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Many thanks to Miguel Cuneta for this industry insider view of things...

Miguel Cuneta@MiguelCuneta

People are saying that the FTX shit show is happening because of lack of oversight and regulation.

I disagree. When we started our Bitcoin exchange & money transfer service in the Philippines in 2014, there was ZERO regulatory clarity.

Banks shut down our business accounts -

Miguel Cuneta@MiguelCuneta

- as soon as they saw we were a bitcoin business.

There was no oversight from any government authority.

Other local exchanges like @coinsph & @MoneybeesPh were operating too.

We experimented with a lot of different products and services to see what would stick.

Miguel Cuneta@MiguelCuneta

Merchant adoption, payments, e-wallets, remittance, orderbooks, BTC via SMS, social media BTC apps, you name it, we tried it.

We never asked permission to do it and just did it.

It was a tiny niche market, yet we experienced hockey-stick growth those first couple of years.

Miguel Cuneta@MiguelCuneta

Did any of us fuck around with user funds?

Never.

We all held ourselves responsible for the integrity & reputation of this nascent industry for which we were blazing a trail.

We then approached our central bank @BangkoSentral to help us create a framework for the industry.

Miguel Cuneta@MiguelCuneta

By end of 2017, it became official:

Our Bitcoin startup received the first ever Virtual Currency Exchange license issued by the central bank, along with @coinsph.

We were finally able to operate like a normal business and engage with other businesses commercially.-

Miguel Cuneta@MiguelCuneta

The downside:

It raised the cost of doing business.

We were regulated as a money service business & reported to the anti-money laundering commission.

In the end, the trade offs were worth it.

It started a boom in our industry, with a total of 19 companies supervised today.

Miguel Cuneta@MiguelCuneta

Today, if you want to operate as a VASP (Virtual asset service provider) in the PH, you have to apply for a license to operate & pass the rigid standards set by the BSP in this framework.

Just to give you an idea, there are some of the things you need to start an exchange here:

Miguel Cuneta@MiguelCuneta

Minimum paid up capital: PHP 10M for non-custodial, PHP 50M for custodial

A sound business plan that will be assessed by the central bank.

A complete compliance framework that consists of tight controls with internal oversight and external audits as a requirement, -

Miguel Cuneta@MiguelCuneta

- KYC implementation policies with strict limits / identity requirements, & a chief compliance officer that does not report to the CEO but only to the Chairman of the board, to external auditors, and to the central bank.

Audit committees.

A corporate governance framework with -

Miguel Cuneta@MiguelCuneta

- a board of directors consisting of at least 5 individuals with a minimum of 2 independent directors not affiliated with the company.

An IT infrastructure & outsourcing risk framework that identifies all potential points of failure, requires the implementation of full backups -

Miguel Cuneta@MiguelCuneta

- , disaster prevention, customer protection, customer redress mechanisms, and customer education.

An Electronic Payments and Financial Service License.

This is a thorough assessment of the applications that will be used by the company & can take a few months to complete.

Miguel Cuneta@MiguelCuneta

A thorough vetting of each person on the board of directors by the BSP, including requiring the ultimate beneficial owners to provide financial documents, police clearances, tax clearances, and the like.

And more...

Some might think this is too strict and can stifle innovation-

Miguel Cuneta@MiguelCuneta

= but the trade off is you can’t run a fly-by-night crypto exchange in the Philippines.

We’ve had this framework for 5 years now, recently updated in 2019, and it took our small industry in this corner of the world almost 10 years of blood, sweat, and tears to build it up.

Miguel Cuneta@MiguelCuneta

No, it isn't lack of regulation that caused this shitshow.

It's pure greed and hubris.

Some exchanges/wallets from pre-2013 era like @Bitstamp, @krakenfx, @coinbase & others are still around today, still serving the best interests of their customers, operating transparently,-

Miguel Cuneta@MiguelCuneta

- with integrity & a love for this industry as a whole.

Some of them are still unregulated, yet operate with higher, self-imposed standards than many financial institutions in the world.

The damage from previous industry failures took years to undo.

This one is no exception.

Miguel Cuneta@MiguelCuneta

How will the industry recover from this?

No different from how we did in the last decade of Mt. Gox, massive hacks, the fork wars, bitconnect, China mining ban, Luna collapse, state level attacks, & too many others to mention:

Just keep building.

Miguel Cuneta@MiguelCuneta

It will seem bleak for a long while, but in my experience, as long as the #Bitcoin blockchain keeps producing uncensorable, permissionless, & transparent blocks of  cryptographically & thermodynamically assured settlements, there is hope.

We will recover.

Tick tock, next block.

Miguel Cuneta@MiguelCuneta

Also, not your keys, not your coins.

Withdraw your Bitcoins off exchanges unless you are actively trading.

Do it now and sleep soundly at night.

And to end this with good news, only 495 days until the next #Bitcoin halving.

#HODL

Miguel Cuneta (@MiguelCuneta)
People are saying that the FTX shit show is happening because of lack of oversight and regulation. I disagree. When we started our Bitcoin exchange & money transfer service in the Philippines in 2014, there was ZERO regulatory clarity. Banks shut down our business accounts-

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