Tacans’s James Davies Explains How Transparency Wins Until DeFi Regulations Catch Up

John Lothian

John Lothian

Executive Chairman and CEO

John Lothian News spoke with James Davies of Tacans last week about his company, a Web3-focused venture builder firm founded in 2021 by Matthias Nielsen and Lars Seier Christensen.  Tacans is working on building trading applications for decentralized exchanges, where there is no centralized location but the exchange is made via smart contracts.

Davies was preparing to attend CoinDesk’s Consensus conference but was still in London at the time of the interview.

Tacans began by building spot markets, to which it brought some innovative capabilities, Davies said, but which are probably only appealing to “a particular group of mathematicians.”

Over time, as the FTX and SVB issues arose, Tacans and others looked more to derivatives trading on the chain with transparency, Davies said.

Davies said many of the crypto exchanges were more of a mature model, but in a jurisdiction where you could not see what was happening inside the exchanges, making it difficult to get your money out when things went sideways.   

Tacans is based out of Zug, Switzerland and one of its projects is called the “CryptoValley Exchange.” Its executives are spread across Europe, from Switzerland to London (where Davies is based) to Kiev and Barcelona.  The core of the staff, over 200 personnel, are in Kiev, Ukraine.

Tacans had 160 people before the war broke out and the number went down, but the firm decided to double down and make Kiev its development home and hired as much talent as they could find. They also secured their facility with backup water, heat and power. 

Davies said the staff has become younger and more male, as women and older men have moved out of the country and Tacans has hired those who have not signed up for the Ukrainian Army. 

Davies said there is great interest in perpetual crypto products, but there is a need for better risk management tools that sit in the same environment. He said that has spurred interest in options. 

He said that being able to trade options on a chain with traditional derivatives and clearing and settlement is what the big traders are looking for to manage their crypto risk, and is what various projects with crypto embedded in them need to manage theirs. 

Davies said he believes Tacans is right at the front of offering an options platform with the functionality, clearing and settlement traders want, he said.

Davies makes the case that there are no good regulations to manage DeFi, thus the best way to manage it until the regulations catch up is through transparency.

He said the message Tacans is taking to the Consensus conference is that if you believe that there are going to be derivatives on a chain, it is going to look more like futures and options, not like the gambling sites many crypto markets are today. Davies said if crypto is based on derivatives, Tacans is going to build one of those markets that is robust like today’s derivatives markets. 

When the regulations catch up in the DeFi world, Davies said, Tacans will be ready to move into a regulated marketplace, but until then, they are using transparency. 

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