ErisX Gains BitLicense for New York Operation

Eris Clearing, the clearing and settlement arm of ErisX, has become the latest crypto company to receive a BitLicense from the New York Department of Financial Services (NYDFS), the company announced on Wednesday.

This has granted the cryptocurrency Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term to legally operate in the state of New York.

The company also obtained a Derivatives Clearing Organization (DCO) license from the Commodity Futures Trading Commission (CFTC) last year for its futures market and Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the execution of trades. Consequently, as a third party, the role of the clearing house is to centralize and standardize all of the steps leading up to the settlement of any transaction. Clearing houses are integral in helping reduce the cost, settlement or operational risk of clearing as well as settling multiple transactions across multiple entities.Role of Clearing Houses Across ExchangesFinancial exchanges such as commodities and stock exchanges have relied on clearing houses for over a century. Today, the futures market is often associated with a clearing house, as its financial products are leveraged and necessitate a stable intermediary. Every reputable exchange possesses its own clearing house. This requires all members of an exchange to effectively clear their trades via a clearing house at the terminus of each trading session.Additionally, exchange members are obligated to reconcile clearing house's margin requirements, sufficient to cover the member's debit balance.This is a crucial stopgap to help prevent risk to individual traders. For example, if a trader doesn't meet a margin call, any and all trades will be closed. This is to prevent against any additional losses. This process helps reduce the risk to individual traders, ensuring sufficient funds in the account to cover any losses which may occur. A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the execution of trades. Consequently, as a third party, the role of the clearing house is to centralize and standardize all of the steps leading up to the settlement of any transaction. Clearing houses are integral in helping reduce the cost, settlement or operational risk of clearing as well as settling multiple transactions across multiple entities.Role of Clearing Houses Across ExchangesFinancial exchanges such as commodities and stock exchanges have relied on clearing houses for over a century. Today, the futures market is often associated with a clearing house, as its financial products are leveraged and necessitate a stable intermediary. Every reputable exchange possesses its own clearing house. This requires all members of an exchange to effectively clear their trades via a clearing house at the terminus of each trading session.Additionally, exchange members are obligated to reconcile clearing house's margin requirements, sufficient to cover the member's debit balance.This is a crucial stopgap to help prevent risk to individual traders. For example, if a trader doesn't meet a margin call, any and all trades will be closed. This is to prevent against any additional losses. This process helps reduce the risk to individual traders, ensuring sufficient funds in the account to cover any losses which may occur. Read this Term.

With this, ErisX also highlighted that it has now obtained permission to offer its services to 47 states and jurisdictions in the United States.

Commenting on the development, Thomas Chippas, CEO of ErisX, said: “We are pleased that the NYDFS recognized our commitment to the high standards we borrowed from existing capital markets structures and applied to the cryptocurrency space.”

A bit about BitLicense

BitLicense is believed to be the toughest regulatory approval a crypto company can get in the United States. The harsh requirements of the licensing process also forced major crypto exchanges, including Kraken, to cease operation in New York.

After the license's introduction in 2015, New York's state regulator was very picky to hand it out in the initial years. Last year, however, as many as eight companies received the license.

With this latest approval, from the ErisX has joined Coinbase, Robinhood, and Tagomi for receiving the tough license.

“Our technology stack as well as regulatory framework, operations, and transparent marketplace are building blocks from the established commodity markets bringing familiarity, reliability, and conventionality to the crypto markets,” Chippas added.

Founded in 2018, ErisX is also well funded, raising $47.5 million to date from ventures arms of Fidelity and Nasdaq.