CEO Fortnightly Message 08/02/19Dear Community,
The time has come once again to update you all on the recent events taking place across GBX and the GSX Group. My schedule often means there aren't enough hours in the day, but I make it a point to keep you informed and take stock of the progress we have made. It is important to me that our community is kept up-to-date and a part of our journey towards a new era of blockchain powered finance.
Here is a breakdown of some of the recent happenings since my last message, plus a reflection on some of the recent events that have transpired in other countries, making news headlines. I want to emphasise the reasons why we operate the way we do, and how we have established ourselves for the long-term. Let’s get started:
1. GBX-DAX Lists Stellar (XLM)The GBX has landed another huge opportunity for our users, with the listing of Stellar’s XLM token. The distributed payment network, Stellar, is a pioneer for user adoption in blockchain and providing a low-cost payments method to the world. You can read more about the listing, and trading pairs here:
https://gbx.gi/news/gbx-dax-goes-stellar-xlm-listing/ 2. My Reflection on Security On my travels, at events and conferences, I’m often asked why GBX? Why do licenses and regulation matter? Why is it easier to open an account on other exchanges, rather than GBX?
The recent events in Canada and New Zealand are a backdrop for my usual answer to those questions and should serve as a warning to those worried about the security of their fiat and digital assets. If you’re not worried about your digital assets, maybe you should be? Let’s look back to the incorporation of GBX - it’s a diligent process to get licensed, having to demonstrate to the regulator that we met the nine DLT principles:
I. A DLT Provider must conduct its business with honesty and integrity.
II. A DLT Provider must pay due regard to the interests and needs of each and all its customers and must communicate with its customers in a way which is fair, clear and not misleading.
III. A DLT Provider must maintain adequate financial and non-financial resources.
IV. A DLT Provider must manage and control its business effectively, and conduct its business with due skill, care and diligence; including having proper regard to risks to its business and customers.
V. A DLT Provider must have effective arrangements in place for the protection of client assets and money when it is responsible for them.
VI. A DLT Provider must have effective corporate governance arrangements.
VII. A DLT Provider must ensure that all systems and security access protocols are maintained to appropriate high standards.
VIII. A DLT Provider must have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing.
IX. A DLT Provider must be resilient and must develop contingency plans for the orderly and solvent wind down of its business.
One of the critical considerations is the security of client assets (Principle five). We had to demonstrate to the regulator and consistently show that we adhere to Principle five, ensuring our clients' assets are secure.
Here at GBX, we do everything in our power to secure our clients’ digital assets.
Firstly, almost all our assets are in deep cold-storage - permanently offline, extremely (on the verge of impossible) difficult to hack. Additionally, our deep cold-storage is multi-jurisdictional, meaning any event in one jurisdiction does not affect the other. Within our procedures, we operate a multi-sig system, with different levels of approval. We are even insured against theft. All those safeguards combined indicate how passionate we are about the security of our clients' assets. A single person should never have complete control over a company’s assets, especially clients’ assets. Our licenses and regulatory oversight makes us robust and institutional-grade, for the betterment of our clients. We have to comply with the highest levels and therefore operate at the highest levels.
An example of the highest level of regulation that we comply with - The Anti-Money Laundering Directive 5 (AMLD5) comes out in the EU in July 2019 - we’re already compliant.
An update to the Proceeds of Crime Act (POCA) comes into effect in July 2019, GBX already complies with its standards.
At GBX, and as a wider GSX Group, we believe that the protection of our clients’ assets goes above everything. With what we've witnessed recently, and in the past, to those who hold assets in other exchanges, our advice would be to ask yourself the following questions:
Is the exchange regulated? Does it comply with AML regulations? Could they launder money? Does the exchange operate deep cold-storage? If so, is it wholly in cold-storage or partially? What procedures do they follow to ensure the safety of your assets? Do they have multi-sig procedures in place? Are the controllers fit and proper? Does the exchange have the financial resources required to stay open? Does the exchange have third-party insurance to cover any loss of assets due to theft or other network events?
You may think this doesn’t affect you, but it could.
Warren Buffett once said: “You only find out who is swimming naked when the tide goes out.”
Unfortunately, in my view, we will likely witness, under current market conditions, further evidence of companies going to the wall. We will see who is wearing swimwear. I commented back in 2018 that it was the year of the regulator. I think there is evidence that 2019 will be the year of regulatory enforcement.
We’ve said from the start that GBX is institutional-grade, and by that, we meant you would have that institutional-grade security for your assets.
We wear swimming trunks.
At the very least, you can gain confidence that your assets are safe. That is how I answer the questions I get asked. Yes, we do require more detail than other exchanges for you to open your account, and the application process could put those people off. However, at the end of the day, we do it for the right reasons, while striving to improve the process, without compromise.
My message to you all as we look ahead this year is, you wouldn’t leave your cash under the mattress, you shouldn’t leave your assets unsecured. Trust in GBX, and trust in the passion behind our process, it may not be the easiest, but it’s certainly one of the safest.
3. GSX Group Attends the Paris Fintech ForumI was offered the chance to participate in a panel discussion at the Paris Fintech Forum, it was a great atmosphere and the perfect opportunity to connect with thought leaders in the emerging tokenised securities space. You can see what happened at the event, and the GSX Group attendance here:
https://gbx.gi/news/gsx-group-attends-the-paris-fintech-forum/ 4. Happy Chinese New YearThis Chinese New Year is the year of the pig, a symbol of prosperity and wealth within Chinese culture. We have many significant milestones to reach this year, and we look forward to the challenges they bring and the success that will follow in achieving them. The GSX Group wishes everyone that celebrates chunjie (春节) a happy new year and good fortune for 2019.
That’s all for now. As always I want to thank our community for your continual support. Together we can bring about greater adoption, redefine the standards surrounding digital assets, and transform the traditional capital markets with innovative technology. We have the experience to execute it.
Until next time!
Nick Cowan
CEO - GSX Group
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