- KuCoin’s Business Development Lead for Europe shared his insights with DailyCoin.
- He explained how KuCoin sees the U.S. market and CEX competitors like Binance.
- Centralized exchanges can’t ignore meme coin communities, he said.
For most of 2023 so far, crypto exchanges, including KuCoin, have been tackling the regulatory challenges that ensued following the bankruptcy of FTX. As global regulators close in on crypto, exchanges have been forced to adapt their strategies.
Despite new regulatory conditions, shifting market trends, and fierce competition, centralized exchanges are still dominant players in the crypto space.
On May 23, the International Organization of Securities Commissions (IOSCO) unveiled global regulatory standards for crypto assets. The rules encompass conflicts of interest, crypto custody, market manipulation, and more.
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Just a week earlier, on May 16, the European Union formally adopted its landmark Markets in Crypto-Assets (MiCA) regulation. In the UK, the Parliament’s Treasury Committee proposed crackdown measures on crypto, likening it to gambling on May 17.
Even crypto-friendly Dubai’s financial watchdog called for increased regulation due to concerns about “bad actors” exploiting regulatory loopholes on May 26.
Through these crackdowns, the crypto market has embraced a positive upswing. Amid increased optimism, the market has seen an unexpected return in demand for increasingly obscure meme tokens.
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Presently, crypto exchanges find themselves having to tackle regulatory concerns and demands from users. To learn more about how exchanges are dealing with these challenges, DailyCoin’s Sections Editor Stefan Trapp spoke to Dorian Vincileoni, Business Development Lead of KuCoin for Europe, at Next Block Expo 2023 in Warsaw.
Explaining Crypto Utility is a Challenge in Europe – KuCoin
Dorian Vincileoni shared his insights on the state of crypto adoption in Europe. Leading KuCoin’s business development in the EU involves tackling regulatory issues and also talking to users, he stated.
On May 16, the European Council adopted the landmark Markets in Crypto-Assets (MiCA) regulation. The new regulations aim to provide clarity for crypto businesses, as well as introduce investor protection. Navigating these rules imposes new challenges for exchanges.
According to Vincileoni, working in Europe presents a unique challenge to CEXs, as he highlighted the relative difficulty for explaining to some European users why they may need crypto. It was here that Stefan began his line of questioning.
You lead KuCoin’s business development efforts in the EU, What would you say are the challenges that you face in Europe, and what are the opportunities there as well?
In Europe, I would say one of the challenges is that you will have a harder time explaining to people why crypto has practical utility in their everyday life in the sense that its utility can help you do better than with the traditional financial system. It’s something that’s self-evident in most of the developing world.
Even if there are limitations, you have a hard time convincing them that it doesn’t only make sense; it’s necessary to have such an alternative as cryptocurrency and blockchain technology to the traditional financial sector if only to bring competition.
Regulation is also a challenging aspect because, as we’ve seen, it’s more developed in the EU right now, with the largest developments anywhere on the planet. It’s a challenge and, at the same time, an opportunity. You have to be compliant, you have to provide a service that users can know that they can rely on.
What are the steps exchanges have to take to convince users to adopt crypto?
Well, it’s our job as a centralized exchange, as I mentioned in the panel, to make the user experience easy. So easy and so self-evident that people will not even notice that they are using this complicated technology to transact, send their money, and manage their assets.
When we manage to provide such a user experience, when users really see us as on par with online banking, then the job will have been done. Then we will probably see them more easily switch from traditional users to digital assets providers and centralized exchanges.
‘Crypto Exchanges Responded to FTX Fast’ – KuCoin
With ever more stringent regulations being posed worldwide, some crypto supporters worry that a crackdown on crypto would stifle innovation in the financial system.
Vincileoni shared practical examples highlighting the agility of exchanges in implementing new technologies and responding to market events highlighting how crypto exchanges responded to the collapse of FTX.
You mentioned that crypto exchanges bring innovation that benefits users, can you elaborate on the shape that takes for KuCoin?
Actually, the shape it takes is that we are more flexible than traditional financial institutions. When they make large updates to their services and products, it usually takes a longer time. For example, with this wave of products being developed at the moment, we can see that in a couple of months, centralized crypto exchanges are already getting products out there. So for KuCoin, we are still implementing things.
But let’s say that, for example, you have this new technology; here’s a practical example: the new technology of BRC-20 tokens with ordinals. They managed to implement a new way of creating tokens on Bitcoin Blockchain exchanges. Centralized exchanges took a couple of weeks, if not a month, to just adapt their product and provide a solution for people to be able to trade these ordinals that are, technically speaking, not a major innovation by themselves but very demanding in terms of the resources required to provide the service to enable casual users to access the opportunity.
Speaking of adaptation, how did KuCoin respond to the events of 2022 after the collapse of FTX?
If I’m not mistaken, all the major centralized exchanges were able to provide a Proof-of-Reserve and the state-of-the-art Merkle tree. It might not be as complete in terms of providing transparency as some users want. We will always strive to bring more transparency to this industry, but it was a fast reaction to events that were ongoing. And we took everyone by surprise.
‘KuCoin Is Not Competing with Binance’
Listing small cap tokens is one factor that differentiates KuCoin from its main competitors like Binance. In that light, Vincileoni explains how KuCoin does not see Binance as a competitor. Instead, he believes that all exchanges are working towards developing the crypto ecosystem.
You were eager to compete with Binance during the panel. How do you view your competition with them?
The truth is that we are, they were right on the panel—my colleagues from Binance were right to say that—we are not truly promptly competing against one another because we have different orientations, and the market is so big that we can all specialize in what we do best and continue to develop our products and continue to communicate: because we do communicate a lot after the events of 2022.
So competition is actually quite healthy. We always have the possibility for users to choose other products because it makes us strive to always bring something better to the table, something better for the users.
If one of us is better than another, meaning it innovates to make it better on our end, then all the others also have to catch up. So their users will get some utility as well—competition is not a bad thing.
But the truth is that, with exchanges like Binance, they are not going to focus on listing very small caps or looking for the very small cap projects that we are looking at, that we are investigating and taking close scrutiny at [to identify] what can be the biggest opportunity for our users.
So it’s very complementary because if a project really works well on KuCoin, then Binance can just look at what’s on KuCoin that has worked well and list it. So yeah, complementary elements and components can be found even amongst the biggest players—which is kind of reassuring if you think about it.
Vincileoni’s remarks demonstrate that efforts towards more adoption and common sense regulation unite major players in the industry. As the industry faces increasing pressure, crypto companies may act from an industry-first perspective rather than as competitors.
On the Flipside
- KuCoin was recently targeted by a New York Attorney General lawsuit allegedly failing to register with the state. The exchange denied receiving any legal documents.
- KuCoin’s main focus is on emerging markets. In 2022, the exchange said that over 115 Million Indians invested in crypto.
Why This Matters
Centralized exchanges are still the dominant players in crypto. Understanding the challenges exchanges face is essential to navigating the current crypto ecosystem.
Read more about Europe’s latest crypto regulatory push:
Why the EU’s MiCA Approval and Crypto Tax Changes Matter
Read more about Temasek’s failed investment in FTX:
