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Cryptocurrency Firms Now Licensed Under Updated Banking Regulations in Switzerland

Swiss FINMA recently introduced new guidelines for companies, including blockchain and cryptocurrency-based firms interested in the new FinTech license.

Details of the Guidelines

Switzerland’s financial regulatory body, the Financial Market Supervisory Authority (FINMA), recently published a set of guidelines for the procurement of the new FinTech License. Cryptocurrency and blockchain-based firms are among companies who are eligible to apply for the new license.

According to FINMA, the license comes with “relaxed requirements,” and it enables companies to accept public deposits as high as CHF 100 million. The move by the regulatory body comes after an amendment to the Banking Act back in November.

The Switzerland financial regulatory body, however, gave specific conditions to companies interested in the new license. FINMA said:

The FinTech license allows institutions to accept public deposits of up to CHF 100 million, provided that these are not invested and no interest is paid on them. A further requirement is that an institution with a FinTech license must have its registered office and conduct its business activities in Switzerland.

Beginning from January 1, 2019, blockchain and virtual currency firms would meet specific criteria to qualify for the new license. FINMA stated that applicants are to submit their applications in one of Switzerland’s official languages. Part of the requirements includes reasons for applying, description of the proposed organization and target audience.

FINMA also requests full accountability from the board members of the firm, including names, date of births, nationality, and a curriculum vitae. Others include Swiss criminal records six months old and a debt enforcement register extract.

Swiss FINMA and the Cryptocurrency Industry

Switzerland is home to hundreds of cryptocurrency startups. The country’s various policies show its strong support for the growing market, while it solidifies its position as the world’s leading virtual currency hub.

The Swiss financial regulatory body, FINMA, granted a license to the Zug-based company, Crypto Fund AG, a subsidiary of Crypto Finance. The asset management license enables the firm to give a variety of collective investment products that monitor cryptocurrencies. The company received a distribution license back in June.

Also, a blockchain startup operating in Switzerland, Smart Valor, received a license from FINMA to launch an online investment platform. The firm further expressed its desire to expand its services by mid-2019, by applying for a banking license.

SEBA, a virtual currency startup formed by former Swiss bankers, raised $100 million from local and foreign institutional investors to fund its regulated cryptocurrency bank. The startup, however, needed a securities dealer and banking license from FINMA to form a licensed virtual currency banking solution.

Imaged courtesy of Shutterstock.

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Coinbase Acquires Keystone Capital – Poised to Become a U.S.-Regulated Broker-Dealer

Cryptocurrency exchange platform behemoth, Coinbase, has acquired Keystone Capital – a financial services firm based in California. This move is the latest in a series of rapid expansion activities by the San Francisco-based Coinbase. The company announced the acquisition deal in a blog post on June 6. By this latest move, Coinbase is in line to become a regulated broker-dealer platform.

Coinbase Broker-Dealer License Aspirations

Announcing the Keystone Capital acquisition, Asiff Hirji, the President and COO of Coinbase said it was an important move in the platform’s aspiration to become a regulated broker-dealing. Commenting on the deal, Hirji said:

We’re announcing that Coinbase is on track to operate a regulated broker-dealer, pending approval by federal authorities. If approved, Coinbase will soon be capable of offering blockchain-based securities, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

By acquiring Keystone Capital, Coinbase is in line to receive a raft of government licenses. These licenses are the broker-dealer (B-D), an alternative trading system (ATS), and a registered investment advisor (RIA).

Coinbase has always erred on the side of caution concerning the digital assets that it offers to its customers. Despite the plethora of cryptocurrencies in the market, the platform only offers four – BTC, ETH, BCH, and LTC. Coinbase has so far not listed ICO tokens or even XRP for that matter due to unclear regulatory provisions. By obtaining these licenses, the platform will finally be able to increase the scope of its offerings to its over 20 million users.

Expanding to Non-Cryptocurrency Markets

With other cryptocurrency exchange giants like Binance, OKEx, and Huobi pursuing their service expansion agenda, Coinbase is taking significant steps to ensure that it isn’t left behind. The company recently announced the launching of four new products targeted at institutional investors.

Following our recent announcement of the Coinbase suite of institutional products, we believe this is an important moment for the crypto ecosystem and yet another indication of the maturation of the crypto economy. If approved, these licenses will set Coinbase on a path to offer future services that include crypto securities trading, margin and over-the-counter (OTC) trading, and new market data products.

If the deal sails through, Coinbase can transcend the cryptocurrency market into the mainstream financial world. Coinbase says it is optimistic about working with regulators, investors, and other stakeholders to tokenize traditional asset classes. The platform envisages a future where distributed ledger technology (DLT) becomes an essential part of the financial market. Coinbase is confident that blockchain offers some useful solutions such as non-stop trading, instant transaction settlements, as well as secure asset custody framework.

Coinbase recently announced that it was opening a new office in Japan. The platform remains the largest cryptocurrency exchange service in the United States.

Do you think other cryptocurrency exchange platforms will emulate Coinbase in acquiring broker-dealer licenses? Keep the conversation going in the comment section below.

Images courtesy of Ethereum World News archives and Everipedia (https://everipedia.org/wiki/asiff-hirji/).