Technology

Sebastian Dessimose (Taurus): “The unknown for cryptography is regulatory” – L’AGEFI

Bringing together the world of crypto and traditional financial institutions is a “business hub” that Taurus, a digital asset and blockchain company, has placed itself in, according to its co-founder Sebastian Desimos. Taurus, founded in 2018 in Geneva, offers financial market infrastructure solutions for digital assets to institutions. In particular, he supports players such as Caceis, a subsidiary of Crédit Agricole that specializes in securities services.

Agefi: A few years ago, most representatives of the traditional financial system were critical and even dismissive of the crypto ecosystem. What has changed today?

Sebastien Decimoz: The main advantage of blockchain technology is that it allows us to imagine the emergence of a kind of “super CSD (Central Securities Depository)” (central depository) through which all players in the financial system could connect. Today, for example, it is very difficult for a lambda company to be listed on several stock exchanges at the same time due to interoperability reasons. Potentially, a blockchain network could solve this problem. It will no longer simply be reserved for the elite.

Thus, investors can access higher liquidity with greater transparency. We are still quite far from the normative point of view, but technologically we know that it is possible. Look at the many cryptocurrency platforms that share the same foundation: cryptocurrencies.

You say that today the main unknown is the normative one. How can the institutions and actors of the two worlds come to an agreement?

To do this, standards must appear, in particular, to ensure security. Initially, there was a bit of a fantasy in the crypto-ecosystem that it was possible to put a whole bunch of information – for example, identity, health data, etc. – into one blockchain. But in fact, I think blockchain should remain fairly simple in terms of infrastructure, at least for financial instruments. If smart contracts [programmes informatiques paramétrables sur un réseau blockchain] that are deployed there are too complex, it may be difficult for agencies to agree among themselves on their harmonization. We need contracts that remain simple enough not to sacrifice interoperability for the sake of specialization. This is a special concern of the banks with which we work. They want to make sure they can interact with all the market infrastructure in the crypto system.

Betting on interoperability and better access to liquidity, many decentralized finance (DeFi) protocols have made a bet. Is this a utopia for centralized platforms?

It is now easier for authorities to regulate a centralized cryptocurrency exchange (like Coinbase or Binance) than a decentralized exchange (like Curve). [Dans ce cas, la plateforme n’a pas d’autorité centrale pour la contrôler]. The latter for me, from a practical and intellectual point of view, is the most efficient way to work. I think in the long term we will be moving towards models of decentralized exchange platforms where players can exchange assets directly, but there are too many regulatory unknowns today regarding money laundering risks in particular.

To operate, these decentralized exchange platforms bring together players who can act according to the amount of the platform’s native cryptocurrencies they own. Can we imagine banks joining their management in the near future?

At the moment, banks are not managed by decentralized exchange platforms in their current form, in part for regulatory reasons. What is conceivable today are more decentralized private blockchain exchanges that would bring together financial players with a status equivalent to those who provide access to the Swift network. This network is certainly centralized, but allows anyone to exchange financial flows. In this case, the main issue of regulation will be the definition of standards that will allow such and such a player to gain access to it. Because the promises of cryptography are based, in part, on the rejection of intermediaries and greater openness of the financial system.

Is convergence between the crypto ecosystem and the traditional financial world inevitable for you?

To survive, the crypto and blockchain world will have to adapt to the rules, this is our thesis from the very beginning at Taurus. Conversely, this world will not disappear, as banks might have thought five or six years ago. I think the secret is to take good cryptographic recipes and apply them in a regulated world with sufficient security standards. For a long time, many players in the crypto ecosystem were convinced that they could beat the banks. But I think they underestimated the difficulty of offering their financial services with such a regulatory framework.

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