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There are problems associated with high risk investments which are only too familiar to people in Asia and the former USSR. In contrast, the population of the USA have little knowledge of them as the laws in that country provide good protection against risky investments so that problems such as broker stealing of the money earned on the exchange are even unheard of. Most often, such cases are about a broker offering speculative trading on exchange rate differences on the Forex market.
Scale of problems
The scale of the market is huge: a daily turnover of over $5 trillion, over 6,000 brokers of which 90% are not subject to any regulation, and several million traders exposed to the daily risk of falling victim to swindlers.
It is obvious that on the state level, the problem can be solved only through strict regulation, and regulation always means constraints on the development of the industry. That is why in the so-called third world countries, the chaotic development of the financial sector is often condoned.
Regulation versus regulation
Forex brokers attract investors mainly via the Internet, and to open such a company, you only need to build a simple site and buy a license for any trading platform.
In the USA, the maximum leverage is limited to 1:50 but in some cases, the leverage of 1:20 is applied (while globally, the leverage of 1:100 is the most popular one), which kills the attractiveness of the Forex market to traders. For that reason, there are only 3 Forex companies operating in the USA.
In Europe, almost all the companies that wish to operate in the territory (almost 200 companies) has wound up registered in Cyprus which has long provided mild licensing conditions.
Britain’s regulation, being the most balanced, has nevertheless a major shortcoming from a trader’s perspective: in the event of an abrupt jump of a currency the client’s account may be badly in the red, and the client will have to pay this debt to the broker.
In Russia, brokers are forbidden to pass the clients’ positions on to liquidity providers, that is, the law obliges brokers to work against the client, making them play the role of casino.
Solving all those problems requires some standardization to provide a venue where the service buyer (trader) and seller (broker) will meet so that all their relations are highly transparent.
Meanwhile, despite all efforts, classical regulation cannot solve that problem. The reason is this huge flaw of classical regulation: it protects only the residents of a particular country. In contrast, blockchain is capable of solving the problem.
For that purpose, several broker and fintech companies has set up the project Serenity Financial which operates on the principles that are independent of either jurisdictions or borders.
What is Serenity Financial
Serenity Financial is the first blockchain-based marketplace for brokers and traders. It acts as an intermediary between the two sides, broker and trader. Serenity Financial uses blockchain technologies to monitor all the operations, thus preventing the trader from using the funds in their selfish interests. Serenity Financial also resolves conflicts between the sides and can make the broker repay the funds to the client. Any trader that trades with their own broker through Serenity goes through verification only once. After that, they can freely change the broker for one they select in the marketplace.
On the basis of blockchain
Trade and non-trade deals of traders are recorded in blockchain. Meanwhile, Serenity receives data from the trading platform and records each deal, meaning that data cannot be either changed or forged. Access to the information on deals is granted to brokers, clients, and Serenity. To store the traders’ deposits, a Serenity smart contract is used which does not allow broker access. This enables Serenity Financial to guarantee safety of funds.
What’s in this for the broker?
A broker on any level, in any jurisdiction, is given the opportunity to draw liquidity. This will bring the brokers onto a new level, allowing them to provide high quality services. Operating through Serenity increases confidence in the brand and builds up turnover.
Who does the project
Behind Serenity Financial is a team with wide experience in the area of finance. They have already launched some successful projects such as the broker company Grand Capital with a monthly turnover of 4.7 billion and a tech company UpTrader which develops software for brokers worldwide.
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