Q&A: Nick Chang, GM of Maicoin, Taiwanese crypto exchange

By Staff Writer

Founded in 2014, MaiCoin is the first crypto asset platform in Taiwan to offer TWD fiat to crypto and crypto to crypto trading. It has nearly 70 staff and close to 100000  clients. In 2016, AMIS, a B2B consulting firm serving large enterprises, was spun off. AMIS went on to become one of the original founding members of Ethereum Enterprise Alliance and later supplied a proprietary consensus algorithm to Quorum, a blockchain initiative by JP Morgan. In 2017, MaiCoin enabled cash purchase through thousands of convenience stores in Taiwan, allowing a more friendly interface for first-timers.  In 2018, MaiCapital, a hedge fund with an emphasis on blockchain technology and crypto assets, was established in Hong Kong. MaiCapital successfully obtained No. 4 and No. 9 licenses issued by the Securities and Futures Commission (SFC) in Hong Kong. In this interview, we sat down with the GM of MaiCoin Nick Chang in Taipei to discuss his views on crypto assets and blockchain trends in Taiwan and the region.

Q: What are your biggest challenges right now?

A: Adoption. Most people are still skeptical about bitcoin and its underlying value. The early adopters seem to make a good fortune, but some of the late adopters got burned during the ups and downs. So the public still sees it as a risky investment, and such a notion is missing the big message behind the blockchain technology. Contrary to popular beliefs, Bitcoin is not about financial freedom. Rather, it is about financial sovereignty. It is not about turning you into a millionaire overnight, but it is about taking back control and ownership of your asset. 

Q: So, if this is about sovereignty, it’s almost impossible to regulate Bitcoin?

A: You can regulate the fiat to crypto conversion by requiring platforms offering this service to conduct identity verification and then run data through a blacklist, processes known as the “KYC” and “AML” in industry jargon. For a crypto-crypto transaction, I wouldn’t call it impossible, but it’s so tricky and cumbersome to the point where you have to wonder if there are bigger crimes to fight.

Q: So, the only way to regulate is through AML rules?

A: Our most significant value is the fiat-to-crypto service, so we task ourselves to do better gatekeeping. 

Q: In Taiwan, you are allowed to trade Bitcoin, especially fiat-to-crypto? And you can also use local banks to do so? Which local bank do you use?

A: Yes, we do! We are also a pioneer in maintaining an open dialogue with the government to help shape the regulation. Currently, we use KGI and Far Eastern as our banks.

Q: Please explain how does it work?

A: On the brokerage platform, you can place an order and make payment through bank transfer or pay with cash at a nearby convenience store, and you receive your purchased crypto assets once the payment has been cleared. Alternatively, if you opt to use our exchange platform, you make a deposit into our trust account provided by our banking partner just like you do when trading securities. In this case, you will see a portfolio of fiat and crypto-assets. 

 Q: I understand by Sep 2020, all the virtual asset exchanges (VASPs) have to comply with certain KYC guidelines. How difficult is it to abide by these rules?

A: Oftentimes, the regulation is based on existing policies, which may not be up-to-date to address activities involving new technology, namely blockchain. We can try pointing out these shortcomings to the lawmakers but it may take a long time to make meaningful changes, take STO, for instance. I would say it’s not difficult to abide by the existing rules, but it’s very difficult to do that and grow the market at the same time.

Q: Are you already working on complying with the G20/FATF guidelines on VASPs?

A: We are working with the local Taiwanese government on complying with the latest international guidelines. 

Q: When you say the Taiwanese government, do you mean securities regulators?

A:  When it comes to AML, the direction comes from the judicial system. The securities regulatory body, SFC, does provide some guidelines for us, but these guidelines pertain to topics such as STO. So we have more than one regulatory bodies to check in with. 

Q: What is the gender ratio in Taiwan in terms of crypto trading?

A: 75% men,  25% women.

Q: When do you think crypto will become mainstream? What exactly does “going mainstream” mean when it comes to crypto?

A: No one has a number, but here is my take. When did Facebook become mainstream? I think around 2008 because that’s when they started expanding outside the US. It is not the absolute number of users cumulatively. What matters more is the penetration in each local market. For example, Taiwan has a high penetration for Facebook users, probably even higher than in the United States.

We need to do something similar to crypto. We need to first define what we mean by the mainstream. Are we talking about regional mainstream or global mainstream? And what is the number, 5%, 10%, or 20%?  Then we need to look at the crypto penetration rate in each of these markets? Maybe 5% is enough as a target number for social media to be considered viral. But for Bitcoin and crypto assets, the target number maybe 10% or 20%. 

Q: The central banks, such as the People’s Bank of China (PBOC), are issuing digital currencies powered by blockchain. Do you think this would make blockchain more mainstream?

A: Other than data redundancy and given the nature of the Chinese government, I don’t see much value-add from such effort since the WeChat pay system is working extremely well. As mentioned earlier, the most valuable aspect of blockchain-based assets is it gives the power of sovereignty back to the people. Such a government-issued crypto asset may work well, but it doesn’t really highlight the benefits of using blockchain technology.

Q: What is a downside of a blockchain-based fiat currency like a blockchain yuan?

A: It really depends on the structure of the blockchain. Presumably, the nodes are going to be operated by the government, so there is no real downside in this. But if anything, speed is the most critical thing in a monetary transaction, and a centralized system should be faster than a decentralized system.

Q: The governments probably want to say that we can also have like our own Bitcoin?

A: Yes, so in that regard, such effort is still a good marketing for blockchain technology, and consequently it helps remind people of bitcoin, the first and purest application of blockchain.

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