Genesis Global Trading’s lending business remains on a growth tear, especially its loans of dollars and stablecoins.
Genesis Global Trading has obtained a BitLicense from the state Department of Financial Services (DFS), making it only the fifth firm in three years to receive the controversial license.
In the regulator’s release, New York financial services superintendent Maria Vullo said, “New York continues to lead the nation in regulating the growing fintech industry.”
But the BitLicense has come in for intense criticism from cryptocurrency entrepreneurs. Speaking at CoinDesk’s Consensus 2018 conference Tuesday, ShapeShift CEO Erik Voorhees called the regulation an “absolute failure” that “should be removed.” He said it was “pathetic” that only a handful of firms had received BitLicenses after three years. “That’s the rate of innovation in New York.”
Several exchanges have stopped operating in the state, including ShapeShift and Kraken.
Despite lacking a BitLicense prior to this week, Genesis Trading has been operating in New York under a safe harbor provision.
The exchange caters to high net worth and institutional investors and offers round-the-clock trading in bitcoin, bitcoin cash, ether, ethereum classic, XRP, litecoin and zcash.
Separately, the DFS also authorized Paxos Trust Company, formerly known as itBit, to operate “a permissioned, blockchain-based post-trade platform settlement service” for precious metals, called Bankchain.
Paxos holds a limited-purpose trust company charter from DFS, as does Gemini Trust Company, a cryptocurrency exchange.
New York became the first state to craft a regulatory structure specifically for cryptocurrencies in 2014, and finalized the BitLicense in August 2015.
The other four firms to receive the license are Circle, in 2015; XRP II, a Ripple subsidiary that sells XRP, the following year; and Coinbase and bitFlyer in 2017.
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Genesis Global Trading Inc., a big institutional market maker for digital currencies, has started a lending business.
The new subsidiary, Genesis Global Capital, will allow investors and businesses to borrow cryptocurrencies in quantities of $100,000 or more for fixed terms ranging from two weeks to six months. Loans will be issued in bitcoin, ether, ether classic, XRP, bitcoin cash and zcash among others.
“We believe now is a great time to offer an institutional-focused lending service because it will increase general liquidity in the marketplace, encourage new financial institutions to participate in a two-sided market and increase the working capital that companies use to scale their digital currency-centric businesses,” Genesis Capital said in a press release.
The company suggests that investors could use its lending capacity to “hedge total portfolio risk or take speculative short positions,” but it also envisions other use cases for the service.
One such example, the company explained in the statement, could be remittance companies that “need to make immediate settlements to their customers, but don’t want to buy a large balance of bitcoin and hold that risk on their books.”
Genesis Capital has already attracted notable clients such as BlockTower Capital, an existing client of the parent trading company, and DV Chain, a crypto trading firm.
“The majority of trading volume in several cryptocurrencies is denominated in bitcoin, which has created a need for a bitcoin lending market,” DV Chain CEO Garrett SEE told CNBC.
Genesis’ move into crypto lending is the latest addition of institutional services in a market that has also recently seen the launch of bitcoin futures trading and increased interest in bitcoin exchange-traded funds.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has ownership stake in Genesis.
Exchange of money image via Shutterstock
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