened. It's like, you know, the fact that, you know, that are Gucci back sold on EBA, doesn't make a Gucci back security cause it has a secondary market, but at the same time, it doesn't happen that simple because everybody knows when your coin gets listed, you pass through some due diligence, you have to loan to an exchange and initial pool of tokens to maintain the liquidity. Cause they didn't need to have something to operate and you have to cooperate with every single exchange that lists you for many, many other practical reasons. That's why it's impossible to get your coin enlisted without you know about this. It's not that simple. And this is to where a lot of, a lot of discussions and clarifications need to happen.
You had a question, okay, no, I just have one last slide. And then I will be more than happy to take questions. And this is customer journey because a lot of people ask me, okay, so, you know, compliance, you know, the regulatory framework, but how do you actually go about organizing this whole QAC and everything around cryptocurrencies? And the first thing you need to keep in mind is that there is a certain pattern in how customers behave and it's the same for Amazon PayPal and every single other client working with customers that I have seen, which means that there are, there is a hundred percent people let's say who come to your website of them, about 10% register. And out of this 10%, that 10% will eventually transact. So some people register because they're curious, some people interest, some people don't want download their documents.
You never know the full reason, but the pattern continues. And essentially, if you say that you are strictly going to apply compliance requirements and ask everybody on day one, please send me your utility bill and your ID and video verification or whatever. You know, the latest and greatest Q I C solution. There is in the market. You already know that 80% of them are not going to transact. So you are waiting 80% of your resources on day one. And then the people who are in the middle who are hesitant and might be able to transact. If you push them through too heavy like identification process, they'll just change your mind. You know what, for two Euro game, I'm not going to give you my activity. It's just much hassle.
So if you are designing your ICO process or your platform, registration process, or any other process where you expected to receive a lot of customers, you have to design the verification process and asking for documents over time. You have to know who are likely to be your highest transacting customers, who, who are the people who you want. And only then when they have transacted a little bit, or when you know they're coming, you know, dreamed by a certain promotion that, or always works or something else only, then you have a higher chance of them actually passing through the hurdles, getting ed and sending you the documents and able to transact. Yeah. So that's one of the kind of key learnings that I have seen in the last year. And with that, I am happy to close. And thank you questions. Thank you.
So we have a question here,
I think in today's possible to this DRC 20 tokens on this intro exchanges, because that's kind of the question before that. If it's, it just gets listed straight away because you don't need liquidity since it's just straight away, peer to peer
It's technically I agree with you. It's possible. But every single series exchange that's been challenged, like they will ask, do you have a legal opinion? Do you have some other things? So you have to, in a way, if you want this to stand, you have to talk to them.
Okay. So I think I have to congratulate you that none of your customers has failed compliance.
What you said. Yes. What was the nearest mess?
How much time do we have? You know, like we started receiving questions, for example, from regulators on, can you prove that you have met my security requirements and it's like the country, you, you don't have an activity. You may have some customers. You're not sure that you've never been there and suddenly they send you this letter because they've heard of you and you kind of feel okay, if, so you have two options, how to react. You have to say, you don't have a jurisdiction to asking these questions go away, but polite. I, or you really have to answer the questions. And then there is a big risk. So how do you go about determining how serious they are and can you just, you know, dispute and say, well, you don't have a jurisdiction. This is a tough choice. So that was one example where I really felt that we could get in trouble, but it was okay. That,
Okay. So it, it is perhaps interesting. And this is perhaps a, a question that sort of has a bias towards the other side of the Atlantic, but which do you think is more risky? The regulators or the class action,
Right? That's the very other side of the prompt question. Yes.
But for organizations that list on the exchanges there, that is often the, the biggest issue,
It is a big issue because, and this is actually the reason why many European players exclude us. Customers exclude us, IPS exclude us, you know, even European customers with us beneficial owners because of the risk of the class action. And because you do not want to deal with, you know, potential implications there. So even though I do, I have seen some investors actually investing into some projects, but it was more based on the personal relationship. I know you're not going to get me. Probably you do have an equity stake in my company or in my sister company. And this is where it happened. Very, very privately.
Yes. Okay. So the, the other thing is that you clearly were talking a lot about what we described as the utilities, whereas the, the previous speaking was perhaps saying that the simplest thing is to be a security. You have a feeling on that.
I do, I, I think people who, who would like to issue a utility token or a currency token, they often succeed because there is a genuine role as a utility or currency for the future platform. And in this case, first of all, they don't need to go through all the hurdles of, you know, preparing the perspective, getting a legal opinion, getting it through the audit, getting, you know, all the other paperwork. And secondly, when I watched the cat of the ACC and the CFTC talking to the us Senate, one of the senators asked, look, we know that most of the people don't read these prospectuses. We know most of the people don't read these disclosures. So what's the point of drafting them in addition to just enriching the consultants. So there is a genuine passion in this industry that you don't want to enrich, man, and you don't want to enrich, you know, consultants because it doesn't get value.
And that's why, and people in blockchain are very, very passionate about, you know, having, you know, the power and have more controls. But I think if there is a genuine business reason for a security token, for example, whenever you are talking represents certain digital, right? On some indexes or on some other assets that are regulated, of course people would do it. I know of a couple of companies that decided they will do it. And or there is another way of going about this. They get the funds as a utility project, as a prepay, and then they would say, but when I get the money, I will get my brokerage banking or whatever license. And then you will be able to pay for my fees with this token. So it's still acknowledges the fact that the future activity would be regulated activity of trading securities. But the first step is just a prepayment of voucher that can be only used for buying route and services of paying for the fees, which is you could call it a gap, but there is also, it is a pilot argument to face it out because in the beginning you may not have the money actually to do the prospect and pay the lawyers and you don't have the time.
Yeah. Okay. So you, you are really, you are saying that in a sense, there is a social and cultural element to this, that the people that go for blockchain, see the blockchain as a, if you will, a way of casting off the, the constraints of the normal regulatory systems and so forth to be able to do what they want. More freedom
Oriented. Very, they oftentimes, even this companies are founded by people who spend some time in the corporate world like myself. And they said, I don't want to ask for 25 permissions anymore. I don't want to be in this matrix organization. I want to drive things that I knew I'm willing to take some risks. And I don't want to always follow this proven, you know, paths in a way. Yes. Yeah.
So you, you're trying to find a way of compliance light for
Yes, I am trying it risky. It's scary it, but it's like, you know, if we don't do this today that you know, somebody else will do it, so
There you go. Well, so thank you very much. And I thank.