The Irish company regulating the 'Wild West' of cryptocurrency
A Louth-based company is using its experience of regulation in the traditional financial sector to tame the 'wild west' of cryptocurrency.
GECKO Governance launched a new compliance solution to manage initial coin offering (ICO) governance and compliance following approval by the Isle of Man Financial Services Authority.
CEO and co-founder of GECKO Governance, Shane Brett, said he spotted a gap in the market about four years ago for this type of solution.
"I've had 20 years experience in the hedge fund industry across the globe and have seen the trends and new assets classes and compliance around same being introduced," he told Independent.ie.
"In the last few decades, from derivatives to ETF’s, securities to hedgefunds, they all eventually come under financial regulation and proper controls, rules, and processes have to be put in place for them to be allowed to trade and expand in the industry."
ICOs are used by startups as a means to raise funds for a new cryptocurrency venture, bypassing the generally strict requirements of venture capitalists (VCs) or banks.
Using GECKO Crypto 1, which is implemented on the Ethereum blockchain, companies will have the capacity to manage ICO projects before, during, and after the capital raising period.
Brett said that the platform's original solution, built on the campus of Dundalk Institute of Technology, was created to ensure ease of bank and fund compliance.
As they were rolling out the product, the GECKO team realised that an effective way of implementing it would be to use blockchain to "timestamp all of the compliance stuff".
"We just thought it was a good way for firms to show that they were doing what they should be doing. But, in fact, nobody else in the compliance space had done this yet," said Brett.
At the start of this year, the company received $1m in funding from tech investment firm Cosimo Ventures, which has offices in Dublin and Boston. Part of the funds have been used to increase staff at the firm's offices in Dundalk, New York and Sydney.
"This gave us the financial fire to support our technological development. Our VC was very invested in the new world of cyptocurrency, where there are very few rules in place and very few best practices.
"Hedge funds were once considered the 'wild west' and many believed that they were going to ruin the industry. It's just a matter of time before cryptocurrency becomes mainstream also, but it needs regulation.
"Cryptocurrency is so volatile mainly because there is not much liquidity, not that much money sloshing around. There's not enough buyers and sellers in the market but the reason why the big players are not allowed is because there's no appropriate compliance rules in place."
Brett said he expects that there will be strong uptake of the GECKO Crypto1 solution as new guidance and regulations are issued by the Central Bank.
The software provides an independent audit trail for regulators as it addresses issues of accountability and transparency within the market, ensuring continuous compliance with regulation.
"Ireland has always been the home of tech innovation and there are already a number of well established Irish blockchain companies that are expanding as the use of blockchain technology increases," he said.
"With the launch of Crypto1, we want to strengthen Ireland’s credentials as a blockchain friendly nation globally," he said.