Cryptocurrencies Could Be the Winners, As Recession Forces a Rethink
Recession, a progressively more favorable regulatory view, a superior comprehension of the technology, and traditional investors turning to crypto — are all key factors that are bringing acceptance to crypto, according to Julian Sawyer, Gemini’s Managing Director (MD) for Europe.
In contrast to past recessions, this one has had an effect over the entire ecosystem of the economy — across all ages, jobs, classes, and skill levels — even the ‘jobs for life’ have been affected, the MD of the crypto exchange said. However, it might conceivably benefit crypto. Sawyer gave two potential situations that could happen as people try to protect themselves, having seen the dangers of unemployment and questioning the government’s support:
- people will look to save more.
- people will want to run their own financial lives, rather than depending exclusively on their employer and government, which will prompt all the more investing — and this is when a few will look at crypto-assets becoming part of their investment portfolio, regardless of whether that is from an institutional, regulator, or individual viewpoint.
“I can see this being a turning point in terms of people’s attitude to money and thinking about money,” said Sawyer.
There are two other major related factors driving crypto and blockchain into the mainstream path as mentioned by Sawyer.
Only a few years ago, regulators and local authorities would be very apprehensive, challenging and even critical of this industry, things have “changed tremendously in terms of them and other players in the market.” Now, “institutions have understood and are understanding of the (blockchain) technology” and it’s “well-accepted across financial services, not just in the cryptocurrency market, but in financial services,” as the potential answer to several issues.
With regards to crypto, the regulators across Europe and several major financial services, markets “are understanding what this means, they understand the risks and are understanding of what the criteria are for the supervision of regulated companies.” There is a general consensus now that ‘this is going to happen,’ so the question isn’t ‘should we do this,’ but ‘how do we do this,’ said Sawyer.
Another key point prompting the blockchain/crypto acceptance is people changing from the traditional to this new industry, therefor creating a cross over between the two worlds. Gemini has employed people from across the banking sector, financial services, fintech, payment services to name a few, including Sawyer himself, and these people are “helping to legitimize this product.” Before Sawyer started at the crypto exchange, he was Co-founder and Chief Operating Officer at one of the UK’s largest mobile banks — Starling Bank.
Think Global, Act Local.
In regards to Gemini in Europe, Sawyer said that, since crypto is a 24/7 global market, they won’t be developing a ‘European exchange,’ but a global exchange however they will have a local presence. They will run one exchange with all their tech out of the New York office and are currently in the process of obtaining their regulatory license in Europe. They requested their license year ago, establishing “a very engaging relationship” with the Financial Conduct Authority (FCA) in the UK. “We see regulation as absolutely critical in this industry. When we’re going into a market, we get regulated first, and then we launch,” he went on to say “I am hoping that it isn’t going to be too long because we’re ready to go.”
As for differences between the two markets, the MD named the onboarding procedure, especially the customer verification process and the know-your-customer (KYC) as part of the anti-money laundering (AML) process as major ones. However, there may be potentially new processes available down the road, depending on the demand of customers.
In May the news was released that the major investment bank JPMorgan Chase welcomed Gemini and Coinbase as their first crypto clients.
James Stewart
Fundamental Analyst for Global Markets
James has over 20 years of experience trading FX, cryptocurrencies and investments products for a range of investment banks and brokers
He spent the last 10 years analyzing and writing about foreign exchange, crypto-currencies and the global financial markets
He has also spoken at a range of conferences around the globe on various financial topics.
