{"id":40748,"date":"2021-04-14T16:25:58","date_gmt":"2021-04-14T13:25:58","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=40748"},"modified":"2025-08-30T15:34:07","modified_gmt":"2025-08-30T12:34:07","slug":"stex-founder-crypto-derivative-platforms-are-the-forex-kitchens-of-the-early-2000s","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/stex-founder-crypto-derivative-platforms-are-the-forex-kitchens-of-the-early-2000s\/","title":{"rendered":"STEX founder: crypto-derivative platforms are the forex kitchens of the early 2000s"},"content":{"rendered":"<p>ForkLog continues its series of podcasts &#8216;Explain for Crypto&#8217;, in which it speaks live with representatives of the crypto industry.<\/p>\n<p>In March, the show welcomed Vadim Kurilovich, founder of the Estonian cryptocurrency exchange <a class=\"tracking_link\" href=\"http:\/\/www.stex.com\/?utm_source=forklog&#038;utm_medium=media&#038;utm_campaign=forklog-media\" target=\"_blank\" rel=\"noopener noreferrer\"> STEX<\/a>. In a ForkLog Live interview he discussed regulation trends in the EU and Estonia, the imperfections of KYC and the shortcomings of margin trading.<\/p>\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Spot versus derivatives \u2014 talking crypto trading\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/hGZFUjT16rw?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div>\n<\/figure>\n<h2 class=\"wp-block-heading\">Regulation in Europe and Estonia<\/h2>\n<p>According to Vadim Kurilovich, regulation of the cryptocurrency industry in the EU is aimed at combating money laundering:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Regulators do not care where you move and how you spend crypto. It is important to them that users do not launder money. Regulators are not interested in the expenses of a hypothetical Ivan Ivanov, but if his transaction looks suspicious, the regulator will ask for additional documents&#8221;.<\/p>\n<\/blockquote>\n<p>He notes that Estonia has developed one of the best crypto legislations in Europe:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;In Estonia, regulatory rules are not simply copied from the banking sector. Crypto regulation has many nuances; it is still a dynamic process&#8221;.<\/p>\n<\/blockquote>\n<p>In July 2020, Estonian regulators tightened the rules for registering crypto companies \u2014 raising the state fee and requiring physical presence of offices and staff in Estonia. More than a thousand companies could not meet the new requirements and <a href=\"https:\/\/u1f987.com\/en\/news\/estonia-revokes-licenses-of-more-than-1000-crypto-companies\">lost<\/a> their licenses.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;The tightening of rules coincided with the coronavirus pandemic. Some companies faced difficulties with re-licensing. Representatives simply could not fly to the country or hire people in Tallinn. Many businesses closed because they found the new requirements too burdensome. Most likely, these companies did not originally need an Estonian license,&#8221; says Vadim Kurilovich.<\/p>\n<\/blockquote>\n<p>He believes effective legislation can be developed only through interaction between business and regulators. For this reason, <a class=\"tracking_link\" href=\"http:\/\/www.stex.com\/?utm_source=forklog&#038;utm_medium=media&#038;utm_campaign=forklog-media\/\" target=\"_blank\" rel=\"noopener noreferrer\"> STEX<\/a> joined the Blockchain and Virtual Currencies Working Group (BV\u0421 WG), which advises EU regulators on crypto industry regulation issues.<\/p>\n<h2 class=\"wp-block-heading\">Decentralised exchanges are at risk due to lack of KYC<\/h2>\n<p>Kurilovich regards the main risk for DEXs as the lack of Know Your Customer (KYC) procedures.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;If a trading platform does not have KYC, for the regulator it is money laundering,&#8221; explains the founder of STEX.<\/p>\n<\/blockquote>\n<p>Vadim emphasises that KYC on regulated crypto exchanges needs to be improved:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;There is banking secrecy and an overall GDPR data protection framework. AML programs operate alongside this. The problem is that GDPR and AML\/KYC contradict each other. The question is how to reconcile them so that they fulfil their functions&#8221;.<\/p>\n<\/blockquote>\n<p>The BV\u0421 WG is working on AML\/KYC improvements in the crypto industry. The group advises EU regulators on services for monitoring transactions and identifying users on exchanges.<\/p>\n<h2 class=\"wp-block-heading\">There are no regulated crypto-derivative platforms in the EU<\/h2>\n<p>The founder of <a class=\"tracking_link\" href=\"http:\/\/www.stex.com\/?utm_source=forklog&#038;utm_medium=media&#038;utm_campaign=forklog-media\" target=\"_blank\" rel=\"noopener noreferrer\"> STEX<\/a> notes that there is no clear regulatory framework for the crypto-derivative market in the EU.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;If anyone says that in a European jurisdiction there are derivatives on cryptocurrencies, leverage and the like, they are deceiving you,&#8221; asserts Vadim.<\/p>\n<\/blockquote>\n<p>According to him, margin platforms have many opportunities to defraud users:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Except for Kraken, where there are some papers, crypto-derivative trading today is the forex kitchens of the early 2000s. With all the consequences that entails.&#8221;<\/p>\n<\/blockquote>\n<p>Kurilovich stresses that not all crypto-derivative exchanges want to defraud their users. However, it is easier for them to do so than for spot trading platforms.<\/p>\n<h2 class=\"wp-block-heading\">Do not store cryptocurrencies on exchanges<\/h2>\n<p>In 2018 the founder of Canadian exchange QuadrigaCX Gerald Cotten died. In April 2019 the exchange filed for bankruptcy. An investigation showed that Cotten&#8217;s fraudulent actions were behind QuadrigaCX&#8217;s bankruptcy.<\/p>\n<p>He spent users&#8217; money to maintain a luxurious lifestyle and to open margin positions on other exchanges. When clients withdrew funds from the exchange, Cotten covered their balances using deposits from other clients.<\/p>\n<p>Vadim Kurilovich believes such a scenario could repeat on unregulated platforms. He urged users not to store crypto on exchanges:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Use cryptocurrency wallets. No one knows what could happen somewhere in the middle. Just as money can disappear in a bank, an exchange can lose them somewhere too. The risk is always present&#8221;.<\/p>\n<\/blockquote>\n<p>As noted, last week Vadim Kurilovich <a href=\"https:\/\/u1f987.com\/en\/news\/keep-the-licence-and-grow-the-client-base-stex-explains-eu-regulation\">told<\/a> about the new draft regulation for crypto-asset markets in the EU (MiCA).<\/p>\n<p>Read ForkLog bitcoin news in our <a href=\"\/\/telegram.me\/forklog\" target=\"\u201c_blank\u201d\" rel=\"\u201cnofollow\u201d noopener\">Telegram<\/a> \u2014 crypto news, rates and analytics.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ForkLog continues its series of podcasts &#8216;Explain Crypto&#8217;, in which it speaks live with representatives of the crypto industry.<\/p>\n","protected":false},"author":1,"featured_media":40749,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"2","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[1292,1168,733,36],"class_list":["post-40748","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-aml-kyc","tag-crypto-derivatives","tag-europe","tag-regulation"],"aioseo_notices":[],"amp_enabled":true,"views":"17","promo_type":"2","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/40748","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=40748"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/40748\/revisions"}],"predecessor-version":[{"id":40750,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/40748\/revisions\/40750"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/40749"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=40748"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=40748"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=40748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}