Institutional-focused crypto exchange Seed CX has received a coveted license to deal in cryptocurrencies in New York. Two subsidiaries were each granted a so-called BitLicense by the NY State Department of Financial Services (NYDFS), joining only 20 other companies that were granted this license, which allows to legally operate as a money transmitter and cryptocurrency exchange.
The highly-sought-after approvals authorize Seed Digital Commodities Market (SCXM) to serve as a matching engine for cryptocurrency trades, while Zero Hash’s license allows Seed CX’s settlement arm to operate as the money transmitter for the trading activity resulting from its affiliated exchange.
The Zero Hash settlement service currently supports spot settlement of fiat and cryptocurrencies and will be launching support for repo, forwards, and other product types in the coming months. The product was already implemented into the trade cycle of traditional brokers, single-dealer platforms, FX ECNs, and other institutional trading venues.
Seed CX has previously registered its Zero Hash service as a Money Services Business and FX Dealer with FinCEN. Zero Hash is also a registered Money Transmitter in over 30 US states.
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“As virtual currency license holders we will be able to expand trading and settlement services to New York firms through our institutional platform that offers the strong institutional technology, the operational support, and the regulatory compliance that institutions demand,” said Edward Woodford, co-founder and CEO of Seed CX.
Complicated regulatory structure
To maintain a BitLicense license, a provider must fulfill various reporting requirements and comply with standards on anti-money laundering, cybersecurity, and consumer protection.
While US authorities have been relatively active on the subject of cryptocurrencies, the local community has had its ears filled with conflicting talk from different regulators and various state legislatures.
New York is the only state that requires firms dealing in digital assets to obtain a license to operate. The Empire State has established a strong state-based regulation, but the approach has been widely maligned by the crypto community for being one of the strictest laws governing this type of business.
The news follows other, similar stories of progress for Bitcoin companies in the US, though cryptocurrency regulation still happens largely on a state-by-state basis.