We recently caught up with Valerii Brizhatiuk, Chief Product Officer, Co-Founder at Swisstronik, a layer-1 solution designed to build scalable decentralized applications that ensure users’ data protection and privacy, while remaining in compliance with local regulations.
According to the project team, Swisstronik is unique because of the following:
- Data privacy on Swisstronik blockchain is ensured by the combination of hardware (Intel SGX) and software (zk-SNARKs) encryption level
- EVM compatibility and Cosmos SDK boost interoperability & developer-friendliness
- Regulatory compliance is enabled by a distributed network of independent data controllers that keep user data verified, yet private and protected
You may review their whitepaper here.
Our discussion with Valerii Brizhatiuk is shared below.
Crowdfund Insider: With the increasing scrutiny of virtual trading assets by regulatory bodies, do you think the new rules set by HK’s SFC will positively impact the crypto industry?
Valerii Brizhatiuk: Hong Kong’s new legislative initiatives exemplify a very competent and far-sighted look at the regulation. Although it may seem rather harsh at first glance, such a set of requirements is a highly positive trend; the state wants to work with the crypto industry. The effect should undoubtedly be considered only as a positive one.
Crowdfund Insider: While these restrictions and rules aim to improve transparency and overall services to clients, how do you think they will benefit companies and operators of these virtual trading platforms? What are your thoughts on the restrictions related to stablecoins?
Valerii Brizhatiuk: These restrictions should be considered more as rules rather than restrictions. This set of rules gives transparency vital for banks and traditional finance companies to finally enter the web3 world and operate there with a sense of stability and reliability. KYC, AML, and DPR are the three primary keys to a door that leads crypto to become a new world financial technology standard.
Rules related to stablecoins are easy as the name of this type of asset – it should be stable. The only way to be stable is to have tangible assets or institutions backing up their price. It is not a good idea to suggest that a copy of some country’s central bank can print banknotes at their own will.
Crowdfund Insider: You mentioned that rules are needed in the field of KYC, AML, and DPR. It’s clear that you had a better understanding of this from the onset, and that’s why your company, Swisstronik, aims to develop a self-regulating network of KYC and AML providers, regulatory bodies, and compliance partners per jurisdiction. How do you intend to achieve this, and how can other companies follow in Swisstronik’s footsteps?
Valerii Brizhatiuk: Our plan is simple – we create a set of tools that can process verification and adaptation of users, funds, or assets within the framework of constantly changing regulatory requirements on the one hand – and give access to such verification to legal companies and regulators.
This system is adaptive and self-regulating. Our main task is not to create a product “for ourselves” but to make the most convenient and easy-to-use, at the same time, evolving decentralized tool. Companies and countries can freely use our transparent ecosystem. Swisstronik will act like Switzerland always did – as a neutral & trusted space. And it is also worth mentioning that the product features customizable built-in privacy, which makes a connection with the product homeland even stronger.
Crowdfund Insider: Many countries are working round the clock to launch their CBDCs soon. In what ways do you believe regulations will speed up the complete adoption of CBDCs?
Valerii Brizhatiuk: I am convinced that creating these laws is necessary for their launch. As long as uncontrolled high-risk assets and instruments exist, launching new-generation national currencies into the same system is impossible. It is required to identify financial market actors, ensure transparency of financial flows and introduce reliable safeguard mechanisms for tokens tied to real currencies or assets. After that, it will be possible to connect them to the CBDC infrastructure and, finally, make a technological breakthrough of the financial system.
Crowdfund Insider: Countries like Dubai have also been making significant moves towards ensuring the regulation of crypto assets and trading. Do you think there should be some sort of connectivity between countries’ rules to help facilitate borderless transactions?
Valerii Brizhatiuk: Many regulators such as those in Dubai, Hong Kong, and the EU, already discuss this. Without homogeneous rules for data structuring and security, KYC, and AML policies, it is impossible to imagine today’s international financial system. This applies equally to the system of tomorrow – based on crypto. As we discussed earlier, these laws are preparations for the launch of the CBDCs, and the CBDCs themselves are new-age domestic and cross-border settlement tools, essential instruments that need to be secure.
Crowdfund Insider: The fallouts in 2022 led to enormous losses for investors and crypto users. Do you think these regulations and the increasing need for compliance by trading platforms will rebuild users’ and investors’ trust and confidence in the industry?
Valerii Brizhatiuk: I am sure this is primarily due to the lack of this regulation. The crypto industry has made significant technological breakthroughs in the first decade of its existence. Reliable smart contract mechanisms have been created, a high speed of sending funds has been worked out, breakthrough data security tools have been found, and much more. These steps ensured the cryptocurrency market’s rapid growth in the early years, inspiring many hopes. The time has come to justify them and integrate them into the global financial system, and this system wants us to be regulated.
Crowdfund Insider: With all these regulations being put in place by various countries, what do you think the crypto market will look like for the rest of 2023 and beyond? Also, while it might be hard for companies to implement these rules, do you think there will be a fast adoption, or will some shut down due to their inability to adapt?
Valerii Brizhatiuk: The night is especially dark before dawn. As I said above, we will see new regulations, particularly from financial giants like the United States. Adapting to this regulation will inject vast amounts of money into the regulated markets, especially in the form of CBDCs. Adaptation will not be easy – but products like Swisstronik will be the connecting beacons that will ensure reliability, safety, and inevitable growth. Web3 adoption – the one we have been all waiting for.