The one thing that’s constant in crypto is the speed at which things evolve, according to one CEO who left the traditional world of finance back in 2016 to build tech infrastructure.
Mriganka Pattnaik, co-founder of software development company Merkle Science, said the biggest pain point for small crypto companies as they grow will be the need to get licensed and stay on the good side of regulators.
“Our hypothesis was fraud, anti-money laundering (AML) and compliance is an evergreen space, [and] there will always be new opportunities,” Pattnaik said.
Pattnaik is a speaker at this year’s Consensus 2022 Festival in Austin, Texas, and he’s one of the brains behind Merkle Science, a top 8 finalist in this year’s Extreme Tech Challenge x CoinDesk Web 3 Pitch Fest, a global competition that looks to provide a platform for innovative projects and communities driving Web 3.
Pattnaik says the Singapore-based company’s services helping companies navigate compliance are likely to become more popular as startups realize the need for those services.
“[In the past], they felt it was valuable, but it was more of a good to have, not a must-have,” Pattnaik said. “But now, everybody acknowledges that it’s a must-have and there’s newer things coming about.”
He expects decentralized finance platforms will face increased regulatory activity, more than crypto has faced.
“We see where crypto was two years ago,” Pattnaik said. “But [now] these DeFi protocols and founders are wondering, ‘Do they really need compliance?’ One year down the line, I’m sure you’ll see them adopting compliance solutions as more regulatory clarity comes about in that space.”
Read more: Mona Is Building a Limitless Metaverse
Pattnaik thinks legal compliance costs can be prohibitive for startups entering the crypto sector.
“By becoming one of the biggest reg tech players in the crypto space, we want to provide the infrastructure on which they can build the next generation of crypto tools,” he said.
Merkle Science is looking to expand into the U.S., in part because of the country's aggressive and bigger market, including its pool of early adopters.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.